Michael Olenick: The Real Origins of Trump – The Foreclosure Crisis

Yves here. If you didn’t have a chance to watch the recent Frank Luntz interview on Frontline, which Lambert featured in Water Cooler the week before last, please see the section from 10:35 to 12:30. Here Luntz focuses on how the Obama bailouts favored the rich and hung pretty much everyone else  out to dry. Luntz discusses how he had meaningful numbers of people breaking down in tears in his focus groups over foreclosure. This was a plague-level crisis in many communities in America that the press has chosen to pretend never happened. No wonder they are mystified as to why Trump won.

By Michael Olenick, a research fellow at INSEAD whose recent articles can be read at at innowiki.org

With the election coming up, I thought it’d be a good time to remind why some people voted for Trump in 2016, especially those who switched their vote from Obama to Trump.

As a quick reminder, Obama ran on and promised “Hope & Change” then, in the middle of the financial crisis, offered no hope and didn’t change much at all. He blamed some of it, rightfully, on Republican obstruction but the fact is he just wasn’t willing to rock the boat: he just didn’t try hard enough.

Some reminders…

The TARP bank bailout program promised help to homeowners, including a budget allocation specifically for that purpose. Despite the program only passed because of those provisions they were largely ignored.

Bailout King Timothy Geithner was put in charge of Treasury where he referred to struggling homeowners facing homelessness as “foam” on a runway. Reports are he felt bad for struggling Manhattanite bankers who faced the loss of their jobs and repeatedly lied that the goals of Wall Street and Main Street were aligned when they clearly were not.

White collar criminal defense lawyer Lanny Breuer was put in charge of prosecuting banking miscreants. He did nothing until the statute of limitations expired then promptly quit, showing up at his old gig – getting paid by the people he was supposed to be prosecuting – a week later.

People were losing their homes. Kids were sleeping in cars and pay by the night no-tell motels. Ordinary people were being run over.

As if the professional predators weren’t enough, an army of opportunists came out of the woodwork to chew up what was left of ordinary folk. Loan modification “experts” charged fees for nothing. Some foreclosure defense attorneys stole houses (though others were very good at what they did). At least one popular left-wing “investigative journalist” eventually admitted “everybody” interested in reducing foreclosures must be in it for something personally. When I told him the something was trying to prevent misery and homeless, he didn’t believe it.

This frustration, the betrayal from the right and the left, led to enormous anger. People wanted to burn something down and, at just the right time, Trump came down the escalator promising to do exactly that.

With that, here are a few stories I remember from that time about people I met. They’re all real so I’m not using their name.

G is a strikingly beautiful woman in her late 20s with a husband and two kids. They bought a house in a hip up-and-coming neighborhood to fix it up which should be no problem since he was in construction. When the bust came he lost his work, they couldn’t afford their payments, and the bank foreclosed. At one point over half the houses on their block were in foreclosure. As banks paid out bonuses they struggled to feed the kids. With a final hearing coming up, she wanted to make pornographic movies to bring in some money; he was adamantly opposed to the idea. They lost to the bank in a one-minute rigged rocket docket hearing. Soon after, a bank representative showed up at their door but rather than evicting them told them they could live rent-free for three years plus offering him a job taking care of the other foreclosed houses on the block.

J is in construction, a man in his early 40s. After work disappeared he was eventually forced to sell his tools to feed his family. With few tools left, an elderly man came by and asked what he was doing. He explained and the old man reminded him that without the tools, he’d probably struggle to find work. J agreed. The old man said it reminded him of the Great Depression except that “back then people cared about one another.” The man then gave him $20 for a beat-up screwdriver. They both cried. His family ended up living in a converted motel.

E was an immigrant, a single mom living the American dream who purchased a small house by the highway. She was talked into a refi with easily affordable payments by a fast-talking man who took advantage of her limited English. She agreed to help pay for daycare for her daughter. Eventually, the payments skyrocketed. A bankruptcy lawyer talked her into declaring bankruptcy and leaving her house despite that she had no meaningful assets, limited income, and foreclosures often took years at that point; she could have stayed in her foreclosed house a long time. She moved into a friend’s bungalow with a brothel on one side and a drug dealer on the other. The bankruptcy paperwork showed the bank claimed a loss greater than they actually suffered which was paid out by a stop-loss agreement with the federal government.

D was a foreclosure lawyer in charge of an enormous firm. He was a fraudster, overseeing the forgery of hundreds of documents a day. He took the “back office” of his law firm public through a SPAC, earning himself a fortune in fees, despite that non-lawyers may not own law offices. When key banking clients fled due to the fraud the stock price collapsed but by then he’d cashed out. The attorney general opened an investigation but, by then, the clients were gone and the stock nearly worthless. Eventually, he was disbarred but never prosecuted. He purchased 150 franchises for a popular hamburger restaurant.

There are countless people similar to those in the first categories and they were justifiably livid. They were ripped-off, used, abused, and then literally thrown to the curb like trash. Government officials did nothing to help them and failed to even protect them from scam artists and predators.

Yes, there are plenty of people who voted for Trump because he’s a racist. And lots wanted an autocrat. Plenty are grifters or wannabe grifters. A few are religious fanatics who want to establish an American theocracy and see Trump as a means to that end. But there’s a whole batch who just wanted to burn the crooked, corrupt, and rotten system to the ground. They wanted to let the bull into the china shop. Like many, I support Joe Biden and hope he wins. But I also hope that he does something to heal the still festering wounds from so long ago, along with the more recent ones caused by the pandemic. Trump didn’t create the hate; he just harnessed it for his own ends.

I’ve been living in France. Europeans used to be supportive of the US or angry. Now, they just feel the country is a pathetic mess. Every European country has suffered through crooks and crazed rulers over the years so nobody feels like the US will permanently fall apart; they know countries eventually self-correct. However, they also know the setbacks are personally painful and the damage can last a long time.

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  1. Michaelmas


    And it was worse than this. To help the banks repair their balance sheets, Geithner, Breuer, and Holder allowed the American TBTFs to launder drug cartel money. That’s why HSBC thought it could get away with it — because they all were doing it.

      1. TomDority

        None of what the banks did was dumb – that is a meme the banks pushed out – who could have known – nobody saw it coming – etc. was carefully crafted to keep the crooks from serving jail time.
        What they did was deliberate and carefully thought out

    1. D. Fuller

      IIRC, Hillary Clinton was part of crafting some minor legislation opposed by women’s rights groups, to justify her support for the bankruptcy legislation. Yet, she was absent the day of the vote.

      Never forget that Republicans are primarily responsible for the bankruptcy legislation, with key Democrats being enablers of Republican malfeasance.

      Biden. From Clarence Thomas to Bankruptcy Legislation to TBTF Bankers to family embroilment in pay-to-play schemes involving China.

    1. Oh

      This only goes to show how bad out judicial system is. It’s as corrupt and uncaring as the other two branches of government.

      1. Intelligent yet idiot

        Equality of justice is annihilated by the cost of litigation, there is no justice for the poor.

      2. TomDority

        Our Judicial system is good but manipulated by criminals like – Intelligent yet Idiot says…

  2. Lemmy Caution

    “Yes, there are plenty of people who voted for Trump because he’s a racist. And lots wanted an autocrat. Plenty are grifters or wannabe grifters. A few are religious fanatics who want to establish an American theocracy and see Trump as a means to that end. But there’s a whole batch who just wanted to burn the crooked, corrupt, and rotten system to the ground.”

    All true, but not everyone voted for Trump for purely negative reasons. I, for one, voted for him in 2016 for his stance on specific policies:

    Stop the endless regime-change wars
    Rebuild American infrastructure
    Avoid/renegotiate crappy trade deals
    Fix the healthcare system
    Throttle back unfettered immigration

    Of course Trump failed to deliver on many, many counts, but at least he addressed fundamental issues that few others even acknowledged.

    1. Yves Smith Post author

      Even though we most assuredly did not vote for Trump nor were we keen about him, we did acknowledge at the time a rational basis for preferring him to Clinton was that Hillary’s repeated statement that she would declare a no-fly zone in Syria, which was tantamount to launching a hot war against Russia.

      1. KLG

        “a rational basis for preferring him to Clinton”

        Something my peeps in the PMC cannot and will not believe, that is until The Man comes for them. They cannot and will not see him walking up to the front door as we speak.

      2. David in Santa Cruz

        I voted for neither Clinton nor Trump for the reason stated above — fear of a hot war with Russia in Syria. I can only now publicly admit that I felt an enormous sense of relief when Trump won, although many of my then-colleagues were in the halls openly sobbing. I felt that Trump might blunder into war through incompetent mismanagement of the Empire, but I dreaded that Clinton had fallen in love with war. Serbia, Gaza, Libya, and Syria were disasters, although engineered to minimize American casualties while maximizing arms sales — and the suffering of civilian populations (who were supposed to somehow decide that we were their “friends” for bombing them).

        However, I believe that the army of nearly 10 million 2008 Obama voters who failed to cast presidential votes at all in 2016 was mostly comprised of the cohort so well-described here by Olenick — people who felt abandoned by the system that Obama had promised to fix.

          1. Louis Fyne

            Replace France with Main Line, PA or Westchester Cty, same difference—a practical different world than hundreds of millions of Americans

        1. D. Fuller

          Up to 8 million Obama voters turned out for Trump in 2016.

          Where does the 10 million come from? I’m simply interested. If that is true… Democrats lost 18 million voters in 2016. Yet, Hillary ended up with 3 million more votes than Trump.

          Obama received 65.9 million votes in 2012. Hillary Clinton received 65.8 million votes in 2016. And this is with up to 8 million Obama voters defecting to Trump. Which means many Republicans voters decided not to vote, to be replaced by Obama voters. With newly registered and some Republican voters going to Hillary.

          Or, perhaps 6 million Republican voters defected to Hillary to be replaced by Obama voters.

          Democrats really did defeat themselves in 2016. Aided by successful – only just so – Republican voters suppression efforts. Efforts that Obama defused with a massive voter registration drive, that Hillary failed to implement.

          Trump garnered 62.9 million votes when Romney received 60.9 million votes.

      3. Joao Bispo

        I think that rational basis only applies if your life was not in danger because of what Trump promised, as it happened to many people during the 4-year term.

    2. Oso_in_Oakland

      Lemmy Caution

      “Throttle back unfettered immigration” so you chose to vote for the republican to continue Obama’s policy of deporting indigenous people at a prodigious rate while also putting us in cages. Interesting. Why not allow Clinton to continue that policy while ignoring your other stated policies as it was obvious to all and sundry that Trump would also ignore them.

      1. tegnost

        Not trying to pick a fight, but I don’t think refugees from honduras can be considered indigenous to the usa, indigenous to honduras yes. I don’t see the Makah tribe being sent to canada.

    3. Lambert Strether

      > Avoid/renegotiate crappy trade deals

      Trump axed TPP in his first days in office. If you think it would be bad to have multinationals suing the United States (and State government) to roll back laws they don’t like in ISDS so-called courts where the judges, the prosecutors, and the defense are all from the same cohort of international trade lawyers, that was an enormous win.

      It will be interesting to see if, for Biden, “restoring the soul of America” would involve restarting TPP. Biden does have form.

      1. tegnost

        Yes, axing TPP was an unheralded good thing…same with ditching the insurance mandate, and both were considered “the gold standard” (whose gold?) by the obama/biden administration. I expect that at least the TPP will come back. Indeed there is likely a long list of hegemonic goals that have been sitting on the shelf since 2016 waiting for the grown ups to pick up where they left off.

        1. Equitable > Equal

          A lot has changed in the years since; I don’t know that there will really be another TPP-scale agreement for a long time (Not in the west anyway)

  3. caucus99percenter

    In former East Germany, non-PMC people have many roughly similar untold stories about being taken for a ride, or sometimes totally to the cleaners, during the post-reunification “Treuhand“ period by well-connected nouveau elite and/or slick pitchmen and carpetbagging investors from the West, taking advantage of their marks’ inexperience with the new economic and legal system and its loopholes.

    The Cass-Sunsteinian, Atlantic Council-guided “nudger” types in German mainstream media would have you believe AfD voters are all racists and Nazis, but that’s far from being true.

  4. LowellHighlander

    Mr. Olenick’s article here is a genuine public service – up to a point. But, how can he explain on one hand how the Obama Administration caused such mass misery [needlessly, I might add] and then on the other implicitly endorse Obama’s Vice President? It’s not as though an alternative doesn’t exist; one does.

        1. Arizona Slim

          Which is precisely what I did, right from my couch in Tucson, Arizona. (Come get me, PMC, because I truly am evil.) I voted third party for POTUS, and I don’t feel the least bit guilty about it.

          Down ballot? Well, there were a lot of people running unopposed. Seat warmers, that’s what they seem like to me. So I didn’t vote for any of them.

          Propositions? Oh, hell yes. The propositions. That’s how I voted on all three of them — legalizing marijuana, restoring funding for public schools, and more money for our local community college, an institution I have personally benefited from.

        2. bassmule

          Let us stipluate that from a population of 330 million, the best the system could come up with was two wretched shysters. There, the similarities diverge: Do you want Gangster or Zombie? Because it’s going to be one or the other. I’m going with Zombie, if only because he doesn’t endorse mass murder, aka “herd mentality.”

          1. Lambert Strether

            Zombie bites create more zombies, a multiplicative process. Hence empowering zombies creates the risk of ruin. The precautionary principle therefore demands you vote for the gangster.

            Kidding… But not entirely.

        3. Carla

          Me, too. Third party for president. But here in Ohio, I consider by the far the most important votes I cast were for Jennifer Brunner and John P. O’Donnell, both Democrats running for the Ohio Supreme Court.

          All elected state offices and the great majority of legislative seats are held by Republicans. In 2018, we finally got two Dems (and good ones) on the state Supreme Court. Electing Brunner and O’Donnell, both excellent judges in their own rights, would mean a Democrat majority on the Ohio Supreme Court for the first time since the 1980s. I am no Democrat, but we REALLY need that as a check on one-party in Ohio. Please, wish us luck.

          1. Michael McK

            Good luck! You provide a good example of ditching the status quo yet still participating electorally, thank you.

      1. LowellHighlander

        Howie Hawkins and Angela Walker. If they don’t appear on the ballot in your state – the Dems successfully got them kicked off the ballot in Wisconsin and Pennsylvania – you can write them in. Why throw your vote away?

        1. Arizona Slim

          And those are the third party peeps I voted for. They’re official write-in candidates here in the AZ. So, I wrote ’em in.

            1. Carla

              Moi, aussi. Thanks to Jennifer Brunner (whom I mentioned above) when she served as Ohio Secretary of State, Howie Hawkins and Angela Walker were on the Ohio ballot as well.

              1. Late Introvert

                Hawkins/Walker on the ballot here in Iowa as well. Dem Rats got my down ticket votes for Senate and House, but both are new candidates so get one chance to prove themselves. Likely I won’t vote for them again after they have a record in office. Dem Rats.

        2. lcn


          And what’s the possibility in the present scheme of things that this third party candidate will actually be able to hold the levers of power and enact progressive policies?

            1. lcn


              Well, he said as much that he’s the Democratic Party.

              Progressives’ job now is to hold his feet to the fire once he’s in office and get as much policy victory as possible.

              Other than that I don’t see any alternative other than burn the whole place down.

              1. tegnost

                He said he’s the dem party, he didn’t say he’d be progressive.
                See the sneering tone with which any one of your TDS infected friends
                remarks on bernie sanders. We’ll know in a week or so at any rate and I will be unsurprised when his staff is the usual suspects. The dog is about to catch the car.

              2. ambrit

                The unacknowledged mood festering in the public sphere now is one of; forget about holding ‘their’ feet to the fire, just tie ‘them’ to stakes in the town square and burn the lot entire.
                If, or more accurately, when, the Dreaded Pathogen flares up again this Northern Hemispherical Winter, whoever “wins” this election will suffer the wrath of an enraged populace in proportion to the inadequacy of the response to the crisis. From what we’ve been seeing of the proposed policies going forward, that ‘event’ should be significant and chaotic.

                1. lcn


                  I pray to my favorite god Odin that the event you anticipate will actually transpire.

                  The tying of feet, I mean.

          1. D. Fuller

            No talk of 3rd party voters.

            3rd Party voters who vote consistently, politicians truly despise.

            Those 3rd Party voters can decide to suddenly vote against the incumbent politician in an election resulting in the defeat of the incumbent. Pollsters have an incredibly difficult time gauging the sentiment of 3rd party voters, in relation to supporting D’s or R’s.

            Which is why both parties expend so much energy convincing American voters that there are only two parties of consequence – who often act like one party.

            Want fear in an American politician? 3-6% of his or her constituency voting 3rd Party. That would usually be enough to sway just about any election. If those 3rd party voters were to be sufficiently offended enough to vote for the incumbent’s opponent (D or R).

            3rd Party voting is not useless. The more, the merrier. The more the incumbent politician has to fear.

            Ross Perot winning 20% of the popular vote was the greatest scare of both The Democratic & Republican parties, in generations. Since at least 1932 when Socialist and CPUSA were gaining ground among voters thanks to Rapine Capitalism. FDR stole the Socialist and Communist thunder with simple Capitalist oriented programs (along with Social Security), hobbling both movements.

            3rd Party voters are hated and despised. Swing voters who swing between D & R are actually sought out by either party.

          2. Glen

            When the Green party POLICY takes enough votes to SWING an election, then the losing party should have SOME CLUE as to how to WIN elections.

            Now that assumes that the parties actually LISTEN to the voters, but they don’t. But to argue that voting for a third party is wasting your vote is wrong. What we need is MANY MORE PEOPLE voting third party.

  5. Sound of the Suburbs

    Western liberalism’s descent into chaos.
    1920s/2000s – neoclassical economics, high inequality, high banker pay, low regulation, low taxes for the wealthy, robber barons (CEOs), reckless bankers, globalisation phase
    1929/2008 – Wall Street crash
    1930s/2010s – Global recession, currency wars, trade wars, austerity, rising nationalism and extremism
    1940s – World war.

    The assumption that capitalism is a self-stabilising system is very dangerous and everything actually just falls apart at the seams.

    Neoliberalism was supposed to be new, but the changes were just cosmetic, so things played out the same way.
    Right wing populist leaders are what we should expect at this stage in the descent into chaos.

    They use bank credit to bring future spending power into today.
    They use it to pump up asset prices, e.g. real estate and stocks, and maintain demand on low wages.
    Early success comes at the expense of an impoverished future, and this is when the trouble starts.
    They still don’t know how banks really work and this is the problem.

    Banks – What is the idea?
    The idea is that banks lend into business and industry to increase the productive capacity of the economy.
    Business and industry don’t have to wait until they have the money to expand. They can borrow the money and use it to expand today, and then pay that money back in the future.
    The economy can then grow more rapidly than it would without banks.
    Debt grows with GDP and there are no problems.
    The banks create money and use it to create real wealth.

    1. Upwithfiat

      The current banking model is a relic of the Gold Standard and is just as obsolete and inherently corrupt.

      We can now have the honest lending of actual fiat since it is inexpensive and easily created and IF that fiat is created ethically (e.g. an equal Citizen’s Dividend) and other privileges for banks removed then no one is cheated.

      1. Wukchumni

        The current banking model is a relic of the Gold Standard and is just as obsolete and inherently corrupt.

        What was inherently corrupt about the Au standard?

        1. Upwithfiat

          That fiat was needlessly expensive for one thing. That it favored private interests such as gold owners and fiat hoarders is another. That it justified special privileges for banks is yet another.

          And then there’s the needless environmental damage of mining gold to waste it as coins or rebury it in Central Bank vaults.

          1. Wukchumni

            Oh, I see.

            Because it cost nothing other than a few keystrokes, fiat money is a much better arbiter of value, got it.

            1. Upwithfiat

              The value of fiat is determined by the supply and demand for it.

              Then note that the demand for fiat is unjustly suppressed in that only banks may use it in account form, not the non-bank private sector, including individual citizens and state and local governments.

              And wasting time, energy and the environment is no way to add value to anything. Rather, it has been a means to loot value from others.

              So requiring a few keystrokes is a benefit so long as the fiat is created ethically and all citizens may use it with no privileges for private interests such as the banks and asset owners.

                1. Upwithfiat

                  A fixed money supply is a means for lazy, risk-free gains from price deflation and also a means to enslave the young to the old via a money supply that does not keep up with population growth – thus driving down wages.

                  So a fixed money supply is anti-progress as well as unjust.

                  Also, Cantillion effects are minimized via an ethical money (fiat plus bank deposits) creation system.

                  Besides, you apparently have no problem if fiat is created so long as it is needlessly expensive and thus benefits private interests.

                    1. Upwithfiat

                      There is no inherent money neutrality, such neutrality must be constructed by institutional arrangements. Much of the New Deal in the 1930s and 1940s was designed to build alternative channels for lending so that small business, industry and individuals could have access to money as quickly as big banks.

                      The Reconstruction Finance Corporation, government procurement, the Federal Housing Administration, the Federal Reserve, agricultural credit supports, Federal Home Loan Banks, credit unions, and regulations like Regulation Q were all mechanisms to insure the flow of money would be neutral. Matt Stoller

                      Assuming one is so-called “credit worthy” of what is, in essence, still the PUBLIC’S credit but for private gain. But what about those who can’t or won’t borrow? Shall they be the net victims of Cantillion and other effects?*

                      *Such as their jobs being automated away with finance that bypasses the need to borrow their savings.

                  1. Wukchumni

                    There was no fiat paper money in France when Cantillion was around, and he was an important player in John Law’s scheme, which was backed by French bonds, and interestingly the value was based on revenues from real estate in the new world, similar to the assignats (they were fiat) of the 1790’s which were based on the value of real estate owned by the Catholic church, in a kind of early MBS if you will.

                    Needless to say both epochs ended in utter financial catastrophe.

                    Assignats started with modest amounts of currency issued @ 400 million Livres, and just 6 years later the total amount issued was close to 50 billion.


                    1. Upwithfiat

                      Dillaye wrote that the British, Belgian, and Swiss counterfeited the currency industrially: “Seventeen manufacturing establishments were in full operation in London, with a force of four hundred men devoted to the production of false and forged Assignats.” from https://en.wikipedia.org/wiki/Assignat#:~:text=Assignats%20w

                      Gold and silver might have been useful to thwart counterfeiting back then but they are long obsolete and needlessly expensive for that purpose now.

                      Moreover, government privileges for banks allow them to, in essence, lend counterfeit money into existence, which is arguably worse than simply spending it into existence because of the resultant boom-bust cycle.

                      So let’s deprivilege the banks and not favor restrictions on the creation and use of fiat that EMPOWER them, eh?

                      Or do you favor continued enslavement to private banks and to the rich, the most so-called “credit worthy”?

        2. D. Fuller

          What would the size of a gold coin be if every person on Earth had exactly 1 gold coin? How many ounces?

          There is not enough gold in the world to be divided enough to support the world economy. Valued at $50 trillion.

          Manipulation of gold is even easier than manipulation of fiat currency. In addition, when the dollar was at its most strongest prior to 1972 or 1932? The dollar was not backed by gold. The United States has not always been on a gold standard.

          Now that gold has utility in industrial processes? Eventually, more will be lost than found.

          1. Wukchumni

            For what it’s worth dept:

            The commonest money in these United States was what were called ‘National Banknotes’ and 12,635 different banks issued them.

            From 1863 to 1935, National Bank Notes were issued by banks throughout the country and in US territories. Banks with a federal charter would deposit bonds in the US Treasury. The banks then could issue banknotes worth up to 90 percent of the value of the bonds. The federal government would back the value of the notes—the issuance of which created a demand for the government bonds needed to back them.

            The program was a form of monetization of the Federal debt. Bonds eligible as collateral for posting to the Treasury were said to have the “circulation privilege” and the interest they bore provided seigniorage to the National Banks.


        3. Sound of the Suburbs

          We always worry about there not being enough money to pay for things.
          Weimar Germany and Zimbabwe didn’t have that problem.

          Weimar Germany and Zimbabwe had created far too much money compared to the goods and services available within the economy causing hyper-inflation.
          States can just create money, and the last thing you want is too much of the damn stuff in your economy.
          They had made so much money it lost nearly all its value, and they needed wheelbarrows of the stuff to buy anything.
          Money has no intrinsic value; it comes from what it can buy.
          Money is just an instrument for carrying out transactions in the economy.
          If you have too much of it, you get inflation.
          If you don’t have enough, the economy slows down as there isn’t the money to carry out all the transactions necessary.
          Central bankers actually look at the money supply, and expect it to rise in line with the new goods and services in the economy, as it grows. More goods and services in the economy require more money in the economy.
          This is the problem with gold; it ties economic growth to gold acquisition and does tend to be deflationary.

          People with money like the gold standard, as money increases in value in a deflationary environment.
          People with debt, find their debts grow and become unpayable in a deflationary environment.

          1. Upwithfiat

            You neglect that the non-bank private sector may not even use fiat except for grubby coins and paper Central Bank Notes.

            Then how can fiat cause price inflation?

            It can’t since the economy largely uses bank deposits, not fiat, and the banks create those too when they “lend” (“Bank loans create bank deposits”).

            So tell the whole story: It’s bank deposit creation that may cause price inflation and while deficit spending creates (for the present) bank deposits so does bank “lending”.

          2. Wukchumni

            States can just create money, and the last thing you want is too much of the damn stuff in your economy.

            Not quite, only the Federal Government can create money…

            This is the problem with gold; it ties economic growth to gold acquisition and does tend to be deflationary.

            The value per oz hardly ever varied from 1795 to 1933, it was incredibly stable from around $19 to $20, thus no inflation to speak of. This was the same scenario all over the world.

            And by the way, nearly 2/3rds of all above ground all that glitters has been mined since 1950, there’s plenty to go back to the future, if we have to.

    2. D. Fuller

      1907 Panic/2007 Panic – JP Morgan/Bernanke provide liquidity to the market.

      Bernanke was hailed as a genius who managed to do something that no one else had ever done. Utter bullsh*t. Self-stroking into orgasmic bliss by the PMC. Like awarding a Nobel Prize to a Presidential warmonger.

      The 1907 Panic was fundamental in the establishment of The Federal Reserve. The 1929 Stock Market crash was caused by The Federal Reserve withdrawing money from the supply. Loans had to be called in.

      The same situation exists today. QE provided the liquidity. Withdrawing the money would crash the market.

      As long as the PMC Bubble exists – supported by financial bubbles and fear bubbles (the Russians!, QAnon, etc)? Not much will change.

      The only consistency in Capitalism is that Capitalists repeat the same mistakes – hardly efficient. By running the same scams. As you noticed, dressed up in new jargon and makeup. Lipstick on a pig.

      Capitalism has its uses – providing “wants” (iPhones, Xbox, PS, etc).

      Capitalism has limited utility use in providing for “needs” – oxygen, water, food, public utilities, etc.

      Capitalists and Capitalism are best kept on a leash with spiked collar, the better to choke them with should they think above their station.

      Capitalism is only sustainable for so long as cheap basic & raw material inputs are available. The cheap “raw material” for Capitalism now? Is not materials. It is labor. Hence why Globalism is code for labor & regulatory arbitrage to generate profits.

      Without such arbitrage? There are very few large and medium sized companies in America (or anywhere for that matter) that would turn a profit. They would be in receivership.

  6. MartyH

    And Trump, Mnuchin, and Powell made the same “mistake” in 2020. All such Genius Politicians and Populists. Any questions about why this isn’t an election issue?

    1. D. Fuller

      What would Mnuchin be without Kamala Harris, if she would have prosecuted him and won?

      What would Trump be without Obama & The Clintons?

      Both would probably be where they were in 2012.

  7. Larry

    This short article is very on point. One would presume that a similar story is playing out now for many people as Trump’s economy is only about the S&P500 and stonk charts on TV, not the actual lived experience of our people. And yet, when these down trodden and forgotten people get a chance to vote, they’ll see a direct member of that failed Obama administration, claiming to be something new.

    The Trump movement is beyond rationale now. I have a cousin who is proudly going around unmasked in Wildwood NJ and boasting about it on social media. He believes we’re living in a “scamdemic” that was invented to crater the economy so Trump will lose. There is no reaching or rationalizing with somebody like this, and I fear that a very large part of the US population feels this way.

    So there still remains this deep, open passion for Trump as a symbol of something lost while Biden garners no passion whatsoever. I barely see Biden signs here in deeply blue Massachusetts. There’s sort of a feeling that this vote is just anti-Trump, not because they believe in anything Biden will accomplish.

    1. Lambert Strether

      > There’s sort of a feeling that this vote is just anti-Trump, not because they believe in anything Biden will accomplish.

      Hope and change in 2008 was sold by a con man of genius. Hope and change in 2020 is being sold by a con man…. of not genius.

      1. marku52

        A sign down the block…
        “Settle for BIden”

        Tho in general, way more BIden signs this year than there were HRC signs in 2016

  8. timbers

    And yet, he wrote that he supports a guy who was part of the policies he just linked to the pain he sees, in the hope that person will correct them.

    1. lyman alpha blob


      I will never understand that calculation, and we see it every election cycle. To me, voting for either of the major parties just gives the corrupt system legitimacy, and without hand marked ballots hand counted in public, I am coming to believe that the act of voting itself gives the system legitimacy it does not deserve.

      Ranked choice voting would be a good alternative. I’m interested to see how many people in Maine, which recently started using ranked choice voting, will put a 3rd party candidate as their first choice in the wretched Senate race we’ve been subjected to for years now between Collins and Gideon. Any sympathy I may have had for Gideon has gone right out the window after a relentless barrage of half truths and blatant falsehoods financed by who knows what corporate cash for well over a year now. She was running ads directly against Collins way before she had even won the Democrat primary, pretending her more leftwing opponent didn’t even exist. No way that more than a small fraction of the money spent on this senate campaign came from actual Maine residents.

  9. Chris Herbert

    Good intentions are a start. Not sufficient, but required. I don’t think our current President has good intentions.

    1. Michael Olenick

      This. I’m not in love with Joe Biden. I don’t think anybody besides his wife and kids are. He doesn’t inspire much in the way of emotion, voted for the disastrous bankrupt “reform” act of 2005, voted for the mandatory prison rules that caused the US to have a higher percentage of people locked up than Stalin, and took lots of money from the multinationals headquartered in Delaware where he’s from. Still, he’s far better than DJT – a transitional President (if he wins). Those family separations, Muslim ban – the grifting. Just today, the Labor Dept. apparently finalized a rule that retirement-funds could only consider risk and rewards and specifically prohibits them from analyzing environmental and social impact. They’re mean to the core.

      1. Oh

        Michael, thanks for your article. Unfortunately, Biden is doing what you’re saying – running as “I’m not Trump”. However, that’s not going to cut it. We need a people’s President and a reformer and neither one of these parties can provide it.

      2. timbers

        Really liked the emotional impact of the video, of foreclosures on families and it’s contribution to the back lash, Tea Party, 2018 elections, Trump. It’s clear to me, that you are one of us and I mean that it a complementary way.

        One thing don’t agree with, is idea adding “insurance” to the ACA public relations push AND the idea that Obama needed Republican cover to pass anything.

        Firstly, no cover needed. Just Do It. Look at FDR. The voters wanted results not cover, bipartisanship, etc. They don’t care about process.

        Secondly, that insurance isn’t healthcare, that insurance is a parasitical worm that needs to be bypassed (not banned just bypassed) to enact a truly effective universal healthcare for all Americans, and must be bypassed to achieve the much lower costs we see in nations with national healthcare for it’s citizens.

        Instead, what Obama did is construct ACA with the parasites – the insurance industry and Big Pharma – to write his law in secret. Which by the way is a 100% U-Turn on his promise to hold crafting the law in public on national television.

      3. Noone from Nowheresville

        They’re mean to the core.

        @Michael Olenick: I can buy that but if there are really two parties and a difference in eventual outcomes between them, then where’s the resistance? What has that looked like for the last 4 years?

        1. John Wright

          Someone at NC characterized the two parties in this way:

          “The Republicans are evil, the Democrats are cruel.”

          Both parties are for endless war (with the poor “economic” volunteers getting harmed) and both parties had to be pulled, by state voters, into lessening the drug war inequities by legalizing marijuana in some states (but Obama’s Eric Holder initially wanted to enforce the federal laws).

          Both parties will do little about climate change, because the economy.

          But the Democrats will pass symbolic legislation that will avoid significant changes.

          At least I won’t be approaching the Biden administration with the hope I had in 2009 for Obama.

          Slow learner me, I actually listened to Obama speeches for about 2 years before giving up on him.

          I will be avoiding Biden speeches from day one, while observing who he installs in his administration and what legislation/wars he promotes.

          Maybe the Biden voters are hoping that the future President Harris will be a positive, despite her priors.

          1. Arizona Slim

            It’s okay, John. I listened to Obama speeches for a couple of years before throwing in the towel.

      4. George

        and they are particularly hard on the smaller animals.
        Trump administration removes gray wolves from federal Endangered Species Act protection.

      5. Lambert Strether

        > [Biden will be] a transitional President (if he wins)

        I agree. The question is transition to what. The difficulty is that a large part of the Democrat base has lost its mind, via Russiagate (hence proving that the same play can be run as often as needed by the same players, with different content). I don’t see how it’s possible to expect good outcomes in such a case: GIGO.

        (That’s not to say that a large part of the Republican based hasn’t lost its mind.)

        1. Ranger Rick

          Is there anything to transition to? The only signals I’ve seen from the Biden campaign are for more neoliberalism, but this time with glowing reviews from the press. Quite how Biden intends to “fight for things that matter” (actual Biden campaign ad) on austerity, and with the expectations after inauguration of fully reversing and replacing all of Trump’s appointees, I don’t expect we’re going to see much of anything for the first two years save some handshakes with prominent checkboxes and solemn but utterly unconvincing declarations to reform mandatory prison sentences. Perhaps we hoi polloi get some breadcrumbs in the form of tax credits for quarantine-related expenses. Meanwhile, on Wall Street . . .

          Some of the wilder fantasies I’ve heard extend to retroactively punishing everyone who ever voted from Trump. Quite what form that would take is an unpleasant thought exercise, but I have to keep in mind that we’ve been looking at Big Data style election maps for years that are granular down to the county level.

          1. Skip Intro

            I think the way it could play out, supposing Biden wins, is that he ushers in a new era of bipartisan harmony, with a few trickle-down props for the revolting masses, and champagne for the pols and their owners. Cue budget hysteria and hard choices, Joe finally gets his social security cuts, albeit posthumously, and a big ratchet jump to the right ensures that the GOP victor of 2024 will be far worse than Trump. This is the natural transition of capital’s ownership of resources to the direct control of a corporatist government.

  10. Hayek's Heelbiter

    What a great summation!
    Well, duh-yeah.
    But try to explain this to an Obamabot. Then duck!

    1. jef

      Here is how I explain it to them;

      Obama, using tax payers money, paid off the millions of mortgages in default at a low negotiated rate saving the banks and the paying off the shareholders but still allowed the banks to kick out the home owners. Then later the banks sold the homes at bargain basement prices to hedge funds, private equity funds, and the millionaire shareholders who then rent them back to the foreclosed upon people at higher rates because they are high risk after having gone through foreclosure/ bankruptcy.

      Oversimplified I know but it gets them thinking.

      1. Patrick

        That’s not over-simplification. It’s incomplete though. You could have kept on, citing further examples of how badly Main Street was and is getting screwed. Give people even more to think about. For example, you could have mentioned how the financial institutions also used some of that TARP bailout money that was given to them and loaned it back to us at usurious interest rates. When you speak of foreclosures you could mention the $300 million dollar net worth of our current Treasure Secretary, Steve Mnuchin, aka “the foreclosure king”. He’s been busy behind the scenes on Wall Street, helping position the world’s largest asset management firm, Blackrock, who have been appointed by the Fed to buy corporate bonds and commercial mortgages, provided with $27 trillion dollars and oversight of a hefty Wall Street slush fund. That was 6 months ago though and I don’t know how much more money they may have received since. Despite his busy schedule and behind the scenes industriousness, Mnuchin does make the occasional public appearance. Most memorable to me are the recent ones in which he expresses how Main Street should expect less in the way of financial assistance during this pandemic. He enumerates the reasons why such largesse simply can’t go on. When this is all said and done will someone be given the crown and anointed the “Eviction King”? Perhaps eventually to become our next Treasure Secretary? You aren’t over-simplifying by stating in plain language that which is intentionally obfuscated. Like the language used for the financial instruments that served as the tools to disassemble our economy, so cryptic and complex that I’ve heard they had to be invented by MIT mathematicians. That’s the point I’m trying to make. I meander, hopefully not too far off course, because what I’m aware of invokes a sense of anger and outrage that tends to snowball. I think George Carlin had a point when he spoke the words “rich white men invented a language to hide their crimes”. So come to think of it, over-simplify all you want. People will start thinking, perhaps gain some awareness, become angry and outraged, and rightfully so. Maybe they’ll realize that voting for someone like Trump or Biden won’t offer a solution.

    2. bad-egg

      Its your government you created it so why complain when it goes astray,one party is no different then the other they just feed it to you in a different way while blaming the other guy,as the man said if voting really mattered they wouldn’t let you do it,and more and more are seeing it and staying home.!!!

  11. Noone from Nowheresville

    I’m not a Trump fan and I’m certainly not a Biden fan but I gotta say that if one voted for Trump to burn the whole place down. A lie of course. One got something for their vote. My gosh, how the PMC/Democrats/what should the label be here carries on about decorum. I’d say real issues but most didn’t care before Trump did it and they probably won’t care once he’s gone.

    The hair pulling, the wailing. It’s so very personal to them. An aside question: But why is that? You’d think that Trump invaded their homes and personally assaulted them. Added bonus is that people who got hit with the bipartisan tax overhaul aka the SALT tax piece are part of that wailing class. Yes, yes, we all know that this will eventually be reversed and the previous years of taxes will be returned (huge hits to state & local budgets coming soon so double screw for the rest of us) but hey, for a while there it was really something.

    Either way one is pretty much screwed. The question is whether or not getting “Democrats” to pull out their hair, kick and scream is worth the personal pain. On the other side it’s about decorum. Screw me over as long as you do it with the very proper only in public manners. We learned that with Obama. Thinking Biden will be any different completely ignores his almost half-century record in politics. Are they projecting or just part of the class that believes they play by the rules so will be protected?

    The thing is that buy-in is high this year if the 65% of the electorate is in the ballpark. Polls are worthless with those kinds of numbers as Minnesota learned with Ventura. If or when things actually start to hit the fan in a can’t be ignored way, potentially much worse and much more public than last decade’s foreclosure tragedy (nope not a crisis the elite weren’t touched), what will this newly invested electorate do?

    Basically it’s tails we lose, heads we lose.

    1. tegnost

      Are they projecting or just part of the class that believes they play by the rules so will be protected?

      They’re the class that believes they make the rules
      That’s why they’re so angry…

      1. Noone from Nowheresville

        So if the rule book suddenly gets thrown out in an unexpected way… yes, I definitely see how that would be terrifying to the rule makers.

        Ya know, tegnost, I really don’t like this game or these rules anymore. I desperately want another way and fear the way is marked by the dead and require a King to pass or a hobbit willing to sacrifice his life for his friend, who I suspect at least partially thinks of him as his servant.

  12. Watt4Bob

    No mention of the current Secretary of the Treasury Steven Mnuchin?

    Otherwise known as the foreclosure king?

    From the linked article, The Hill;

    Sen. Tammy Duckworth (D-Ill.) did not hesitate to call Mnuchin “greedy” and “unethical.” She backed it up with these blunt words: “Whether illegally foreclosing on thousands of families, skirting the law with offshore tax havens or helping design tactics that contributed to the 2008 financial crisis, Steve Mnuchin made a career — and millions of dollars — pioneering increasingly deceptive and predatory ways to rob hardworking Americans of their savings and homes.”

    1. Yves Smith Post author

      I’m no fan of Mnuchin, but Mnuchin invested in OneWest. He was not the CEO of OneWest. Warren Buffett invested in Bank of America when it was trading at $6 and its yield IIRC was 6.5%.


      And Bank of America didn’t change course one iota as a result of the Buffett buy. Buffett, as you may recall, is a Democratic Party backer and regularly appeared with Obama. Bizarrely, Obama even gave Buffett as a tie in 2010!




      In other words, Obama was hanging out with the richest man in the US while Obama was ignoring foreclosure pain. Oh, and Buffett was already an investor in Wells Fargo, which kept pretending it was a less abusive servicer than other big banks, which we repeatedly documented at the time based on whistleblower leaks was false. Wells Fargo also had far bigger market share in servicing than OneWest and harmed more borrowers than OneWest.

      You can see here that the BofA settlement with the OCC for foreclosure abuses was $2.88 billion versus $1.991 billion for Wells. OneWest was not required to participate in the Independent Foreclosure Review settlement in 2013 when Obama was still in office. OneWest was not even remotely one of the top five subprime servicers; recall Merrill had purchased Franklin and Goldman bought a particularly horrific servicer, Litton. I’ve spent 10 minutes on Google and can’t find a ranking back from 2010 to 2012, but this confirms that OneWest didn’t rate a mention as one of the bigger boys:



      So are you upset about him? As we documented at the time, Bank of America, per the OCC’s botched effort to compensate homeowners for foreclosure abuses, Bank of America was responsible for vastly more foreclosure abuses than any other bank.

      And icon of the left, George Soros, was also a OneWest investor, yet no one talks about him profiting from homeowner misery:

      On March 19, 2009, a seven-member investor group, IMB Holdco, led by Steven Mnuchin—which included billionaire Christopher Flowers, John Paulson, Michael Dell, and George Soros—purchased Independent National Mortgage Corporation (IndyMac Bank) of Pasadena, California for $13.65 billion from the FDIC and created OneWest.


      1. Watt4Bob

        No, I’m not focused on Mnuchin because I think he’s the worst of the parasite class, I mention him because he happens to share gate-keeping duty with Pelosi as concerns federal aid to the sinking main street economy.

        It’s simply my reflection on the current state of affairs, being forced to choose to march back into the desert in order to avoid going forward into the firestorm.

        1. Michael

          Imagine Pelosi and Kamala being gate keepers together. Ugh!

          Neither can deliver a reasonable deal for average people.

          Remember the past or repeat it.

      2. Alex morfesis

        But…coutryside bank…now commonly known as 1 west…had an asiento…countrywide securities Corp…a primary dealer since January of 2004… technically part of countrywide Mortgage but the two entities, cwm and indymac, danced hand in hand…July 2008 was the end of the beginning in the “grand conversion” cka “the great recession”…cw could not be allowed to just flame out…too many derivative counterparty positions tied to that “asciento”…

        b of a absorbed the CP risk when it ate cw and Merrill…

        1. Yves Smith Post author

          No, BofA purchased Countrywide. That is why its mortgage settlement #s were so massive (that plus the servicers Merrill had purchased).

    2. chuck roast

      Thank you for opening the gates to my personal bete-noir – the entirety of corporate rule to the exclusion of all cultural norms. If corporations have been endowed with “personhood”, then who can deny that they exhibit all the characteristics of psychopaths: parasitic behavior, lack of remorse, manipulation, narcissism, blah…blah…blah. Consequently why wouldn’t their owners, operators, servants or even their serfs internalize and demonstrate much the same behavior? Our political life is merely a reflection of our endemic corporate culture. Until this epidemic of corporatism is given the scrutiny of the current pandemic and we begin to apply the appropriate palliative measures we are doomed. We need way more than vitamin D and zinc to fight off this disease.

      1. Intelligent idiot

        Yes, our corporations have been endowed with personhood but they still differ from the person in two major aspects, they have limited responsibilities and don’t go to jail.

      2. Philip

        I like your thinking. Corporations are inherently fascist (exhibiting the characteristics of psychopaths), If you allow them to dominate a society, fascist values will permeate that society, in particular its political system. With the current election, the choice is between varieties of fascism; Bush/Clinton/Biden or Trumpism. Biden is going to offer nothing different from the establishment of the Bush, Clinton, Bush and Obama years, the richer getting richer and everybody else getting robbed. The divisions their policies created led to Trump. More of the same will lead to something worse than Trump! The cure, very hard to do, is get rid of the corporations or at least leash them like Teddy Roosevelt did. America has a very poor and difficult choice. My choice would be to vote third party, the current choice between two evils leads to just more evil.

    3. Wukchumni

      One thing that separates IndyMac Bank from all the others in the country @ the time, was it was the only one experiencing bank runs, and a real threat to overall stability of the banking system.

      The idea that OneWest Bank was a real threat to the stability of home owners, is sadly par for the course.

  13. Watt4Bob

    The fact that many voters turned away from the dims then, hasn’t seemed to matter much to the dims now.

    Witness the kayfabe aid negotiations between Pelosi and Mnuchin, the ‘Foreclosure King’.

    Obama’s secretary of the treasury, Timothy Geithner thought he was foaming the runway for the big banks, but he was also, more importantly, foaming the runway for Trump.

  14. Thomas Cox

    My legal work in uncovering the rampant fraud of the mortgage servicers led the the $25 billion national in 2010. That was actually a smoke screen and a slap on the wrists of the miscreants since the servicers were allowed to get credit toward the $25 billion penalty by modify the loans of the their loan owner clients, loans which they did not own.

    The quote by Olenick about that jerk Geithner foaming the runway is not accurate. What Geithner told Neil Barofsky, the TARP Inspector General is that Obama’s HAMP loan modification was an effort to foam the runway for a soft landing by the banks coming out of the 2007-2008 near collapse of our financial system.

    The HAMP program was a cruel hoax of the Obama administration in my opinion. It offered loan modifications to underwater homeowners to reduce interest rates and reduce monthly payments, but it did not provide for any principal reductions of overpriced loans to reduce loan balances to actual real property values. This left homeowners with hope of building equity and not really caring about their homes or about paying the modified loan payments. The re-default rate on the HAMP program was huge–I think above 50%. I represented many homeowners during the HAMP era and repeatedly counseled them to not accept HAMP modifications that left them greatly underwater. Usually their emotional attachments to their homes and their view that the modified payments were cheaper than rent caused them to reject my advice.

    Over 10 million Americans lost their homes to foreclosure. Obama’s failure to act was despicable. I agree with Olenick’s premise that this was part of the foundation that laid open the path for a Trump win in 2016.

    I have difficulty putting into words the utter contempt that I feel for AG Holder, his sorry deputy and chickenshit assistant Lanny Breuer and Treasury Secretary Geithner for their refusals to indict bankers and lenders and servicers and for the cruel hoax of the HAMP program

    As to other commentators on this list who say that they will not vote for Biden, I say a pox on you. A Trump win is a vote to destroy what is left of our constitutional structure. Biden does not excite many of us, but at least a win by Biden gives us the right to hope that the Trump destruction will stop and possibly be reversed. I reject the assertion “Basically its tails we lose, heads we lose.” To a certainty, if Trump wins we lose. If Biden wins, we have the chance that we do not lose more and maybe even reverse the losses caused by Trump. Biden cannot govern alone. Folks like Elizabeth Warren Bernie Sander and AOC are not going to let get away with his old bullshit, such as his vote to change the Bankruptcy Code to make student loans dischargeable.

    1. Acacia

      How, exactly, are Warren, Sanders, and AOC going to stop Biden, and his new Republican buddies from carrying on the Obama legacy that you (justly) loathe? Another sternly-worded letter?

      1. Thomas Cox

        Biden and the Democrats already know that if they win this election, they will be facing an impatient public and the historical trend of the party in power facing major losses of seats and possible losses of control in Congress in the midterm election that they will face in two years. Biden and the Democrats already know how angry that public is and that, if they want to remain in power (which power they covet just as much as the Republicans do) they must immediately work to enact policies which will demonstrate a recognition of the legitimate issues of the disaffected public on COVID, finance, climate change, governmental integrity and all of this.

        Biden cannot legislate alone any more that Trump could not have “succeeded” without folks like McConnell. So I just cannot agree with you that Warren, Sanders, AOC and other right minded legislators are going to be unable to influence Biden’s courses of action.

        1. Jeremy Grimm

          Does that mean we can look forward to a new CARES Act II backed by good ole’ Joe’s friend, the sputtering spoiler, and the new talker promising ‘green’ Hope and Change? I am ready for a few pleasant surprises and tonight is a blue Hunter’s Moon … so who knows?

        2. Philip

          No, the Dems like the privileges of power, but losing the mid terms means they have cover for changing nothing. Remember Obama, the GFC was a great excuse for doing nothing for the not rich, and then the Dems lost the mid-terms giving them cover for again not doing nothing for the not rich. Predictions, If its a Biden Presidency he will do nothing for the not rich for two years because of COVID, then lose the midterms, and do nothing. Yeah I’m cynical, but that’s the rinse and repeat I have seen from the Dems for forty years.

        3. Acacia

          Though that’s assuming the Dems get control of the Senate, like they did in 2008, and that they actually want to legislate in ways agreeable with Sanders, which they never have before, isn’t it?

        4. Lambert Strether

          > Biden and the Democrats already know how angry that public is and that, if they want to remain in power (which power they covet just as much as the Republicans do) they must immediately work to enact policies which will demonstrate a recognition of the legitimate issues of the disaffected public

          The issue here is that liberal Democrats have form. Let me revise your statement slightly:

          Biden Obama and the Democrats already know how angry that public is and that, if they want to remain in power (which power they covet just as much as the Republicans do) they must immediately work to enact policies which will demonstrate a recognition of the legitimate issues of the disaffected public

          In other words, your comment on Biden in 2020 applies with equal force to Obama in 2008, and look what happened.

          Now, the same actors — the Obama Alumni Association — will return to power, except with an admixture of Bush-era Republicans, and a revised base including more white suburban PMCs (and even less working class). How many of the new base will be “socially progressive, and fiscally conservative”? I bet a lot. Hence, a stimulus that’s too small, half-hearted Green New Deal, a public option that doesn’t “bend the cost curve” and isn’t universal either, and on and on and on.

          The Democrats have been expunging FDR and all his works from their party since the Clinton era. I find it extremely implausible that Obama stood up Biden because he thought Biden was a second FDR. I think it’s far more likely that Biden will take case of his own, exactly as Obama did:

          1. tegnost

            “Now, the same actors — the Obama Alumni Association — will return to power, except with an admixture of Bush-era Republicans, and a revised base including more white suburban PMCs (and even less working class). How many of the new base will be “socially progressive, and fiscally conservative”?”

            Absolutely true and depressing. The beatings will continue until morale improves. Let the scolding begin. The only way these peoples feet will be in the fire will be when when the whole world is burning, at which point there will be a great howl…

    2. newbie

      “hope”…. Seems I’ve heard that word before in this context.

      How long, exactly, do you expect your hope to last should Biden prevail? Do you even recall the Obama transition?

      Elected November 4, 2008
      Announced Rahm Emmanuel as Chief of Staff November 6, 2008

      I understand that denial is a useful, sometimes necessary, survival tactic, but come on, man.

    3. Noone from Nowheresville

      Folks like Elizabeth Warren Bernie Sander and AOC are not going to let get away with his old bullshit, such as his vote to change the Bankruptcy Code to make student loans dischargeable.

      I said tails we lose, heads we lose. I stand by that. Perhaps a different journey but overall I think we’re headed to the same basic destination.

      Warren, Sanders & AOC did what exactly with the CARES Act? What organizing did they do? What group pressure did they bring? What public or private negotiations did they do before this large giveaway? From Warren I heard silence. From Sanders I got a dog & pony show. AOC at least made some valid hard hitting points but it was way too late in the game to make any difference at all. She gave the Act a barely passing grade of a C-.

      What pressures have these progressive warriors brought to bear in the last 7 months during the ongoing pandemic tragedy? on Trump? on Pelosi? on Schumer?

      And did I somehow miss Warren taking apart Biden over the Bankruptcy law (her supposed bread & butter issue) like she took apart Bloomberg (great theater that)? Did she even noticeably tweak Biden’s nose over it during the primaries?

      So these progressive warriors can’t even make a dent against Trump’s agenda when the resistance should be at full strength and at least prompt serious national discussions over policy, but suddenly they’ll be able to adjust the trajectory of a Biden presidency? Is that a Hope and Change belief? If not, what are you basing that on?

      I want to believe you but I’m going to need much more than the actions & rhetoric of Warren, Sanders & AOC during this pandemic and election season.

      ETA: My understanding of Biden is that he did much more than vote for the Bankruptcy Law. He helped create and shepard it over multiple administrations.

    4. Darius

      Biden is going to be crap. But, Biden and the Democrats will not be hyperfocused on an ultra-reactionary agenda, one of the many aims of which is to destroy organized labor. Biden is not labor’s friend, but he will not have ultra-reactionaries at the National Labor Relations Board and the Department of Labor. Under Biden, the progressive elements in organized labor will have space to organize for progress, rather than spending all her time fighting off continual rule-makings and decisions destroying rights won over decades.

      Biden, Obama, and the Democrats deserve no credit, and are directly responsible for creating this nightmare. But a Biden victory would create better material conditions for people to organize for justice and solidarity. We’re going to have to seize any gains we make with minimal or no help from the Democrats, but with Trump, it’s just going to be another four years of hyperactive reaction and violence.

      One advantage of Biden is that he doesn’t have Obama’s cursed charisma, which dazzled people who should have known better and prevented them from organizing against his championing of the ruling class,. Biden has none that charisma. Those who might be classified as Bernie people should have little patiences for similar behavior. Chomsky is right. A vote isn’t a personal statement. It’s a strategic choice. A Biden victory is strategically advantageous to Trump winning, which would be a continuing strategic disaster.

      1. Lambert Strether

        > One advantage of Biden is that he doesn’t have Obama’s cursed charisma, which dazzled people who should have known better and prevented them from organizing against his championing of the ruling class

        Excellent point. Though they’re working overtime to create it, with Biden’s smile and all that “empathy” crapola.

  15. Louis

    There probably is some truth to this assumption that some people voted for Trump because of the unfairness of the response to the 2008.

    However, Biden and his administration should be careful in how they proceed. If the response to climate change or the current pandemic gets botched like 2008—the haves end up better off and the have nots get once again thrown under the bus–you’ll see another backlash and there won’t be the political will to enact lockdowns (even if they are scientifically supported) and policies to combat climate change will be reversed once a Trump like figure comes to power on the promise of bringing people their jobs back by reversing climate change policies, even if such promises (like coal) cannot be fulfilled.

    Having a stock market and housing market that seem to hit record highs while, simultaneously, a substantial number of people are out of work shows something is horribly wrong with the economy and sets the stage for a repeat of the backlash against the unfair response to the 2008 recession.

  16. Wukchumni

    Luntz makes a great comparison between the Tea Party & OWS.

    I found the latter to be just as he describes, looking like a homeless encampment and conversing in a weird sign language that to an outsider such as me required a decoder ring to understand, so much for messaging.

    1. Arizona Slim

      Same thing happened here in Tucson.

      Occupy started out in Armory Park and kept the place tidy. Then it had to move because of El Tour de Tucson. The bike race needed the park for the start and finish line festival.

      After Occupy moved Downtown, it became a homeless camp. One of my neighbors worked in a nearby office building. She’d go outside on her lunch break and watch the fighting in the Occupy zone, which the city eventually shut down.

    2. Yves Smith Post author

      No, Luntz is wrong on OWS. It was around for a mere two months before it was crushed in a Federally-coordinated 17 city crackdown. Two months is a blink of an eye in politics. There’s no telling where OWS might have gone. Don’t rely on a guy on the right to interpret “the left”. It’s too removed from them.

      1. Wukchumni

        I actually went to Fresno to check out OWS in October of 2011, and even by the standards of said city, it was utterly pathetic and looked more like skid row. Could it have amounted to something before the Feds took it down?

        Not as far as I could tell in my hour of observation there…

  17. Michael Fiorillo

    Given the near-occult powers the #McResistance has attributed to Putin, why has no one proposed that he was behind the foreclosure crisis, as a long-term means of getting Trump (a Russian asset since the 1980’s, don’tcha know?) into the White House?

    Anything to deflect responsibility, after all…

  18. Intelligent yet idiot

    I lived through this period of greed and moral hazard.
    No one forced anyone to take a mortgage, don’t come crying here with heartbreaking stories. Live within your means, work hard , save for a rainy day , you will be fine.
    Government shouldn’t have bailed the banks and private enterprises, that is what has brought us today the mother of all moral hazards, Fed printing and handing out trillions to cronies. This will not end well. But now you can rightfully blame the government and the Fed, the hard working saver has nowhere to hide while his labor gets devalued at will by autocrats.

    1. Lightningclap

      No one informed me that I was entering a mortgage agreement with a criminal institution engaged in fraud. I live within my means and “play by the rules”‘ I did not forge documents, etc unlike the other party.

    2. Josef K

      There was a lack of parity in information between lender and borrower; it was a scam. So you’re saying, don’t ever be a dupe.

      That’s an exceedingly narrow rope to walk on, so high above mere mortals.

    3. Young

      “Live within your means, work hard, save for a rainy day, you will be fine.”

      C’mon, man. Are you J. Powell by any chance?

      If I saved my annual salary last year and deposited to your favorite bank, they would pay me a cup of coffee a day in interest.

      I am sure that is fine by you.

      1. tegnost

        they would pay me a cup of coffee a day in interest.
        where are you getting coffee for that cheap?
        I know, I know….you have access to coffee in the bank lobby, but what do you do on sundays?

  19. Mikel

    Isn’t the Fed still having to purchase Mortgage backed assets? So many speak as if the housing crisis was solved. It was papered over and Covid is exposing that.

  20. Alex morfesis

    D the foreclosure lawyer ?… didn’t that basketball commish die on New year’s day… basketball…that team with 5 guys ?? /s

    The truth is stranger than fiction…D wasn’t “taken down”…he was part of a very elaborate staged event…his “spac” merger a strange via China vehicle spac…amazing no one followed up on who was involved and where else their lives went…

    The wonderwoman who told everyone to focus on the PSA instead of the actual trust agreement, getting her funding in Florida from mister short Pauldaughter himself ?? She was actually handing out work books with THE gs/Pauldude loan pool named to run that broken on purpose derivative position…

    her lawyer sidekick in St something or other, getting on TV telling folks the judges are helping the banks..when in actuality the local district judges he was complaining about were the reason the banks demanded the Florida judicial funding be reduced and foreclosure cases given to “senior/retired” judges…that m dude forgot to tell everyone him and his law partner on Central Ave were tied to the biggest local bail bondsman/”forced to retire ex cop” and were the vampire lenders who “saved” homeowners before the crash…he was still foreclosing on people on “those” loans in front of those same judges while then putting on a different hat claiming to “defend homeowners”…the judges were laughing at his two hat game and were not going to play…

    the other goddess who cashed out her qui tam and then pocketed the money instead of “handing it out” as she had implied, always forgot to mention the big law firm she had worked with and still had friends at was in fact one of the largest bank foreclosure rocket docket firms…she worked in another section of the firm that kept workers from collecting on workman’s comp…

    With all due respect to all of us who imagined “they” were the fulcrum that “stopped” the system…we all got played…if we had not done our part to slow down the process those derivative positions would not have been so lucrative…not that the fight was not the right thing to do…but we got played…

    “sharks in heat” are almost impossible to stop…

    One of the lawyers in Florida who pushed back after miss ag/pb fired the two female attorneys…he got tracked by his libido via plenty of fish and was set up by bankers buying some drug addicts who offered to pay him for his services in a stupid high risk carnal location…he was black balled by the law, ended up fumbling and half not even practicing law…his weakness was tracked and used against him…just a footnote under the fold on page seven on a Friday…

    “Sharks in heat” are very patient and will keep tracking until they find or create an opening…

    Beware…dragons be there…

    1. Michael Olenick

      It was a feeding fest.

      Mrs Quitam didn’t waste the money – oh no. She moved her in-ground pool a few feet. Yes, she took money where the government forced a settlement from her frivolous suit — she lost every case where the banks weren’t forced to settle — to dig up an in-ground pool and move it. She also rented a waterfront penthouse for a “housing justice foundation” and staffed it with her kids, making sure to mislead because they all had different names. She also took her ex-sorta’ husband — she had a house and kids but no ring — to Hawaii along w/ his new wife who happened to be his former secretary. Then she said very mean things and untruthful things about me. Which was weird because she was over for dinner constantly right up until that wave of money rolled in – almost like the money changed her for the worse. Or maybe just brought out who she really was.

      I talked to the investors of the Chinese SPAC a lot. One even sent me two t-shirts D handed out of himself as Superman, or maybe it’s super foreclosure lawyer, flying over NYC. Before he decided he kinda’ liked me he told me there were people who’d kill me or paralyze me from the neck down. Somehow we became buddies after that. I sent one of the shirts to Andy Kroll of Mother Jones who had the balls to follow-up on that sorry story, or the foreclosure part at least. I wore the other while touring Red Square in Moscow – I thought D would somehow appreciate a thoroughly corrupt system like that. That SPAC traded under the symbol CACA because you can’t make stuff like that up – who choose a stock ticker called CACA. The investors backgrounds were … interesting. There’s a moneytrail to the Wizard himself, the man behind the curtain of the whole sorry shitshow though nobody’s ever followed up or been interested in that story. Hint – he’s one of the people who received a Trump pardon. And he had lots and lots and lots of money and influence. And an affinity for making money from crap debt.

      And if the whole sorry episode couldn’t be stranger it ended up with Donald Trump ranting and raving and becoming President while covered in orange face paint.

      Something tells me we know one another. From a past life.

  21. Jeremy Grimm

    I believe Michael Olenick is right about the origins of the Trump Presidency. But in 2020 after four years of Trump what candidate is there who will “burn the crooked, corrupt, and rotten system to the ground.” Trump and the other branches and grafted-branches of Government propped up the crooked, corrupt, and rotten” financial system and stand ready to torch the homes and housing of the Populace.

    I don’t see any happy endings for the rent and mortgage moratoriums no matter who wins the Presidency or any of the Senate or Representative races. Does anyone believe there will be a large scale rent and mortgage forgiveness and a program to support the growing population of un- and under-employed after this election? If not, what happy ending does this story have? And who will breathe life back into the small businesses dying as their incomes shrink and debts grow.

    1. Noone from Nowheresville

      And what happens once you seriously gut the state and local governments? Drag it on long enough and another local safety net feature might not return. Assuming Biden wins, what will these more locally accountable governments look like in March & April without funding in the near future? How will the budgets be shaped? What kind of trade-offs will local officials / citizens / residents be forced to make before we even get down to minimizing the crisis faced by individuals within the communities?

      This is ‘a gonna’ hurt. Especially if / when we’re told that public goods must be sold to bridge budget gaps. Or rules must be streamlined to save “business.” Environment and workers be damned.

      It has the bipartisan earmarks of remaking of local societies.

      1. Jeremy Grimm

        Great questions! Like you I think our Power Elite is remaking local societies but I would add a remake of our national society as Big Money further consolidates Corporations and Proprietorships — like Cargil.

        1. Noone from Nowheresville

          I’m with you.

          Ahh, Cargill. One of the largest privately held corporations with its fingers in agri-business all over the world. Rumor had it a few decades ago, big internal fight about going public. The old ones kept the young ones in line for control and the long-term rather than the short-term gains. Of course they must be dying off by now.

          Just like the old Lake Office they tore down. An end as well as a gutting of an era.


    2. Ian Ollmann

      One solution would be UBI, including a largish up front payment of maybe $10k or so. (Unclear to me quite what is necessary.) It should be enough to clear out debts like back rent.

      Cash back in the hands of the precariat should turn our capitalist economy back to serving them instead of kicking them.

      1. tegnost

        “It should be enough to clear out debts like back rent”
        Yes, so the banksters and grifters are made whole and the renters get back to zero! Yay!
        Basic income acknowledges the system is irretrievably broken and can only continue on through fakery (true now anyway, but to date unacknowledged…so far it’s just in the form of ubi for corps and the wealthy, known in some circles as “socialism”) Do you have any ideas that might actually work to improve things rather than just prop it up enough to keep the ridiculous system hobbling along? This of course assumes facts not in evidence, i.e. wall st isn’t giving $10,000 to people, they want it all for themselves, even though, (and being the smartest guys in the room it should be easy for them) the $10,000 or any other random number generated would end up deposited in the bank so they could rehypothecate it anyway. Plus fees! so grifting opportunity!…but give money “those people” and they won’t go to the bs job…;hmmm
        yeah I can see a problem there, too

        1. JBird4049

          Cash back in the hands of the precariat should turn our capitalist economy back to serving them instead of kicking them.

          Which is why that ain’t happening. Much of the fun in being in the Elites is in kicking down the Deplorables. It feels good being the King feudal lord nomenklatura

  22. Susan the other

    I agree with the tone of the thread. But I cannot even look at the clip. It’s too awful in my memory. Like my husband can’t look at footage of Vietnam. He gets up and leaves the room. May Obama rot in hell like all the rest of the pols who are nothing more than cowards.

  23. sharonsj

    After the meltdown, a lawyer friend got a temp job at Wells Fargo. They hired a bunch of lawyers to go over the mortgages and my friend eventually got fired because she kept questioning the validity of the paperwork. People she knew who were still there told her her name appeared on some paperwork with the title of “vice president” which, of course, she never was.

    1. Michael Olenick

      Yves and I and the gang uncovered what was arguably the most egregious, ridiculous, and underreported instance of f-ed up government oversight from that era; the government hired a foreclosure “auditor” to audit their own prior work. The NYT picked up that article and, a week later, Allonhill lost their auditing contract. They claim, and the OCC supports, it had nothing to do w/ our expose:


  24. Clem

    Fast forward today. Names to remember:

    Eric “Place” Holder, Obama’s attorney general who did nothing to prosecute and jail anyone in the mortgage crime spree, and who returned to the corporate law firm from whence he came.


    Steven Mnuchin, owner of WaPo Bank that became One West Bank, private profiteer billionaire who foreclosed on tens of thousands of homeowners in 2007. He went on to support with half a million dollars or so dozens of Republican think tanks and conservative candidates, some with a D in front of their names.

    “Mnuchin, earned tens of millions of dollars from a 2015 bank sale that got a boost from an array of nonprofit groups that had one thing in common — they had received tens of thousands of dollars each from the bank’s foundation, which was run by Mnuchin. The sale of OneWest, a bank that Mnuchin co-founded and chaired, to CIT Group for $3.4 billion drew significant opposition from public interest groups because OneWest had been accused of wrongful foreclosures and racial discrimination in its mortgages and small-business loans.”


    Kamala Harris, “for the people.” Which ones? California attorney general who let Mnuchin slide, and got a political donation, investment, bribe, tip, he gave to her so she could get into the senate and service the financial overworld’s needs there.


    Betting time! How much you want to bet that if Harris/Biden gets into the white house, Mnuchin is kept on, just like Obama kept the Clinton, George W. Bush financial “experts” on board and in the fed?

    1. 1 Kings

      Thank you. All this work and only a few mentions of the current freaking Treasury Sec who is so deep into these crimes he HAD to become, I don’t know, Treasury Secretary! You know, the guy who gave hundreds of billions of the Cares Extortion Act to whoever he decided, and then when some Congresspeople dared to ask who he said “go f.. yourself’.. Yeah that guy.
      And I presume Pres Trump must have nominated a Swamp-drainer to be Sec Treasury, but some evil transition-team hacker switch the letters all around…and magic, Mnuchin.

  25. sharonsj

    I listened to the entire Frank Luntz interview and I agree with everything he said. I have gone from a mild-mannered almost pacifist to a person who hates both parties with a fury. I often wish I was 30 years younger so I could join the anarchists and just burn down the banks and the hedge funds, the rich, Congress, the Fed…. And if I’m like that–I never lost my house and I don’t own stock–imagine the millions who did lose everything and the millions losing everything now.

    1. Eudora Welty

      I’ve listened to the Luntz interview 3 times now. The moment he connected dots between Sarah Palin and Trump felt electrifying and clarifying to me. I recall that McCain wanted a different VP (one of his senate buddies), and this choice was thrust upon him. I feel Luntz really has his finger on some defining points about the last 10-12 years. This post by Olenick is excellent, too. I am so glad to read this site. Thank you.

  26. JohnH

    David in Santa Cruz: I too voted third party in 2016, as I have done in all presidential elections but one in the past 25 years.

    I wish that everyone who voted for Obama but failed to vote in 2016 had done the same.

    IMO not voting signals apathy; voting third party signals protest and disgust with the two evils.

    Only if enough people vote third party will corrupt politicians begin to take note.

  27. km

    “I’ve been living in France. Europeans used to be supportive of the US or angry. Now, they just feel the country is a pathetic mess.”

    Think of the USSR, in the years before Glasnost. Maybe Biden can play Konstantin Ustinovich Chernenko.

    The Soviet Union had a massive army, a fearsome secret police and total control of the press, but when Chernobyl hit, not even the KGB could hide the fact that the authorities were not only self-serving and tribal – worse, they were, frankly, incompetent.

    Not sure if the COVID is our Chernobyl or maybe that will take something even worse.

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