Rev Left Radio - Capitalist Chaos and Crimes: The Great Recession of 2008

Episode Date: July 13, 2019

Matt Soener, an economic sociologist, joins Breht to discuss the Great Recession of 2008. Here is the GoFundMe account for Kreetay Briggs Jr., a 12 year old boy hit by a stray bullet while he was playing on a beach: https://www.gofundme.com/f/35gjf-shooting-victim?utm_source=facebook&utm_medium=social&utm_campaign=fb_dn_cpgnstaticsmall_r   Outro Music: White Male Carnivore by Yak ------- LEARN MORE ABOUT REV LEFT RADIO: https://www.revolutionaryleftradio.com/ SUPPORT REV LEFT RADIO: www.patreon.com/revleftradio Our logo was made by BARB, a communist graphic design collective! You can find them on twitter or insta @Barbaradical.  Intro music by Captain Planet. Find and support his music here:  https://djcaptainplanet.bandcamp.com --------------- This podcast is affiliated with: The Nebraska Left Coalition, Omaha Tenants United, Socialist Rifle Association (SRA), Feed The People - Omaha, and the Marxist Center. Join the SRA here: https://www.socialistra.org/

In the weekend, Lehman Brothers, one of the most venerable and biggest investment banks, was forced to declare itself bankrupt. Another, Carol Lynch, was forced to sell itself. Today, crisis talks are under... Rural financial markets are way down today, following dramatic developments. In December 2008, the bankruptcy of the U.S. Investment Bank, Lehman Brothers, and the collapse of the world's largest insurance company, triggered a global financial crisis.

...gripped markets overnight with Asian stocks slacks fell off a cliff, the largest single point drop in his share prices continued to tumble in the aftermath of the Lehman collapse. The result was a global recession, which cost the world tens of trillions of dollars, rendered 30 million people unemployed, and doubled the national debt of the United States. If you look at the cost of it, destruction of equity wealth, of housing wealth, the destruction of income, of jobs, 15 million people globally could end up below the poverty line again. This is just a hugely expensive crisis. This crisis was not an accident. It was caused by an out-of-control industry.

Since the 1980s, the rise of the U.S. financial sector has led to the crisis. to a series of increasingly severe financial crises. Each crisis has caused more damage, while the industry has made more and more money. Hello everybody, and welcome back to Revolutionary Left Radio. I'm your host and Comrade Bred O'Shea, and today we have on Matt Sainer to talk about the Great Recession of 2008. Before we get into the episode, I do want to plug a GoFund Me,

a comrade on our Patreon messaged me, and his nephew, Crete, Brits, was 12 years old playing on a beach and was shot in the stomach by a stray bullet the family is struggling to pay the medical bills he did survive and he is recovering but it's going to be a long road to recovery um so this is again an innocent 12 year old boy the nephew of one of our our comrades and patreon supporters and they have a go fund me to help cover their medical costs we will link to that in the show notes if you have a couple spare dollars anything helps you know it's sad that we live in a world where we have to sort of crowd fund for innocent children's medical bills, but this is the United States of America,

and that's what we have to do. So if you have any spare dollars laying around, definitely go click on that GoFundMe link in the description and the show notes and help out that family. It's really important. Before we get into the episode, if you don't want to join our Patreon or otherwise can't, there are two other ways you can help the show grow. We are on YouTube now. We're consistently trying to put up more and more videos.

All of our Red Menace videos go up there, but also we're putting our backlogged Rev. left radios up on YouTube so if you're into YouTube definitely subscribe to us there and the other thing you can do to help the podcast without spending any money is to give us a rating and review a good rating please and a review on iTunes or any other podcast app that really helps increase our reach so yeah those are two easy ways to help to show without giving us any pennies but if you do want to give us a couple pennies go to patreon.com forward slash rev left radio and you can get access to a bunch of bonus content at various tiers okay having said all of that let's get into this episode about the Great Recession with Matt Sainer.

I'm Matt Sainer. I am a postdoc researcher at Science Po in Paris, where I study mostly the relationship of finance in capitalism, in contemporary capitalism, as well as inequality, particularly in the U.S., but I'm also here studying inequality in France, and I am also an Omaha native. Yeah, that's awesome. It was our mutual friend, Matt, who set us up. I don't think Matt is in Texas right now. You're in Paris, and I'm in Omaha, but somehow he coordinated this little interview together,

and I'm excited for it. So, yeah, thank you so much for coming on. Yeah, my pleasure. So, like, you have an interest. You mentioned that you were doing some postdoctoral work, so what are you doing your postdoctoral in, and how'd you come to be interested in that field of study? So my field of study, I'm actually trained as a sociologist, particularly in economic

sociology and political economy. And as I said, I'm really interested in this, the relationship in which finance has come to play a larger role within contemporary capitalist society and how that's related to inequality, though I'm also interested in inequality just sort of more broadly. And I came into this, you know, I was, became politicized. quite early on in high school. This was the time of the Iraq war, which was very much opposed to that time as well as becoming sort of interested in inequality in the United States, income, you know, in class inequality

as well as racial inequality that I can see in my city and across the United States. And so I became quite interested in this. I kind of knew early on I wanted to study sociology and went to university. and did that, and it wasn't until about a few years into college that I became, you know, much more interested in political economy and economic issues, primarily through a professor I really looked up to, and he had just reading things like, you know, Karl Marx as well as other kind of classical sociological statements on capitalism. And I really found that as a really kind of more thorough and interesting way to understand what was happening. And in particular, you know,

he was talking a lot about the financial crisis. And so that really kind of piqued my interest because that happened. I graduated high school back in 2008, so the year that it happened, but it wasn't so aware of it at the moment. But as a few years after, I really wanted to kind of go back and understand how did this happen. This seemed like such an important event. So I really started to read everything I could about this, and that really led me to a lot of different things, a lot of different ideas, and really kind of contributed to politicizing me more. And it was an interesting time. I just say last thing is that it's a really. read these things because it was unfolding around us.

You know, this was the time of the anti-austerity protests and as well as the austerity rhetoric, the Occupy Wall Street, more topic concerned about inequality and so on. And so, you know, reading these things in an academic way also kind of brought it to life because it was helping you understand what's happening in the news around you. And so from then I knew I kind of wanted to do my graduate work and something related to that. Yeah, just had a curiosity. How old are you? I'm 29, barely.

I turned 30 at a few weeks. Nice, yeah, because I'm exactly 30, and I graduated the same year that you did. And I was sort of, I remember, like, living in, like, a really small apartment with a roommate just fresh out of high school and watching, like, this sort of economic meltdown on television, you know, and I wasn't really going to college at that time. I took two years off before trying to go back to college, and I was sort of not at all political or socially conscious, really. I was more interested in, like, drugs and partying at that time. but I do specifically remember when this whole thing went down. I watched the news for hours and hours on end,

and I would call my dad, who was a little bit economically literate compared to most people I know, and I would just constantly ask him questions, like, what exactly is happening? What does this word mean? All this stuff. So my political consciousness,

specifically with regards to economics, because I already had like socially progressive values. You know, I was sort of a progressive liberal coming out of high school, but economics was something I really didn't understand. at all. And so this was very, very eye-opening. And I rank this recession up there with like, you know, Occupy the Iraq War as like periods of really important political consciousness expanding in my personal life. So yeah, it was really, it really affected a lot of us roughly around

our age, especially as we were coming out of high school and trying to enter the job market and enter the economy at the exact moment it was in complete collapse, you know. Yeah, absolutely. And, you know, it's interesting you say that. I mean, I can relate, you know, coming out of high school, I was always very kind of progressive, but it didn't have a real sense of, you know, economic issues. They seem sort of obscure and arcane and kind of under this, you know, language is very technical. And often, you know, kind of under the, you know, we often think of this as being a very kind of, you know, people who study economics and more kind of conservative. And I think that for a lot of us, people our age, as well as others, that this was a moment when people kind of had to step back and understand.

understand, you know, not just the fundamentals of economics, but, you know, capitalism more generally or larger kind of systematic properties of politics and economics that really kind of force it upon us. And I think some of these progressive movements and other kind of leftists and radical movements that have been cropping up, especially among younger people, I don't think it's an accident because people are kind of questioning these things. Yeah. Yeah, I couldn't agree more. But let's go ahead and just like move on a little bit talking about, I guess we can sort of take the perspective that we're in right now, right? The Great Recession is now more than a decade behind us, so at least the start of it.

So in what ways are we still living in its fallout and why is it important for people to have a good understanding of that crisis, especially for those of us who are on the left? Yeah, we are definitely living in the shadow of it. And it's interesting. I think last September was the 10-year anniversary of when the Bank Lehman Brothers collapsed and this is sort of regarded as the kind of really the floodgates opening from there. And it was interesting. It was reported that the employees from Lehman Brothers in London were going to meet

and have a 10-year anniversary party at a big kind of swanky event. And I think they actually ended up canceling this because they came under such public scrutiny. But I think that's a kind of telling anecdote because it's hard to imagine, for example, that bankers and other financiers in the United States or Britain would be having a 10-year anniversary party in October 1939, 10 years after the Great Depression. And that tells you something about our own period versus then. And in some sense, it tells you that, you know, people who bore a tremendous responsibility have actually their structural position, you might say, has really kind of remained unchanged.

even if the financial industry has changed in some modest ways. You know, and so that's an important thing to keep in mind. But another kind of new story that I remember at the time is the financial times ran a headline at that anniversary saying populism is a true legacy of the financial crisis. I don't really love this word populism, but I think it's kind of hard not to talk about things like Trump or Brexit or some of the other political forces that have come up, especially in the Western world, without understanding the financial crisis. And so it wasn't just this thing confined. The financial sector really has rippled across over every conceivable area of social life. And so there are studies, for example, showing macroeconomic indicators being behind changes in labor market outcomes and things like this.

But, you know, there's also a real concrete human cost, too, that has really played out that is observable for, example, in studies that have shown things like, you know, increased suicide and anxiety, depression, other kinds of mental distress, and other kinds of events that, you know, I think are good kind of proxies for anxiety, people not getting married, people not buying homes and all these other kinds of things that people kind of complain about people not doing. I mean, these are very much, you know, an aspect of the crisis that's really changed the way that people have lived their lives in everyday ways. So this one event has really, really, really had tremendous kind of outcomes, devastating outcomes that will continue for, you know, a lifetime perhaps.

Yeah. Yeah, without a doubt. And one of the, you know, you could say, I think it is one of the good things that sort of came out of this was a sort of rising in, you know, this society, at least, of a class consciousness, which has been really submerged for a long. time. Like, you know, now in 2019, talking about issues of class in the U.S. is pretty normal in politics. But before this crisis, in the 90s in the early 2000s, class was really put, and even before that, obviously, class was really pushed out of the discussion entirely. And one of the legacies of this is not only this millennial urge towards socialism, which we hear so much about, but it gave rise to things like the Occupy movement, which for our generation was a big

political movement given all of its flaws that got a lot of people engaged and then it even resulted in stuff like you know the Bernie Sanders presidency run and him continuing to run for president you know that that sort of fringe left wing figure you know relative to the u.s center would have been unthinkable as as a running for president and really giving it a go before this crisis and before occupy specifically so that fallout in that way as sort of you know helped people develop their class consciousness especially with regards and we'll get into this in a little bit, especially in regards to how different classes were treated in the immediate wake of the crisis.

And you really got to see who this system works for and who it's geared toward protecting and whose interest it doesn't care about. And that was really stark. And I think at least for some segment of the population, specifically the younger segment, it really woke a lot of people up. That's absolutely right. And, you know, I think there's, you know, people who, for example, who study disasters, it's interesting.

They often talk about how disasters really sort of. expose who's vulnerable in society, who's, you know, advantage in society, you know, if there's a hurricane, who can get out, who's not, whose homes are destroyed, et cetera. You know, and I think a financial crisis is just the same kind of thing. It really kind of exposed society's fault lines as well as the politics surrounding that. And it's a really good point to point out that there has been a lot of politicization that's come out of this as well, because the effect of this is, you know, on one hand, you can say, well, there's sort of right-wing movement. that have cropped up, but there's also a lot of left-wing movements, as you said, that's also

cropped up, too. And so it's really kind of intensified that kind of a dialectic, if you will, between these two forces. And there's things that, I mean, just, you know, even a few years ago, I couldn't imagine being part of political discourse, as you said. And a lot of it, again, as you said, too, is with younger people, especially, I mean, I used to teach at Ohio State. I was teaching sociology there. And I feel like every year that I would teach, you know, I could tell that students were more politically conscious and that there were things that maybe I would have to explain two years ago that now I wouldn't have to really explain. People sort of had some sense of these kinds of things. And so it was really interesting to watch and how fast these things really

evolved. Yeah. And, you know, the last thing I'll say before the next question is when the center falls out, you know, when the capitalist economy is shown for what it is and it's entered a period of crisis or collapse. Obviously there's going to be right-wing reaction as well as left-wing revolutionary, you know, fervor as well. As you said, it's sort of dialectical. You can't have one without the other. And so when the center falls out, people look left and people look right, depending on, you know, they're already, you know, established political commitments or their reactionary or revolutionary instincts or intuitions or sometimes it boils down to the people that are your immediate influence and what information you're getting from them. But we've seen

this before in the Great Depression, for example, the fallout from that also resulted in a sort of polarizing from the left and the right and people picking sides and really doing battle in a lot of countries. I mean, you had civil wars, you had revolutions. And here in the West, after the 2008 Great Recession, we're seeing a bunch of social ills, a bunch of dysfunction in our politics, in our societies, and these sort of suppressed antagonisms coming to the surface and really rearing their heads in ugly ways. And so that's sort of, we're all living in the wake of it in one way or another, and it's inescapable.

Before we talk about the economic collapse itself, can you maybe talk about, and this is a big, there's a lot of big questions in this interview, just because this issue is so big, but can you talk about some of the history and the economics which led up to this crisis and which caused it? Yeah, definitely. It's a really, it's a really excellent question. And there's a lot of, and I think it's especially important question because there's are many kind of proximate causes of the financial crisis that are, of course, also very extremely

important to understand for, you know, dealing with the sort of immediate effects of this. But the crisis has to be seen in the kind of larger historical context because it has a, it has a longer sort of roots. And it has a more kind of structural side to it, too, that even if, you know, there's a need to have some immediate kind of regulation or whatever kind of in place to make sure that the most kind of reckless financial behavior doesn't happen again, you know, we have to also. keep in mind the longer history of that. So the crucial thing I would say is that, you know, perhaps some of your listeners would be familiar that, you know,

from the, during the post-war period with the kind of system that was put in place within Western economies was a kind of very regulated kind of welfare state capitalism that sort of assured that trade could sort of a flow between countries, but states had what are called capital controls that really limited the financial flow between countries. And that was really important because it allowed states to be able to sort of run welfare state programs, you know, run deficits and be able to provide these sort of supportive services without really having that sort of outside market pressure that would, for example, make it difficult to finance these kinds of things. And so that was a very kind of crucial

development. So sometimes this goes under different guises, sort of like embedded liberalism or the Bretton Wood system where it was developed. But it was, You know, in terms, it's kind of an irony that, you know, the most successful form of capitalism in terms of, you know, economic growth and unemployment and all these other kind of standard indicators was actually a very regulated kind of capitalism. But in the 1960s, late 1960, 1970s, this really came under strain for a number of different reasons. And profitability rates within the capitalist core started to decline. you had just slow kind of sluggish growth overall and high inflation. And so this system was sort of abandoned over a series of a couple years in the early 1970s. And the system was basically liberalized so that, you know, global currency and other kind of financial markets were essentially liberalized.

And this had a lot of a number of different effects because it made it that much harder for states to maintain welfare states and, you know, kind of put a cap on inequality. as it were. And this also kind of connects to finance as well, because another kind of key event that happened at this time was there was the OPEC oil embargo that happened as a result of the United States' support for Israel during the 1973 war, OPEC, which is a coalition of oil-producing states, mostly in the global south, who decided to increase the price of oil at this time. And what the United States in response did, because this was such a big threat to the U.S. at a time when it was, you know, losing badly in Vietnam and sort of constrained economically, what it did was it negotiated with Saudi Arabia government to say, you know, we'll trade you discounted bonds, U.S. government bonds, as well as weapons, if oil is denominated in dollars. And why this is important is because because the price of oil increased so much and because this was now traded in dollars, there was a huge surplus of oil dollars floating around the world economy that just ended up going into Western banks.

And so you have this kind of realignment of, you know, both oil markets, U.S. imperial conditions, as well as big swath of money that ended up flowing into Western banks because of this realignment. No. And at the same time in the United States and other Western countries, you had really high inflation at this time in really slow growth, which economists sometimes call stagnation. And this is a really huge problem in these countries at this time. And there wasn't really so sure how to solve it. And so what ended up happening was, among other things, was some kind of forms of liberalization to try to increase economic growth. And most importantly, the called Volker shock when the Federal Reserve Chairman Paul Volker raised interest rates in 1979 and ended up kind of causing a recession in the United States. But this was a way to sort of quell inflation because it made the cost of borrowing really high. But what that ended up doing was it made it extremely difficult for manufacturer, American manufacturer, to stay competitive because you had this huge rush of dollars coming into the United the States, and that made American exports less competitive. And so a lot of that money ended up

kind of going to get into finance. And so you end up having decreasing rates of return for manufacturing and more incentive for manufacturers to outsource their production and more money kind of going into finance. And so you're starting to see the emergence of an economy that's more oriented around finance and less oriented around manufacturing and other kind of tangible goods because these things are going abroad. At the same time, we also know this is a period of a really rising inequality. And median wage growth in the United States from

1979 to the present has been zero percent. And so for most people, their wages have actually been stagnating in real terms, if not falling, for example, for some of the poorest. And so you have an economy that's increasingly worrying around finance. You have a higher inequality,

particularly because people can't pay or people aren't being paid rising wages. And so one question then becomes, well, how do you actually increase demand? And among other things, the big answer was credit. Because credit, you know, if your wages aren't increasing, if you're going to still be able to buy goods and services, credit becomes a really pivotal kind of instrument for this thing. And this also had a larger kind of structural dynamic at play, particularly between China and the United States. And so with this relationship was, you know, gradually kind of emerged in the 1990s was China was exporting all these goods to the United States.

States. Because U.S. consumers, because their wages aren't stagnated, they require, you know, cheaper goods to be able to be able to purchase. But in addition to that, as I said, they also need credit. And because China was selling so many products in the United States, they had a whole bunch of dollar surpluses. And they used those dollars to buy U.S. bonds and treasuries. And so this relationship allowed China to export lots of goods. It also allowed the U.S. to run huge deficits at this time and also, you know, and allow kind of consumers to engage in consumer spending. And so that, so again, just to highlight these things, you have economy-oriented on finance, increasing inequality with stagnating wages, and a more kind of

credit-fueled consumption. So this is the sort of larger backdrop that we kind of entered the 2008 financial crisis in. Yeah. And that's a great, like, succinct summary of that history. And you covered a lot of years and a lot of big events. One thing I would just add on top of that is the systematic financial deregulation that occurred, started occurring, you know, rabidly under Reagan and went throughout the Clinton administration, the Bush administration, etc. And so while you have the financial sector of the economy rising, the manufacturing sector decreasing, you also have this extreme deregulation driven by ideology, of course, you know, the Reaganomic concept. And that really cleared the way for these financial institutions

to behave incredibly recklessly, which I'm sure we'll get into in a little bit. But that's also a huge component. Would you agree with that? Yeah, the financial deregulation was really key because there were a number of specific mechanisms that kind of push the financial crisis into motion or what caused the financial crisis into motion that probably would not have happened had those forms of deregulation not existed. So, yeah, you're right to say that this is a, another really crucial feature of this and really kind of increase the size and power of finance,

certainly. Yeah. The highest order of business before the nation is to restore our economic prosperity. In 1981, President Ronald Reagan chose his Treasury Secretary, the CEO of the Investment Bank, Merrill Lynch, Donald Reagan. Wall Street and the president do see Idaho. I've talked to many leaders of Wall Street. They all say we're behind the president 100%.

The Reagan administration. supported by economists and financial lobbyists started a 30-year period of financial deregulation. In 1982, the Reagan administration deregulated savings and loan companies, allowing them to make risky investments with their depositors' money. By the end of the decade, hundreds of savings and loan companies had failed. This crisis cost taxpayers $124 billion and cost many people their life savings. may be the biggest bank heist in our history. Thousands of savings and loan executives went to jail for looting their companies.

One of the most extreme cases was Charles Keating. You got a word? In 1985, when federal regulators began investigating him, Keating hired an economist named Alan Greenspan. In this letter to regulators, Greenspan praised Keating's sound business plans and expertise and said he saw no risk in allowing Keating to invest his customers' money. Keating reportedly paid Greenspan $40,000. Charles Keating went to prison shortly afterwards.

As for Alan Greenspan, President Reagan appointed him Chairman of America's Central Bank, the Federal Reserve. Greenspan was reappointed by President's Clinton and George W. Bush. During the Clinton administration, deregulation continued under Greenspan and Treasury Secretary's Robert Rubin, the former CEO of the Investment Bank, Goldman Sachs, and Larry Summers, a Harvard economics professor. The financial sector, Wall Street, being powerful, having lobbies, having lots of money, step by step, capture the political system, both on the democratic and the republican side.

By the late 1990s, the financial sector had consolidated into a few gigantic firms. each of them so large that their failure could threaten the whole system and the Clinton administration helped them grow even larger in 1998 city corp and travelers merged to form city group the largest financial services company in the world the merger violated the Glass-Steagall Act a law passed after the Great Depression which prevented banks with consumer deposits from engaging in risky investment banking activities

It was illegal to acquire travelers. Greenspan said nothing. The Federal Reserve gave them an exemption for a year, and then they got the law passed. In 1999, at the urging of Summers and Rubin, Congress passed the Graham-Leach-Blyle Act, known to some as the Citigroup Relief Act. It overturned Glass-Steagel

and cleared the way for future mergers. why do you have big banks well because banks like monopoly power because banks like lobbying power because banks know that when they're too big they will be bailed again and again you know the reagan administration in that era really comes up it came up in our last episode or one of our last episodes about the sandinista revolution and the contras and then it comes up constantly with regards to the you know the the the rough vague starting point of what we now call neoliberalism. And I think this is another example of just how crucial the 80s were for the sort of society that we're living in to this very day. But moving on

to another huge question, and I'm sorry to keep doing this to you. So feel free to take this in any direction that you want to. But maybe you can just talk about how the financial crisis happened, when it exploded onto the scene and sort of how it played out, especially in those first crucial months. Yeah, absolutely. And this is a big topic, of course, but it's in some ways, while there is a lot of, you know, kind of technical jargon to it, it is, arguably there is a kind of straightforward logic to it. And I think it's most, your listeners will, of course, know is that there is a relationship between kind of what you might say, financial excess and risk taking, you know, in Wall Street, as well as the connection. to the housing market, because this was a housing bubble. So the question kind of is, well, how did a housing bubble translate into this big financial crisis? And the answer to this really gets back to what you just said about deregulation.

Because after the Great Depression and the New Deal reforms in the 1930s, one of the reforms that they made was they said that investment banks cannot be, their business can't be overlapping with commercial banks. Commercial banks are the kind of banks that you and I let, you know, borrow money. from put our money in or whatever, investment banks are the sort of larger financial institutions in the economy that are not for ordinary consumers. Their job is to oversee merger and acquisition events from large corporations, you know, undertaking's kind of, you know, really massive kind of financing schemes and overseeing, you know, initial public offerings of companies, you're really kind of doing a much more sophisticated, you know, heavy-duty kind of finance that really doesn't have to do with, you know, small businesses or consumer loans and things like this, including housing.

Well, that changed during the Clinton administration when they deregulated this, what was called the Glass-Steagall Act that had kept this kind of firewall between these banks. And so what that meant was that if you go and buy a, or, you know, take out a mortgage on a home from a commercial bank, that commercial bank can now sell that loan to an investment bank. So this was, as they say, this was securitized. It became a tradable security, much in the same way that a bond or a stock is a tradable security. And so this mortgage could now be actually traded for a profit just in the same way that a bond was. So you can collect interest on it. And this immediately opens, you know, and actually part of the reason for this was in order to stimulate homeownership. because homeownership has an enormous kind of cultural significance in the United States.

And it was extremely important, particularly for white families who were originally the only ones to be able to really take part in this mass subsidized homeownership society. It was really part of Americans to be able to buy homes. And this idea of kind of securitizing it, which actually has an even longer kind of history, was really kind of opened up as a way to stimulate this market. But what this structure kind of invites is a profit motive into selling people into selling people mortgages. And that's quite harmful because, you know, if you're lending to a younger homeowner or to be a homeowner, you really want to make sure that they're going to be able to pay back that loan because, you know, these are usually paid off over 30 years. It's a very kind of long-term kind of commitment. But if there's a kind of profit incentive that all of a sudden kind of changes the logic and says you want to get out as many of these mortgages as possible. And so this became kind of the logic in order to kind of grease the wheels of this of this kind of financial market.

And so these became known as mortgage-backed securities, and mortgage-backed securities became a really kind of hot commodity for finance. But to make things even more problematic is that it was the riskier borrowers where the most profits could be made. These are so-called subprime mortgages. And so there was a more incentive to get these subprime mortgages to increase the volume of those even more. And so we know what happened was that, you know, the volume of these increased, you know, dramatically in the early 2000s. So I think between, either 2004, 2005, or 2005, and 2006, you know, the market for subprime loan doubled, you know, overnight. So you have money more people who are risky borrowers, all of a sudden, take you. out taking out these loans. And that's quite significant because, and this is kind of jumping

ahead a little bit, we know a lot about the kind of shady practices, you might say, of how these loans were originated. And they're often encouraging people who didn't speak English well, people who didn't have proper understanding of what they were kind of getting into were really they were pushed for taking out these kinds of loans. And we know why. So this was happening throughout the 2000s, and it rapidly increased the housing bubble. And to make matters even worse, all these kinds of mortgage-backed securities were given really good ratings from rating agencies. You know, rating agencies are supposed to evaluate the risk of a loan and they were giving what ended up being extremely bad, you know, really risky loans, you know, AAA ratings, you know, the best ratings you could get. And so, you know, we know that there is clearly some kind of, you know, some kind of, you know, faulty logic or, you know, bad interests or something at stake there.

that was kind of creating a kind of sense of legitimacy and trust in this entire market. And I think it's also important just to emphasize that a lot of the funding for this also came from Europe. And so a lot of this was very much of kind of a transnational story. Wall Street was the major player because they're the major financial institutions. But this was a more global kind of affair, and particularly from Europe. So a lot of the credit was coming from the European side. And a lot of the European banks were super, super leverage, which means they have a huge, amount of debt relative to their assets.

And so they're, you know, they're pummeling tons of kind of money in this, into this kind of a logical system. And so basically, by 2007, people start to default on their loans that they, you know, were bad loans to begin with in the first place. And this starts to have an increased kind of ripple effect because it starts pulling on, you know, the holders of these securities, which are large financial institutions. And so this gradually starts to become this kind of house of cars where, one institution starts to become fragile and then it starts to look like it's going to fail.

And so then another one and so forth. And so certainly by 2008, there were starting to be a large bailout. So by March of 2008, Bear Stearns was bailed out and the other investment bank, J.P. Morgan took it over. By the summer, the government had nationalized Fannie Mae and Freddie Mac, which was just sort of of this quasi-government, quasi, you know, kind of have private loan originator, and things were starting to get more and more tense, but the big moment came in September 2008, when the next bank, you know, was next in line, basically, Lehman Brothers, it said, well, they're, you know, they're unable to, to maintain, you know, business is going concern. But this time, the government, you know,

and this is during the very last years of the Bush administration, and you have people like Hank Paulson, who was the Treasury Secretary at the time, who was very kind of free market ideologue, had had to go against his ideology and bail at all these large banks, decided that they were going to let Lehman fail. And there's a lot of mystery surrounding exactly why they let, you know, why was it Lehman, why then, why did they let it fail? And some of the best evidence, you know, from people that have really kind of looked into this suggest it was really his ideology, you know, people like Hank Paul Sim and Tim Geithner,

who is the Federal Reserve Secretary of New York, you know, other kind of people just couldn't live with this kind of signal that they were saying the financial community, which is saying, you know, we can bail you out. In their mind, it would cause what economists sometimes call it a moral hazard because it says, well, you can engage in reckless behavior because you'll eventually be bailed out. So they let Lehman Brothers fail.

It failed on September 15th, 2008. It caused a massive ripple across the financial sector and across the entire economy itself because we saw how integrated your finance was into everyday, everyday kind of business. And so then began the kind of cleanup process. So the immediate kinds of things that were taken were, you know, massive bailout efforts.

I think by October 2008, there was something like a $700 billion dollar bailout program designed to basically plug the gap by giving, you know, kind of liquidity provision, recapitalizing banks, trying to get them. In fact, even the government actually lending directly to businesses in some cases, as a way to prevent the floor from falling out even further. And this was, of course, intensely politicized and interestingly enough, actually kind of opposed by most of the banks, but it was actually the state, which stepped in and says, you're going to take your medicine, basically, because this is too important to, you know,

leave to the market, so to speak. And this was all, of course, a taxpayer-funded endeavor, and an extremely costly one of that, too. that taxpayers were basically charged with having to clean up the mess that financiers had made in order to enrich themselves for such a long time. 30 years ago, if you went to get a loan for a home, the person lending you the money expected you to pay him or her back. You got a loan from a lender who wanted you to pay them back. We've since developed securitization whereby the people who make the loan are no longer at

risk if there's a failure to repay. In the old system, when a homeowner paid their more. every month, the money went to their local lender. And since mortgages took decades to repay, lenders were careful. In the new system, lenders sold the mortgages to investment banks. The investment banks combined thousands of mortgages and other loans, including car loans, student loans, and credit card debt, to create complex derivatives called collateralized debt obligations, or CDOs.

The investment banks then sold the CDOs to investors. Now when homeowners paid their mortgages, the money went to investors all over the world. The investment banks paid rating agencies to evaluate the CDOs, and many of them were given a triple A rating, which is the highest possible investment grade. This made CDOs popular with retirement funds, which could only purchase highly rated securities. This system was a ticking time bomb. Lenders didn't care anymore about whether a borrower could repay, so they started making riskier loans. The investment banks didn't care either.

The more CDOs they sold, the higher their profits. And the rating agencies, which were paid by the investment banks, had no liability if their ratings of CDOs proved wrong. You weren't going to be on the hook, and there weren't regulatory constraints. so it was a green light to just pump out more and more and more loans. Between 2000 and 2003, the number of mortgage loans made each year nearly quadrupled. Everybody in this securitization food chain from the very beginning until the end, they didn't care about the quality of the mortgage.

They were caring about maximizing the volume and getting a fee out of it. In the early 2000s, there was a huge increase in the riskiest loans, called subprime. But when thousands of subprime loans were combined to create CDOs, many of them still received AAA ratings. You know, it says a lot because, you know, these banks behaved incredibly recklessly. They were driven by the sort of broader financial deregulation occurring, you know, in the decades before the crisis.

And then they saw all these opportunities with this lack of oversight and regulation to take advantage of people, especially marginalized people or poor people, and, you know, do this really disgusting thing. They would also collude with the ratings agencies to give these really shitty securities and CDOs high ratings, and that would push them into stuff like people's retirement plans, because, you know, sometimes when you're bundling these things, you look to ratings agencies and see what they rate certain packages, and if they're highly rated, then they're more safe and therefore they can be rolled into these broader retirement packages for people and so when everything went belly up all these people you know that were you know banking on this

stuff for their retirement and they lost everything but the big banks not only did they get all this help from the state but then they turned around and gave all that money away to each other in the form of these what at the time was called golden parachutes or you know you heard these huge bonuses and so these CEOs and these executives in charge of these financial and that led to this chaos and crisis got bailed out by the government, and then instead of, you know, doing things practically or responsibly, they would just turn around and just dump that money off into their friend's hands. And so you really see this like horrible, corruptive circle while, why, you know, that allowed these people that are already incredibly rich and

powerful to be bailed out, no matter how reckless and absurd they behave, while poor people and marginalized people were just grinded up and spit out. Yeah, you know, it's a pretty telling fact that in 2009, you know, so in the midst of just total economic downturn, that the bonuses for financial institutions in 2009 were larger than they were in 2008. I mean, that's a really kind of telling thing. And, you know, interestingly, too, there's a kind of anecdote that came out sometime later after this, but quite early on in Obama's presidency, he had met with a number of, you know, CEOs, some of the Wall Street banks

and said something to be effective, I'm the only thing keeping you from the pitchforks. And, you know, he mostly, he basically told them, you know, look, you just have to shape up and you know, not look so overtly, you know, paying

out these huge bonuses, you know, even if you calls this kind of crap. But, you know, basically told them, I'm not going to go after you. You know, I'm not really going to actually try to implement any kind of reforms. And in fact, you know, that that is unfortunately the legacy of the Obama administration is that there was not any real kind of meaningful reform that he took at least in terms of finance.

There was a reform bill that was called the Dodd-Frank bill that was tried to put some stoppage to some of the worst successes, but a lot of it has unfortunately been quite watered down, and so you're really seeing, yeah, as you said, kind of telling about, you know, power in society and you know who yields it and not only did the Obama administration do very little in the form in the realm of reforming these institutions but actually brought on some of the very same ghouls that had been leading this process and were the you know huge causes of this process brought them on to his team onto his economic team onto his advisory board onto the secretary of treasury etc so you know you had this really ghoulish you know back and forth between

these high finance and the U.S. state right here. That's right. And I think I even remember that when he was running, he had Joseph Stiglitz, who's an economist at Columbia, Nobel laureate. I mean, very, you know, all the many, you know, kind of mainstream institutional, you know, kind of pedigree that you could imagine. But he's also, you know, quite progressive, even though he's, you know, kind of neoclassical, you know, conventional economist.

But Obama, I think had hired him on his team for the election in 2008. And then as soon as you got elected, fired him. So, you know, even have a mainstream pedigree, but are sort of progressive, we're not even allowed on at that moment, which is really, really telling, you know. Yep. Yeah, and some of the main players in this just general realm, some were on the Obama administration, but some played other roles. These are people like Ben Bernanke, Larry Summers, Alan Greenspan, Tim Geithner,

Henry Paulson, Lloyd Blankfein, and some of the big institutions. I know we haven't named a lot of names, but they include. include many more than this, but they include big ones like Goldman Sachs, Bear Stearns, Merrill Lynch, Lehman Brothers, Morgan Stanley, and even insurance companies like AIG. The era of greed and irresponsibility on Wall Street and in Washington has led us to a financial crisis as serious as any that we faced since the Great Depression. When the financial crisis struck just before the 2008 election, Barack Obama pointed to Wall Street greed and regulatory failures. as examples of the need for change in America. A lack of oversight in Washington, and on Wall Street is exactly what got us into this mess.

After taking office, President Obama spoke of the need to reform the financial industry. We want a systemic risk regulator, increased capital requirements. We need a consumer financial protection agency that we need to change Wall Street's culture. But when finally enacted in mid-2010, the administration's financial reforms were weak, and in some critical areas, including the rating agencies, lobbying, and compensation, nothing significant was even proposed. Addressing Obama and, quote, regulatory reform, my response, if it was one word, would be,

ha, there's very little reform. How come? It's a Wall Street government. Obama chose Timothy Geithner. as Treasury Secretary. Geithner was the president of the New York Federal Reserve during the crisis, and one of the key players in the decision to pay Goldman Sachs 100 cents on the dollar for its bets against mortgages.

When Tim Geithner was testifying to be confirmed as Treasury Secretary, he said, I have never been a regulator. Now, that said to me, he did not understand his job as President of the New York Fed. The new president of the New York Fed is William C. Dudley, the former chief economist of Goldman Sachs, whose paper with Glenn Hubbard praised derivatives. Geithner's chief of staff is Mark Patterson, a former lobbyist for Goldman. And one of the senior advisors is Lewis Sachs, who oversaw tricadia, a company heavily involved in betting against the mortgage securities it was selling. To head the Commodity Futures Trading Commission, Obama picked Gary Gensler, a former Gold Goldman Sachs executive, who had helped ban the regulation of derivatives.

To run the Securities and Exchange Commission, Obama picked Mary Shapiro, the former CEO of FINRA, the investment banking industry's self-regulation body. Obama's chief of staff, Rahm Emanuel, made $320,000 serving on the board of Freddie Mac. Both Martin Feldstein and Laura Tyson are members of Obama's Economic Recovery Advisory Board, And Obama's chief economic advisor is Larry Summers. The most senior economic advisors are the very people who were there who built the structure. Don't know that Summers and Geithner are going to play major roles as advisors first. I knew this is going to be status quo.

The Obama administration resisted regulation of bank compensation, even as foreign leaders, took action. I think the financial industry is a service industry. serve others before it serves itself. In September of 2009, Christine Lagarde and the finance ministers of Sweden, the Netherlands, Luxembourg, Italy, Spain, and Germany, called for the G20 nations, including the United States, to impose strict regulations on bank compensation. And in July of 2010, the European Parliament enacted those very regulations. The Obama administration had no response.

Their view is, it's a temporary blip, and things will go back to normal. That is why I am reappointing him to another term as chairman of the Federal Reserve. Thank you so much. In 2009, Barack Obama reappointed Ben Bernanke. Thank you, Mr. President. As of mid-2010, not a single senior financial executive had been criminally prosecuted or even arrested. No special prosecutor had been appointed. not a single financial firm had been prosecuted criminally for securities fraud or accounting fraud.

The Obama administration has made no attempt to recover any of the compensation given to financial executives during the bubble. But let's move into sort of the reaction and post-recession era and what happened after that. So what was the political reaction in the United States to the Great Recession? And I know you touched on that a little bit, maybe go further into detail. And what were the major arguments from the left and the right regarding how to deal with it? That's right. You know, as I said, it was a deeply kind of politicized a moment when passing both the bailout and then early in Obama's administration, he passed a stimulus package.

And so these things became highly partisan and only that partisanship only intensified over the rest of the course of the Obama administration. You know, the Republican Party basically became opposed to basically anything that came out of that. administration. And so the crisis was, you was diagnosed in several ways. I mean, I think for people generally, you know, on the left, very broadly speaking, the crisis was seen as financial kind of recklessness, something that could be changed through, through more regulation in that sector, you know, as well as concrete things that could be done to bailout homeowners who were sort of unfairly kind of victimized in this charade. In that way, a number of proposals

had come out to shift the burden, you know, away from taxpayers and on to, for example, you know, the financial institutions themselves or their shareholders or others. And so I think you could probably say that in a very kind of classic way, the response was kind of around what you might say on the left of center in a kind of, you know, Keynesian way, a way of stimulating demand through government's running deficits. And on the right, you know, people in the American Enterprise Institute or the Heritage Foundation, you know, kind of Paul Ryan and the Republican Party wing kind of clamoring for austerity as a way to revive growth. And so these kind of crystallizes the kind of main ideas. And just so, you know, elaborate a little bit more.

When we talk about fiscal stimulus, you know, the idea behind this is quite simple. It means that if you're in an economic contraction, as we were in 2009, 2010, the way to, you know, if consumers are not spending money, if businesses are not hiring, then the way that this was really kind of dealt with in the 1930s was for the government to create, you know, new programs to new kinds of funding, new stimulus endeavors. for example, in building, you know, building roads, building high-speed rail was actually proposed. It's actually kind of interesting to hear all this talk about the Green New Deal happening right now in the United States because at the time, people also had the foresight to say, well, we had this huge climate crisis and we have this economic crisis. We should be building high-speed rail and public transportation and all the rest of it. And these things actually did get close to happening. I lived in Ohio, for example, for a number of years and they proposed building trains there.

but the governor vetoed it for a variety of logical reasons. And so things like this were proposed and in some cases implemented. As I said, the Obama administration had a fairly large stimulus effort, although a big chunk of that was actually in tax cuts. So it doesn't quite have the same effect. And this is even kind of very mainstream economic theory would say that. And then again, on the right, the issue was the way it was, the scene was there was too much government spending before, that it was actually the kind

of institutions like Fannie Mae and Freddie Mac, which were to blame for the housing crisis. And so, if anything, we should actually be, we should actually be cutting spending. There's an economic historian, I was just thinking of this now, Philip Morowski, who wrote an interesting book about the post-crisis period. And he recounts the story actually of saying that he went to the Mount Pellerin Society right after the crisis, which is a very kind of neoliberal. kind of think tank and he was saying for them they said the issue was actually markets were not free enough you know there was too much regulation actually we need to

even go further my god um and this kind of thing and so even uh voices like that were kind of being proposed um i suppose on kind of that note you know on more sophisticated um right-wing view of this sort of hyacian view uh we kind of say something that you know uh supply kind of creates its own demand, and credit and money actually exists exogenously in the economy. It's actually, you know, the state that kind of primes the pump. And what the state had done was create too much credit before the crisis. And so this is kind of the nature of the problem. And it's true that interest rates were lowered after 2001 that kind of helped fuel the housing

bubble, but to only look at that, and not any other kinds of things happening is a bit myopic. And so for the right, again, it was just really kind of. excessive kind of government spending that needed to be brought under control through austerity and all the rest of it. Yeah, exactly. And that was a big argument at the time. It was, you know, libertarians and right-wing conservatives would always argue that actually this whole crisis was the fault of the government and government policies.

And if big government just got out of the way and stopped forcing quotas on companies and financial institutions, this would never happen. It's obviously a bait-and-switch tactic. It's either ignorance or ideological cynicism that gives rise to these arguments. but it's really funny because, you know, sitting, you know, 10 years later, people sometimes forget, especially younger millennials who are interested in, like, left-wing politics and maybe listening now, they really forget just how ferocious and how sort of well-situated, this sort of free market libertarianism was on the right at that time. It was, you know, what, what, like, what we see today with Trump and fascist

and Charlottesville and neo-Nazis, you know, that's a pretty recent development on the right in the last couple of decades. At the time, it was really, I mean, in the U.S., at the time, it was this libertarian free market, you know, Frederick Hayek's sort of dogmatism. And I remember dealing with right wingers of all sorts, and they would be regurgitating this all the time. But, you know, in the 10 years that's passed since, that whole movement, that libertarianism, has really just been hollowed out, right? The same people that were hardcore libertarians or even anarcho-capitalists around this time are now just full-blown fascists. And it's just funny how the sort of of material conditions after the Great Recession, just radically distorted and changed

the right, right? And you never hear, you don't really hear these arguments, certainly not from like Trumpians and the fascists about free market libertarianism now. You know, that sort of mask has slipped away and the sort of fascism that always is burbling underneath it has come to the forefront now. So it's sort of like living in another world to go back and remember all those debates I had with right wingers that were talking about Hayek and hardcore free market libertarianism and now to see them now, you know, basically doing Sieg Hales and voting for Trump. It's just, it's an absolute whirlwind of a, of an era for sure. Yeah, it tells you how much things can change in a short period of time in politics, for sure. And just how bankrupt,

I think ultimately libertarian ideas are when, when pushed into any real sort of crisis or, you know, political center falling out a situation, those libertarian ideas don't make sense to people anymore, left or right. And I think it's a sort of a testament to see how the right has sort of deformed itself over the last 10 years. But I do want to mention this really quick. How did the recession specifically impact poor and working people? Because obviously that's something that we should focus on. We know how the banks were treated in response. We know how Wall Street was treated. Not one executive of any of these institutions were put up on any sort of criminal charges whatsoever. Meanwhile, you know, the poor and the working class were just

devastated. So can you talk a little bit about that? This hit the poor and working class people particularly hard. And again, it's like, it's like, I think I brought up a disaster analogy earlier. I think the same could be said for the crisis in the same way that when natural disasters hit, you know, they hurt society's most vulnerable the most. And the same is certainly true of the financial crisis, we can observe, for example, that the poverty rate, which there's always questions about how this is calculated, but the poverty rate rose certainly in the immediate aftermath of the crisis, particularly for young people and children especially, as well as foreign-born non-citizens. And so, you know, again, you see society's most vulnerable, really

experiencing immediate kind of hardship. I was looking at this recently. I mean, child poverty rose to levels that we haven't seen since the 1960s. So this was really kind of a step back in terms of a lot of material well-being because of the crisis. And, you know, something else is interesting to point out is also that some of the largest income losses were amongst and job losses were a lot of more middle class or, if you like, more privileged kind of working class families. And I actually did a paper with a friend of mine about looking. at the kind of volatility, income volatility that people experience in the aftermath of a crisis.

And, you know, this is a, I think, salient point for understanding the kind of political turmoil that is happening now. Because if you want to understand the kind of lack of legitimacy, if you will, in governing institutions and economic system, you know, one of the quickest ways to do that is to deprive people of status or income that they once had. I mean, the preceding years to the 2008 crisis were not necessarily good for average American families by recent historical standards, but to lose income, to lose the status of a job, to be forced to work involuntarily part-time, for example, to have to move your neighborhood and change your social circuit. I mean, these are profoundly, you know, harmful things in people's everyday kind of psyche and, you know, and kind of humiliating in a way, too. And this, again, has much broader kind of effects, you know, not just economically, but their everyday kinds of life. And so, you know, that's an important thing to appreciate. The other thing, the last thing I'll say about this is the role that neighborhood segregation played in the crisis, too. And this kind of gets back, especially to its subprime mortgages.

One of more interesting papers I remember reading about the financial crisis showed that one of the biggest predictors of neighborhoods that were affected by the subprime mortgage crisis and the housing crisis in general were racially segregated neighborhoods in the United States. And so we know, for example, that there's this long history of very racist segregation practices. in the United States. You can't talk about housing and not talk about race in the United States because black families were prevented from, you know, obtaining credit or were, you know, quote unquote, redlined by, you know, forcing the neighborhoods that had received poor credit quality and were not brought into the sort of post-war, highly subsidized housing policies that the white families were afforded to. And so, you know, this plays out in, you know, numerous kinds of consequences. But one of them is that these neighborhoods were target for subprime mortgage lending and therefore badly hit by this crisis too.

And so it's important to remember that we shouldn't just see the crisis as, you know, I mean, of course it's this larger structural issue, you know, an economic income class issues, but it's also very much connected to the very particular kind of racial segregation and kind of institutionalized racism in the United States. and that really played out in a big way. You know, the racial wealth gap, for example, is way higher than the racial income gap, which is already, you know, quite high. Before the crisis, it was something like 20 to 1, the average white family. The effect of the crisis had only kind of exacerbated that dynamic. Yeah, and it's a distillation of the white supremacy and the inequality of the society broadly. When the society, the system enters into a crisis, I mean, this crisis was driven by largely, very, very rich, largely very, very white men at the very tops of the economy and the political system.

And yet the brunt of it, the pain and the suffering that it brought about was not dropped on their shoulders on their heads at all. They got out of this quite well. Most of them are still very rich. In fact, some of them still have executive positions or high-ranking political positions. it fell on the marginalized people, on the poor people, on working class people. These are families that struggle to get by losing their home, losing everything, you know, the racism and white supremacy of our system, taking the form of, you know, targeting black communities with these subprime mortgages and just leaving them utterly devastated, no bailout

for these people whatsoever. And that's sort of a, you know, just a truer, a little succinct way of a microcosy, example of what the United States is broadly. And then again, when you see that libertarian free market crisis happened, it falls on their shoulders. And then when that libertarian right-wing current devolves into a fascist current, it is still the immigrants and the black folks in our society who suffer the brunt of that right-wing anger and violence.

So we see this spike in hate crimes and these fascist movements growing and multiplying all over our society. So whether it's libertarian right-wing economics or it's authoritarian fascist right-wing politics, it is still the poor working class and marginalized people who have to suffer the brunt of this system every goddamn time. It's, I mean, it's fucking heartbreaking. But let's zoom out and talk about the world broadly. How did the collapse play out in other parts of the world? And what political and social ills have sort of blossomed in its wake over the past decade?

Yeah, it truly is a glow of crisis. even though it emanated in the United States, but of course it spread everywhere. For example, you know, in our neighbors to the South and Latin America during the 2000s had undergone what is sometimes called the Pink Thai, which is a sort of pink in the sense that it's not quite red, sort of socialist, communist kind of governments, but a mere kind of social democratic kind of governments in power all over the region. and these countries had largely dependent upon the sort of commodity boom at this time and major exports and prices in sort of basic commodities and that they'd used to sort of redistribute wealth in various ways.

At this time, the crisis really took the wind out of those sales and had made it really impossible to sustain those movements. And as a kind of specific note, the housing crisis had also overlapped with a major collapse in oil prices at this time and also kind of food crisis that happened all over the global south. There were major kind of food riots at this time. So the whole, you know, really kind of pulled the threads under all different types of economic markets that ricocheted into the sort of political domain too.

Because, of course, now if we look at Latin America, it's not very pink anymore, you know, particularly, you know, I mean, most vividly, you know, in Brazil, whether it's, you know, quite an authoritarian regime or a sort of very kind of neoliberal regime in Argentina and, you know, we go on so on down and so forth. So this had really changed the dynamic there. In eastern Ukraine, it's interesting because, of course, there was this quite dramatic conflict that's still going on, of course, but particularly bad in 2014 and 15 in eastern Ukraine. And that also has roots in the financial crisis because this kind of conformed around the sort of geopolitical tension that had arisen since the end of the, at the end of the Cold War, where the United States, it should be pointed out, actually, while it had at the end of the Cold War had said that it wouldn't push NATO expansion, NATO is an organization totally designed for the Cold War. they actually went back on that pledge and very much expanded NATO. And in 2004, I included a lot of Eastern European members into both NATO and the European Union. And so Russia, of course, saw this very much as a threat geopolitically as these countries were coming more under the sphere of the sort of Western-oriented markets and politics.

And this had really kind of come to a head in Ukraine because the president of that time, Victor Yanukovych, had sort of been forced to look for outside funding because Ukraine was so dependent upon foreign capital, and this had all kind of dried up in the aftermath of the crisis. And so he was sort of really much forced under Western powers, you know, heavy hand, I should say, to, you know, choose either the EU or Russia, and this ended up kind of causing a major kind of political disruption at that time that resulted in that conflict. But perhaps one of the more notable legacies of this crisis was in Western Europe, and particularly the Eurozone crisis. And this had sort of come under because of both the financial excesses that European banks were very much tied to at this period, but also the particular structure of the Eurozone itself, which is a single currency that a number of different countries share.

And this had, you know, there had always been skeptics. There had always been critics about the Eurozone. But it really came to a head by 2010, 2011, because countries that were sort of peripheral members suddenly found themselves in a very difficult position. Because prior to this time, core states like Germany and France had bought lots of peripheral debt, which had made consumption in those countries quite cheap. And they were sort of on the hook for these kinds of things. And investors became very worried about countries in the periphery that are mostly the first one of the most important. Greece, of course, but also Ireland, Portugal, and Spain. And all these countries had kind of different configurations to them.

There was, again, as in there was in the United States, a very kind of neoliberal trope that says, Well, these countries were engaged in excessive spending and, you know, kind of lavish public sector workers. And this was the real kind of nature of the crisis and not the sort of private, you know, sector, financial sector, a roots of this. It's true that Greece had had a high debt at this time, but they had accumulated most of that in the 80s and 90s, actually. So way before the euro. And other countries like Ireland was, you know, in trouble because they, you know, created a housing bubble as well. same with Spain. And so, you know, this had become a very kind of salient talking point, and the result of

it was very harsh austerity. And this is particularly bad in the case of the Eurozone structure, because one of the conventional ways that countries can deal with an economic crisis is they can devalue their currency, because this will make their exports more competitive. But if everyone has the same currency, you can't do that. And so you lose that tool, and you lose your printing press, and you can't engage in the kind of countercyclical fiscal policy to increase spending that I kind of talked about earlier because everyone has the same currency. And even worse, you know, austerity, which is a, I think

is shown to be kind of a flawed economic idea in general, but potentially it could work if only, you know, some people are doing it. But if everyone's doing it together, then it becomes, you know, everyone's sort of being dragged down together and the peripheral countries are being hurt the most. And so this really put the strain on these countries and really kind of intensified the kind of, you know, worsened material circumstances there. And I think it's not very much of a stretch to say had very directly kind of precipitated both the reaction on the left. For example, Ceresa and Greece, which has really, well, come very soft left now, but for a time was seen as a sort of alternative, Podemos, Dylinka in Germany, and maybe more recently the Corbin

phenomena, but also, of course, the extreme right, too, which had sort of blossomed in this period, too, and could use the crisis to blame the problems on immigrants and other more, you know, kind of vulnerable people or people in peripheral countries, and these parties had really kind of rose into power, too. And so it's very much a situation, like you said, where the center has kind of become hollowed down and it's the the the the the left which is not so mobilized because a lot of these parties are actually kind of new and the right where some many of these parties actually go back quite a quite a ways they have a sort of longer kind of of history and so they had that kind of organizational structure to to to gain a lot of

momentum and in some places have gained a lot of momentum yeah yeah so I mean broadly speaking when you have a a huge collapse like this you get to sort of to see the proposed solutions from all different sort of areas of the political spectrum. The neoliberal centrist, you know, is austerity, and that's what rules the day, and that's what largely got implemented in a lot of these countries. The Social Democrats would talk about breaking up the banks, increasing regulation, and doing more government spending, you know, in the face of it. Obviously, the far left is saying that this is an incentive structure inherent into the way

that capitalism operates in these booms and bus cycles. this sort of executive recklessness, this financial monopoly capitalism is the problem, and you're never going to be able to solve it without pulling out the system by its roots in a way. And then, of course, the far rights reaction is right populism, nativism, violent xenophobia, and eventually fascism. And we've seen all of these sort of blossom in the wake of this. The power structures are pro austerity, but you know, you are seeing this movement on all these different sides reacting to it. and we're still very much, you know, in the legacy of that, from Trump to Brexit, Crimea, Greece versus Germany, all these things that you mentioned, you know,

these are all in one way or another connected with the Great Recession. And so it's very much still present in that way. But this is a good opportunity to talk about a left-wing perspective on the Great Recession broadly. So, you know, coming specifically from a Marxist perspective, in what ways did the Great Recession prove or otherwise highlight some key insights into the nature of capitalism that like Marx and Angles articulated a century and a half ago. Yeah, it's a really interesting question because, of course, you're not going to find anything in Marks about mortgage-backed securities or, you know,

these kinds of things. And it's been interesting because there's a lot of people, academics in particular, who are interested in kind of reviving what Marx wrote about finance or didn't write. And so there's been some, you know, recent debate about these kinds of things. And, you know, there's, it's a mixed picture. I mean, Marks wrote a lot of things about money. You wrote some things about credit. People, you know, I think sometimes will kind of come down and say, well, you know,

there's something interesting thing about finance, but not like a totally developed theory that would explain everything because it didn't get, you know, fully articulated or it's kind of scattered around in, you know, volume three of capital or volume two of capital or whatever. But that said, you know, there's still a lot of just core insights about. about capitalism that I think Marx articulated that would still apply to the Great Recession. You know, Marx was very keen on saying capitalism is a crisis-prone system. It has a kind of contradictory logic to it based around unequal property ownership and the profit motive itself and the kind of social inequalities that generates that, you know, while each crisis is different

and has its own kind of historical context to it, that Marx and other writings was very keen to know, especially as writings about France. There's always a very kind of unique historical circumstance that happened to this. There's still a kind of general logic that we can kind of unearth from Marx. And so, for example, one thing that was really salient for me, especially when I was younger, you talked about getting into these things. Well, when I was an undergrad, I had to read a value price and profit by Marx. And this is actually, you know, for listeners, you know, if you don't want to quite take on capital,

I rarely recommend value price and product because it's a very short kind of concise book. that crystallizes a lot of interesting kind of core ideas about Marx's kind of economic thinking. And, you know, he says in there something, you know, these things about the, you know, surplus value is generated from worker exploitation, you know, so that you can generate more surpluses if you work, workers longer, if you pay them, you know, way above the kind of work that they embodied into the commodities that they produce, extending the working day, et cetera, et cetera. and so that this is, you know, the way that the capitalists generate profit. But Marx noticed something kind of interesting where he's like there's a kind of seesaw dynamic to this because it's possible for workers to unionize, to demand higher wages, to reduce the kind of exploitation place on them. And this is also an interesting place where Marx talks about unions,

and that will increase their material well-being, but that will eventually cut into profits. And if that comes into profits, then you're going to have a kind of capitalist crisis. And if that happens, then there's going to have to be some way of dealing with this. And so another way of dealing with this is just to increase exploitation more. But that will also generate a crisis in the long run because workers aren't able to sort of produce by the things that they produce. And so there's always this kind of back and forth, kind of contradictory dynamic within

the logic of accumulation that marks articulated. And I think you could probably map this on to, for example, the postwar history, when wages and inequality increased, wages increased up until the point when that cut into profits. And then there was this big crisis in the 70s. And so the way to deal with that was through neoliberalism and, you know, keeping wages low. And as I kind of talked about earlier, well, then you have this problem because they say, well, how are you going to demand more goods? Well, through credit, through finance, through other kinds of tactics. it's like that. And so it's that kind of core logic that still very much, I think, understands, helps us understand the crisis in a longer kind of historical perspective that's still very much

useful. And still kind of reminds us that as long as that an equal relationship exists, as Marx is kind of key to note, then this, these crisis tendencies will always be there. Yeah. Yeah. Incredibly well said. And I would also just add to that quickly, the concept of, you know, the bourgeois state being the dictatorship of the bourgeoisie, right, the dictatorship of the ruling class, and that the state is a sort of super structural function of the base, the capitalist mode of production, the capitalist relations of production, and we see how the state reacts in the face of capitalist crisis, who it helps, who it doesn't, whose interest it has in mind, and, you know, the sort of people

that litter the political institutions and how they reflect the sort of people that litter the economic ones. And then I'd also bring it up to even Lenin, right? In Lenin's seminal text, imperialism, the highest stage of capitalism, which we did an episode on in our sister podcast, Red Menace, if anybody's interested, Lenin talks about the development of what he calls monopoly capitalism and talks about how monopoly capitalism, which is like, in every industry smaller, you know, or more and more power is concentrated in as smaller and smaller amounts of firms or institutions. And especially that's true in the financial industry. And his argument was talking about how monopoly capitalism gave rise to what we know as imperialism,

and how imperialism is a manifestation of monopoly capitalism, which I thought is really interesting. And that is really proven by what happened after the collapse and the failure of some of these financial institutions because of all the talk we hear about these banks being too big to fail and break up the banks, what actually happened after this collapse was the mergers of these banks. When one financial institution would fail,

one of the other huge giants would just buy them up. And so you saw maybe 10 or 20 institutions, be whittled down to four or five. And so that concentration of power into fewer and fewer hands absolutely took place before and then it was accelerated after the collapse itself. So these are just a few of, I think, the core concepts in Marxism and in Leninism that can be sort of drawn out and sort of shown as an example of how these things, you know, operate.

Would you largely agree with that? Yeah, there's certainly been a tremendous consolidation of the financial industry and I think it's interesting to point out because I know that there is well there's always kind of in this talk I mean it goes back before the financial crisis of the need to break up the banks and this kind of thing and I can understand where someone would say well banks are too powerful so therefore the logical conclusion of the opposite of that break them up but you know there's a there's a there's a trickier question about how they operate who they operate for and you know all these other kinds of things that

I don't know on the face of it how breaking up banks would necessarily operate. And same would go, I guess, for Silicon Valley as well, which is also kind of talked about. I would, I mean, I would argue not the, not the U.S. state because we all know how that operates. But I mean, you know, obviously I think it's not breaking up the big banks. It's a sort of, I would advocate more of a nationalizing of the banks. When these institutions are so central to how an entire, really world economy functions, we can. cannot leave them in the hands of these vampires who are just recklessly pursuing short-term profit. If these things are so crucial to the stability of our global order, then they should

be democratically owned and operated and controlled, have oversight, regulation, protection, and the profit motive should be extracted from them because it obviously leads to this sort of disastrous effects time and time again. Between 1998 and 2008, the financial industry spent over $5 billion on lobbying and campaign contributions. And since the crisis, they're spending even more money. The financial industry also exerts its influence in a more subtle way, one that most Americans don't know about. It has corrupted the study of economics itself. Irregulation had tremendous financial and intellectual support because people argued it

for their own benefit, the economics profession was the main source of that illusion. Since the 1980s, academic economists have been major advocates of deregulation and played powerful roles in shaping U.S. government policy. Very few of these economic experts warned about the crisis. And even after the crisis, many of them opposed reform. The guys who taught these things tended to get paid a lot of money being consultants, business school professors don't live on a faculty salary. They do very, very well.

Over the last decade, the financial services industry has made about $5 billion worth of political contributions in the United States. It's kind of a lot of money. That doesn't bother you? No. Martin Feldstein is a professor at Harvard, and one of the world's most prominent economists. As President Reagan's chief economic advisor,

he was a major architect of deregulation. And from 1988 until 2009, he was on the board of directors of both AIG and AIG financial products, which paid him millions of dollars. You have any regrets about having been on AIG's board? I have no comments. No, I have no regrets about being on AIG's board.

No. That I can say. Absolutely not. Absolutely not. Okay. You have any regrets about AIG's decisions? I cannot say anything more about AIG. I've taught it. Northwestern in Chicago, Harvard, and Columbia. Glenn Hubbard is the Dean of Columbia Business School

and was the chairman of the Council of Economic Advisers under George W. Bush. Do you think the financial services industry has too much political power in the United States? I don't think so. No, you certainly wouldn't get that impression by the drubbing that they regularly get in Washington. Many prominent academics quietly make fortunes while helping the financial industry shape public debate and government policy. The analysis group, Charles River Associates, Compass Lexicon, and the Law and Economics Consulting Group manage a multi-billion dollar industry that provides academic experts for hire. Two bankers who used these services were Ralph Chiaffi and Matthew Tannen.

Barristern's hedge fund managers prosecuted for securities fraud. After hiring the analysis group, both were acquitted. Glenn Hubbard was paid $100,000 to testify in their defense. Do you think that the economics discipline has a conflict of interest problem? I'm not sure I know what you mean. Do you think that a significant fraction of the economics discipline and number of economists have financial conflicts of interest that in some way might call into question or color? I see what you're saying. I doubt it. You know, most academic economists, you know, aren't wealthy business people. Hubbard makes $250,000 a year as a board member of MetLife and was formerly on the board of Capmark, a major commercial mortgage lender during the bubble, which went bankrupt in 2009.

He has also advised Nomura Securities, KKR Financial Corporation, and many other financial firms. Laura Tyson, who declined to be interviewed for this film, is a professor at the University of California, Berkeley. She was the chair of the Council of Economic Advisors and then director of the National Economic Council in the Clinton administration. Shortly after leaving government, she joined the board of Morgan Stanley, which pays her $350,000 a year. Ruth Simmons, the president of Brown University, makes over $300,000 a year on the board of Goldman Sachs. Larry Summers, who as Treasury Secretary, played a critical role in the deregulation of derivatives, became president of Harvard in 2001. While at Harvard, he made millions consulting to hedge funds and millions more in speaking fees, much of it from investment banks. According to his federal disclosure report,

Summers' net worth is between $16.5 million and $39.5 million. Frederick Michkin, who returned to Columbia Business School after leaving the Federal Reserve, reported on his federal disclosure report that his net worth was between $6 million and $17 million. In 2006, you co-authored a study of Iceland's financial system. Iceland is also an advanced country with excellent institutions, low corruption, rule of law. The economy has already adjusted to financial liberalization, while prudential regulation and supervision is generally quite strong. And that was the mistake. That turns out that the prudential regulation and supervision was not strong in Iceland. So what led you to think that it was?

I think that you're going with the information you had, and generally the view was that Iceland had very, good institutions. It was a very advanced country. Who told you that? What kind of research did you do? You talk to people. You have faith in the central bank, which actually did fall down on the job. That clearly, this... Why do you have faith in a central bank? Well, that faith, because you go with the information you have. How much were you paid to write it?

I was paid. I think the number was, it's public information. On your CV, the title of this report has been changed from financial stability in Iceland to financial instability in Iceland. Oh, well, I don't know. Wherever it is the other thing, if it's a typo, there's a typo. I think what should be publicly available is whenever anybody does research on topic that they disclose if they have any financial conflict with that research. But if I recall, there is no policy to that effect. I can't imagine anybody not doing that in terms of putting it in a paper

you would be significant professional sanction for failure to do that I didn't see any place in study where you indicated that you had been paid by the Icelandic Chamber of Commerce to produce it no I don't you know Richard Portis

the most famous economist in Britain and a professor at London Business School was also commissioned by the Icelandic Chamber of Commerce in 2007 to write a report which praised the Icelandic financial sector. The banks themselves are highly liquid. They've actually made money on the fall of the Icelandic crona. These are strong banks. Their funding, their market funding is assured for the coming year.

These are well-run banks. Thank you so much. Like Michigan, Portis' report didn't disclose his payment from the Icelandic Chamber of Commerce. Does Harvard require disclosures of financial conflict of interest in publications? Not to my knowledge. Do you require people to report the compensation they've received from outside activities? No. Don't you think that's a problem?

I don't see why. Martin Feldstein being on the board of AIG, Laura Tyson going on the board of Morgan Stanley, Larry Summers making $10 million a year consulting to financial services firms. Irrelevant. Yeah, basically irrelevant. You've written a very large number of articles, a very wide array of subjects.

You never saw fit to investigate the risks of unregulated credit fault swaps? I never did. Same question with regard to executive compensation, the regulation of corporate governance, the effect of political contributions. I don't know that I would have anything to add to those discussions. I'm looking at your resume now. It looks to me as if the majority of your outside of your

of your outside activities are consulting and directorship arrangements with the financial services industry. Would you not agree with that characterization? No, to my knowledge, I don't think my consulting clients are even on my CV, so I don't know. Who are your consulting clients? I don't believe I have to discuss that with you. Okay. In fact, you have a few more minutes and interviews over.

Do you consult for any financial services firms? The answer is I do. And I don't want to go into details about that. Do they include other financial services firms? Possibly. You don't remember? This isn't a deposition, sir. I was polite enough to give you time.

Foolishly, I now see. But you have three more minutes. Give it your best shot. In 2004, at the height of the bubble, Glenn Hubbard co-authored a widely red paper with William C. Dudley, the chief economist of Goldman Sachs. In the paper, Hubbard praised credit derivatives in the securitization chain, stating that they had improved allocation of capital

and were enhancing financial stability. He cited reduced volatility in the economy and stated that recessions had become less frequent and milder. Credit derivatives were protecting banks against losses and helping to distribute risk. A medical researcher writes an article saying, to treat this disease, you should prescribe this drug. Turns out, doctor makes 80% of personal income

from manufacture of this drug. Does not bother you. I think it's certainly important to disclose the... Well, I think that's also a little different from cases that we're talking about here, because what would you say are some key insights or lessons that we as leftist in 2019 should learn from the Great Recession? Yeah, you know, one thing that is intriguing looking back on this 10 years is I would say

we shouldn't underestimate capitalism's resiliency and its ability to, in fact, even kind of absorb the crises that actually it creates. You know, other kind of people have written about this kind of thing. I mean, it's actually, I mean, it's pretty remarkable. If you think about how these kind of crises, 1929, 2008, I mean, these are really massive crises and capitalism still been able to kind of become resilient. And one thing why I would say that's important is because for some circles, I think, on the left. Sometimes you hear this kind of rhetoric

that there's a kind of sense that like if there's a big enough rupture, then the alternative, the anti-system alternative will sort of spontaneously appear. And it's just not the case. I mean, you can understand where that would

come from, but history turns out to be a bit more complicated. You know, and there's an anecdote I often talk about with, I remember reading this a long time ago, that the German, well, I think it was a Weimar era SPD chair at times of finance minister, who was actually an early Marxist theoretician of finance and of the state,

Rudolf Hilfreni, during the Great Depression, he says, this is finally the crisis that's going to end it all. And so he raised interest rates in order to hasten the crisis. And we know that that didn't turn out that way. Accelerationism. It is a kind of acceleration, exactly. It reminded me the kind of accelerations under Trump. You know, leftists who were sort of voting for Trump and this kind of thing.

So, you know, I mean, we have to be careful. We have to be kind of careful about these things because, you know, the crisis, and this is the importance of history, is that the crisis was this dramatic moment. It was a huge rupture. But it's part of a longer kind of history and lineage of the 20th century. and even earlier, and it's continuing to play out, and it's continuing to play out in ways that we talked about before, including the rise of the far right, who has become empowered in this age of austerity, as well as groups on the left, and, you know, people making

serious challenges, and so that struggle is kind of continuing to sort of play out, and so, you know, I think it might be tempting to see, you know, these kind of apocalyptic scenarios or, you know, whatever, that really the key is still the same as it's always been, which is just, you know, to propose an alternative it's going to take organizing and kind of efforts on the ground. That said, you know, the other thing I would say related to that is, you know, that we should also estimate the extent to which elites are going to devote to save the system. And the crisis really shows that. The amount of political coordination and the amount of money that was put into, you know, bailing out these institutions and basically trying to preserve the system as it was is really actually quite extraordinary. But the interesting thing about that is that I don't really think they have a lot of new ideas.

You know, if you compare this and, you know, comparisons between now and the 30s are, you know, are there and, you know, people are writing about these things. But, you know, comparing the crisis is kind of interesting because to elites as credit, they actually came up with a sort of novel form of capitalism. And they, of course, came up with it, we know, because of social pressure because of organized movements. But there was a very kind of new kind of regime put in place in a way that's just not on display now at all. You know, neoliberalism is sort of capable of producing different kind of figures or different kind of policies throughout history. You can have a, I don't know, a right-wing, Thatcherite kind of contingent or Reaganite contingent. You have a sort of leftist center, Clinton-tonianism or Blairism that sort of says, let's make welfare a sort of market-oriented or let's balance the budgets or this kind of thing. I mean, there's some kind of variations to that.

And these things can, you know, get political support for a moment. They can have some sort of economic effects, but they're not really designed to be a sort of productive, generative kind of politics and the way the politics really is supposed to be. There is sort of one-time trick. And I would also add that, you know, kind of centrist parties operate in the same sort of way. It's possible to get everyone under sort of a big tent party to challenge an incumbent or to, you know, know, to challenge the really kind of crazy party that is opposing you, but that only works once. And once you win the election, you're actually faced with doing the difficult tasks of politics. And I just, you know, I just really, you know, kind of look around and say, you know,

where are the novel idea? You know, where are the sort of, you know, where are the kind of centrist think tanks doing? And they're really only option in the face of the right is just to say, vote for us, we're not insane. And, you know, that happened, for example, in France over, you know, where I live, and the, the challenge, you know, the second round of the last election was between Emmanuel Macron, who's very centrist, communal type, and Marine Le Pen, who's on the far right. And, you know, Macron won decidedly. But then after that, you know, his policies have been, you know, I don't know, I'm trying to make France into a startup country or something like that. You know, there's huge discontent. There's, you know, major protests here every Saturday in Paris. So,

you know, politics is really about kind of putting something into motion. and making the sort of difficult calls about, you know, distribution and dealing with conflicting inequalities within society. And if the center is no longer able to do that, I would, you know, this, go back to your point. What doesn't be take is, you know, that, you know, the left has an opportunity to kind of do that. And I'm not saying anything that's totally new or hasn't been said before. But I think we have to keep that kind of moment in mind, that there's a real kind of opening And I think even the demand for different kind of political alternatives. And the question is, you know, what are those of us who want something more egalitarian going to do about that?

Yeah. I think that's an incredibly important point. And I think it also highlights some of the difficulties and illogical nature of trying to put together a big tent party like the Democrats do with centrist, with sort of left-leaning sympathetic Republicans and, quote-unquote, whatever they consider to be the left. and you're exactly right. It could maybe topple Trump, but then once they're in office, what are they going to do? And I think we saw what they're going to do with an Obama-type figure. And so with that shit, which is just, you know, default to the center. So with that in mind, I think it's incumbent upon the left to organize outside the structures of the Democratic Party, in my opinion.

And one thing that the left really wasn't ready for during 2007 and 2008, but have since become better at, is organizing around mutual aid projects and self-sufficiency outside of the confines of the market or the state. And I think it's going to be incredibly crucial if and when, I mean, when another recession comes that the left is already to some degree organized. It might not even be organized on a national level, but even local organizations are still incredibly important when it comes to making sure that people in the wake of a crisis have goods and services still available to them in the form of mutual aid programs and then organizing against stuff like foreclosures, which we saw a bunch of after the Great Recession and on the rise.

to the Occupy movement, one of the big movements was the sort of anti-foreclosure movements where people would, in a community, come around and just, you know, form lines around houses that police were trying to come in and put foreclosure notices on. And, you know, people were trying to take people out of their house and a bunch of other people in the community would come together and push back and maybe get arrested for trying to defend their neighbors and stuff. But I think that's incredibly important, not only just for its own sake, but also in, you know, helping people understand that the left, you know, in the wake of the Cold War taboos and stigmas about socialism and communism, that the left is here to help you protect your home, to feed your family, to make sure that you're getting the goods and necessities that you need in the wake of a crisis. And that will convince people of our politic a million times more effectively than yelling at each other on Twitter or just trying to talk people in through argument to your side of things. showing up and showing people in an organized fashion what the left can do in the wake of a crisis

is absolutely essential. And that leads perfectly into this next question because a lot of economists today are saying that we're on the verge of another recession. These things are cyclical. They come and they go and they will return. So what are your thoughts on this idea of being on the verge of another recession? And do you have any sense as to win or how deep this next one might be? Well, I think predicting your recessions might be above my pay grade, which is maybe a bit of a doubt, but certainly what's in place now is a fragile system, and I would agree. And of course, you know, recessions are cyclical. They do come in ways.

Whether or not we'd see something quite as large as 2008, I kind of doubt, but it doesn't mean that another recession and the magnitude of, you know, I don't know, the 2001 crisis or the 1986 stock market crash or I don't know what that potentially could could happen and you know I think this kind of ties up everything we've talked about today because you know there's a lot of debate for example about should the government have bailed out the banks and you know they have done this or that and that discussion is can be helpful I think it sometimes overlooks the fact that it could have been done different ways and all the rest of it but do that as it may the real kind of legacy of the bailout for me was system preservation, that, of course, there were some very modest

kind of financial regulatory changes put in place and that, you know, we can kind of observe these things. In general, there wasn't a sort of sweeping kind of change in the function of these institutions. They're really actually kind of just sort of safeguarded from, you know, the worst happening. And so that still means that a lot of the kind of historical contradictions or structural problems that I talked about earlier are still there. And that creates a very kind of delicate situation. And to take one example, in February of last year, of 2018, there was, for example, a jobs report that came out, the government officially released, is showing that wages had increased

by just a couple percent, I mean, very small, but wages had increased nonetheless. Incidentally, this was actually all supervisory wages, so it was actually more kind of bosses and managers that are wages, but wages had shown to have been increased, and there was a huge stock market panic because investors got scared and they thought, well, this will cause inflation and all the rest of it. And so it shows you that, you know, as much as stock market activity and these other kinds of things are picking up and Trump loves to boast about, it's a very kind of fragile order. And something like something as small as, you know, small modest wage gains can actually kind of impinge on that. And it shows you kind of how delicate this is and how there is still sort of

a balance hanging in there. And, you know, kind of on that note, too, I mean, you know, of course Trump is going around talking about how great the economy is and how good the fundamentals are. And, you know, there is some truth to that in terms of mild economic growth or, you know, unemployment is really at historic lows. It's at 3.6 percent, which is, I mean, the lowest it's been during the era of quote unquote, full employment policies in the 1960s. So this is actually quite significant, and this has given people a lot of sense of optimism. But as much as those things are true, I mean, I'm not one to just totally dismiss these. Oh, these are constructed numbers or whatever made by capitalists. I mean, there's some truth to them. But if you do look beneath these

kinds of things, it is a little bit more complicated. And so, for example, while unemployment might be low, first of all, six million people are still out of work. So if that's something to celebrate, I don't know if I want to necessarily celebrate that. But even more importantly, the way that unemployment is calculated is that it's actually only people who are looking for work within the last three months. These are the only people who are actually carrying those unemployment. So it doesn't actually include people who have simply given up. And a better measure for this is what's sometimes called the employment to population ratio.

So it measures the number of people working who are part of the labor force. And that's at 60%. And more importantly, it's below. lower it was in 2008. So you have a lot of people who have actually given up, left the labor market. They don't have any kind of alternatives left. At the same time that you're seeing record-breaking corporate profits and record-breaking amounts of money being either hoarded as cash on corporate balance sheets or used to pay back or use to buy back stocks and money that's not being reinvested into productive economy. So you still have very kind of precarious

labor market situation. And of course, you know, people's work regimes are changing, kind of becoming Uber-ized and all the rest of it. And at the same time that you still have the sort of corporate dynamism that you had before without the kind of reinvestment and productive kind of activity that we often think corporations do. So this is a very kind of fragile structural situation, even if some of the sort of macroeconomic indicators look better than they were five years ago. So, you know, we still have to be a tendency to the fact that, okay, some measures look okay, but what does that really mean for people in their lived experiences? That's the really kind of fundamental thing. Yeah, for sure. Incredibly well said. Thank you for that. What recommendations

before we let you go would you offer for people who want to learn more about these issues? I know, economics can be, you know, very difficult to get into for a layperson, but if you have any recommendations, that'd be awesome. And then also, where can listeners possibly find you online? I don't have much of an online presence I kicked social a few years ago but for reading yeah of course I have lots of recommendations if people are interested in finance

from a very kind of critical perspective probably the most thorough book on the topic is by a Marxist economist Costas Lappavitsis a book called Profiting Without Producing I think and that goes through all the theory and lots of empirics and everything for a slightly shorter but still

a really kind of rich book on a similar thing Sedgillac Durand who's also a Marxist economist wrote a book called The Fictitious Capital that I would also very much recommend and both of those were published by Verso and you can find those cheap because

Verso has a sale every other day and also also actually this is I think also Verso book too you can tell about my library But I still think one of the best books on finance is Doug Henwood's book Wall Street. It was published like 25 years ago. It was really kind of ahead of time.

And it really explains all the sort of nuts and bolts as well as the sort of larger theory. Think about these things that are kind of post-Kasian tradition. It's really, really excellent book. As far as things on the Internet, there's a blogger. Again, listeners want a very kind of Marxist economics, but very good and lots of empirical information. There's a blogger of Michael Roberts, who has a very, very prolific blogger, a very good resource. Not quite so much in the, not quite as critical, but maybe kind of more social democratic, but full of very good empirical information on economic issues is the Economic Policy Institute,

as well as the Roosevelt Institute. Most of those have a sort of goldmined of just, you know, kind of data for understanding these kind of concrete issues that I also find quite helpful, too. Yeah, and I would also recommend, I hate this title because it's so misleading, but it's called Inside Job. It's not about 9-11. Oh, yes. Yeah, go ahead. Yeah, I would second that too, absolutely, really, really thorough look and makes it understand the crisis very, very digestible.

Yeah, it's incredibly accessible for lay people like myself. so all right matt hey thank you so much for coming on it's honestly it's been a pleasure and an honor i've learned a lot from this i i was really forced into some challenging sort of economic research leading up to this and i really appreciate how accessible and awesome you've been by explaining all this complex stuff so thank you so much for coming on i really really appreciate it yeah i really enjoyed talking with me thanks a lot I said, Hey, you white carnival, say, say, come in see the soul

Ah, you're so kind of lateral Or just a white male, Color with a low-paying french hole You are the glass house Rowling stones You think that You've got the finger on the pulse But you

You must have hard It must make me the stone Like a relic A finger Or some kind of Neoclassical They love The

The power of your society Has no clarity Smoke The mirrors Say I'm a white carnival And after everything Not superior

Say I'm not an animal No, I'm a white male Calfour With a low-paid fresh hole I'm a glass house Throwing stones I don't think Got the finger on the balls

And I just can't cry Because I made a stone Those relics, those figures Crumbling, neo-classical Millarise There you're coming I want you crumble Oh

Oh, you know Oh, you know Nice Mitchell's house Myt Nice Killet me wrong, I'm gonna die me wrong, killing me wrong, killing me wrong, killing me wrong, killing me wrong.

Come on. Go! It's just a whole white world. It's just the whole white world. It's just the whole one in its hands. It's just the whole world. In his hands Oh, I know

In his hands And everyone here In his hands