"spent billions of dollars on advertising campaigns to persuade Americans to increase their mortgage related debt. Citigroup ran a billion-dollar campaign with the theme 'Live Richly' in the 1990s, designed to get home owners to take out second mortgages to spend on whatever they liked. Other banks acted in a similar fashion, with a great deal of success: second mortgage debt climbed to over $1 trillion in a decade."
One also wonders to what extent the conditions that gave rise to the housing bubble were knowingly manufactured and sustained for so long by the banks, policy makers, legislators and regulators. As noted, for those that still had a job and a reasonable income -- a not insignificant qualifier here -- it is an undisputed reality that real, if not actual, take home earnings (and therefore purchasing power) for most American Dreamers had at best remained stagnant throughout the period Gowan has identified, whilst corporate earnings and executive salaries had enjoyed unprecedented growth, much of it at the expense of jobs themselves and/or reduced incomes and wages. For those that didn't have a full-time secure job or were on low incomes, the only way to access the Dream was via the sub-prime route.
And once folks bought into the sub-prime American Dream and watched the value of their houses rising as the bubble got bigger, in response to seeing their real and actual take home earnings falling over the same period and after being lulled into a false sense of financial security, they then hocked themselves via further debt to maintain the fantasy of never ending prosperity. Keeping up with the Joneses' had never been a more expensive, futile or precarious endeavor, with Middle America increasingly assuming all the mythical, mystical aura of Middle Earth!
If You're not Cheating, You're not Trying
In that 20+ year lead up to the GFC then, it seems safe to conclude the following then. Never before have so many of the already wealthy few elites accumulated so much additional wealth they didn't need, had not earned and therefore didn't deserve, at the expense of so many others who could least afford it. Never before have so many ordinary folk been conned, then shafted so slowly, so inexorably and so unwittingly, by so few for so much for so long and with such dire consequences and lasting impact.
Moreover, never before have these "few" been aided and abetted by the negligence, incompetence and/or complicity of so many others who should have known better; [who] turned a blind eye and deaf ear; [who] were in on the game and/or getting a cut of the action in some way, shape or form; [who] should have done a hell of a lot more to prevent it; whose very job and civic duty required them to take effective remedial action; and who have never been held to account for their own actions and inactions, or for their crimes of omission or commission.
This was also a period punctuated and characterized by some of the most shameless, unrepentantly flagrant and fraudulent scams in America's and anyone else's history, none of which show any signs of abating anytime soon. As the Martens chronicle in a recent piece on the LIBOR case mentioned earlier, UBS actually drafted an instruction manual for traders, teaching them how to manipulate Libor to benefit trading positions of the firm. No doubt other firms adopted similar methods. The Martens also reported on the prevailing motto in financial services: "If you ain't cheating, you ain't trying," a trader's chat room mantra revealed in the recent FOREX charges brought by the U.S. Justice Department.
And whilst it also ushered in a period of unprecedented economic instability, uncertainty, chaos and fraud, for those who were willing to see it for what it represented, it also brought into sharp relief the existing inequality and socioeconomic divide in the Land of Opportunity -- indeed, across the Western world -- and created a scenario where that socioeconomic disadvantage, insecurity and disenfranchisement will become even more pronounced over time. And the more pronounced it has become, so too does it become more entrenched and accepted as the norm.
Of course we cannot emphasize enough that when the reality of the GFC hit home, a very large cohort of life-members of the free marketeers club had to face their putative worst nightmare -- unholy government intervention in the holy markets. Which is to say, all this from a bunch of folks whose once inviolable mantra was that the markets could, would, or should always sort themselves out when things go pear-shaped, and that government should just get out of the way and stay out. It would take a cold, cold heart indeed to not feel any empathy for the 'poor' sods when said "reality" did hit home, and that such "intervention" on a massive, unprecedented scale was their only option in order to stave off financial Armageddon, one that bears repeating, was of their own making.
In the fallout from the Train-wreck of '08 then, there was and continues to be much righteous indignation, hand-wringing, finger-pointing, existential angst and ardent analysis and reflection by all and sundry about everything from why it wasn't foreseen, how it could get so bad so quickly, who might be held accountable, how it might have been prevented, and what should be done to avoid it in the future. Doubtless such considerations will continue to be part of the narrative of the next election campaign, as will exhortations from respective candidates as to what they will do to restore the American Dream. But we've heard it all before haven't we?
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