The Crash of 2016

by Thom Hartmann

  But the bank still claimed it never received the payment, and over the next few months the bank repeatedly claimed that the Rousseaus had missed payments, hitting them with a barrage of demands for monies owed including additional fee after fee and penalty after penalty. Every time the Rousseaus thought they had finally convinced the bank that it was wrong, the cycle of abuse would begin again.

  During the next few years, this sort of back-and-forth, double-talk, Kafkaesque nightmare continued between Wells Fargo and Norman Rousseau. The fees kept piling up, as did the lies from the bank—and then the eviction notices came rolling in.

  By 2012, the financial burden of the whole ordeal had become unbearable, and the Rousseaus—like so many other Americans in the middle of the housing meltdown—were getting wiped out by the increased mortgage payments. That’s when Wells Fargo finished them off, setting the eviction date of May 15 for when Norman Rousseau and his wife had to be out of their house.

  But two days before the scheduled eviction, Norman Rousseau, apparently unable to bear losing his home after the bank had already taken all his money, pulled out a gun and killed himself. He was one of the first victims of the Great Crash.

  So, too, was James Richard Verone.

  Verone knew something was wrong when he noticed a strange protrusion in his chest.

  He was already dealing with arthritis and carpal tunnel syndrome, only now the pain was too unbearable to handle. Unfortunately, James couldn’t see a doctor because he didn’t have health insurance after he was laid off as a delivery driver for Coca-Cola—a job he’d held for seventeen years.

  With the economy in recession, James could only find work as a convenience clerk, but that job didn’t offer any medical benefits. And eventually, as the pain grew and grew, James found himself unable to work. That’s when the social safety net that has been under attack for thirty years by the Economic Royalists failed him: He was denied any sort of disability benefits by the federal government.

  James was dying and had no options in the United States of America—the wealthiest nation on the planet.

  No way to get health care… except for one.

  In June 2011, James woke up, took a shower, ironed his shirt, and jumped in a taxicab headed for his local RBC bank. He walked inside, slipped the teller a note, and then walked over to a bench in the bank, where he waited, anxiously pawing at his long lock of gray hair and mangy beard.

  The note read that he was robbing the bank of one dollar. James knew that the only way he could receive the sort of medical attention he needed was in prison, so he committed the smallest crime he could think of and waited for the cops to arrest him.

  He was charged with bank robbery, and exactly according to plan, James was thrown in jail, where he was given the chance of seeing a doctor and received the basic health care that he was unable to receive as a free man.

  As James said about his decision to choose jail over freedom, “If you don’t have your health, you don’t have anything.”8 It’s another story that will be common during the Crash of 2016.

  Death by Globalism

  In the past, diseases such as tuberculosis and malaria have been number one health concerns around the world.

  But not anymore.

  In today’s world, globalization is the number one health risk facing humanity.

  A study recently released by the Blacksmith Institute reveals, for the first time ever, the impact of industrial pollutants on communities across the planet. It found that industrial-waste dump sites containing toxic horrors such as lead, mercury, and chromium poison more than 125 million people in forty-nine different low- and middle-income nations around the planet.

  The authors of the study say this is a very conservative estimate and that likely even more people are sickened by this rampant industrial pollution. In fact, the report says, industrial pollution is now a bigger global health problem for the world than malaria and tuberculosis.

  Richard Fuller, the president of the Blacksmith Institute, warned that it’s only going to get worse. “Life-threatening pollution will likely increase as the global economy exerts an ever-increasing pressure on industry to meet growing demands,” he said. “The damage will be greatest in many low- and middle-income countries, where industrial-pollution-prevention regulations and measures have not kept pace.”9

  But it’s not just the developing world that’s being poisoned—it’s the United States, too.

  In 2012, Chris Hedges warned Bill Moyers, “It’s absolutely imperative that we begin to understand what unfettered, unregulated capitalism does, the violence of that system.”

  In his book Days of Destruction, Days of Revolt, Hedges documents what he calls “sacrifice zones.” He defines them as “areas that have been destroyed for quarterly profit. And we’re talking about environmentally destroyed, communities destroyed, human beings destroyed, families destroyed.”10

  They are places like Camden, New Jersey, which is the poorest city per capita in America. Hedges calls it “a dead city.” He adds, “There’s nothing left. There is no employment. Whole blocks are abandoned. The only thing functioning are open-air drug markets, of which there are about a hundred.”

  There are also the “sacrifice zones” of West Virginia, where mountaintop mining is poisoning local populations with sky-high cancer rates, and crippling the environment. Hedges says the Royalists are “rendering the area a moonscape. It becomes uninhabitable. [They are] destroying the lungs of the Eastern seaboard. It’s all destroyed and it’s not coming back.”11

  There are places all across America that have already crashed.

  Hedges warns that “because there are no impediments left” in this cancer stage of capitalism, then “these sacrifice zones are just going to spread outward.”12

  Like Gary, Indiana, which used to be home to buzzing manufacturing plants, but is now a ghost town after those plants were all outsourced to low-wage nations. Half of the population has left the city, and it’s one of the ten most violent in America.

  This is what crash looks like.

  Or it looks like Chicago, Illinois, where the effects of wealth inequality have unleashed unthinkable violence on the streets. There are an estimated 100,000 gang members in the city, according to the Chicago Police Gang Enforcement Unit.13

  The Task

  This crash is coming. It’s inevitable. I may be off a few years plus or minus in my timing, but the realities of the economic fundamentals left to us by thirty-three years of Reaganomics and deregulation have made it a certainty. We are quite simply repeating the mistakes of the 1920s, the 1850s, and the 1760s, and we are so far into them it’s extremely unlikely that anything other than reinflating the recent bubbles to buy a little time here and there will happen.

  While the task ahead is daunting, and the prospects for recovery may seem bleak, you will find out what each of us can do to ensure that this Fourth Crash—like the previous Great Crises—ends with the United States of America being, to quote the Constitution, “a more perfect union.”

  Part 1 of the book begins our quest to figure out who stole the back side of America and how this theft will result in a gut-wrenching Great Crash around the year 2016. We meet the destructive forces who’ve looted the United States of America over the last several decades. I describe them the same way FDR did, as “Economic Royalists.”

  Also in part 1, we learn about a cycle fueling American history that allows the Economic Royalists to rise to power every four generations.

  In part 2, we learn of the plot hatched in the 1970s by the modern-day Economic Royalists, who sensed that the cycles of “the Great Forgetting” were just coming around again and that they could successfully sneak back into power and loot the nation once again.

  In part 3, we see the aftermath of thirty-plus years of Economic Royalist policies, culminating in the financial panic of 2007–08. But rather than the Royalists being expelled from power for crashing the economy, part 3 shows how they were able to hold on to t
he reins of government and fling the nation toward another, far more catastrophic crash.

  In part 4, we explore the various scenarios confronting us with the Crash of 2016—ranging from social disorder to war. And finally, in part 5, we find redemption in post-crash America with specific direction for how America can emerge from this time of instability and chaos.

  So let us begin by looking at what’s right in front of us but what so many Americans are working so hard to ignore.

  PART 1

  The Economic Royalists and the Corporatist Conspiracy

  Chapter 1

  A Rendezvous with Destiny

  In this world of ours in other lands, there are some people, who, in times past, have lived and fought for freedom, and seem to have grown too weary to carry on the fight. They have sold their heritage of freedom for the illusion of a living. They have yielded their democracy.

  —President Franklin Delano Roosevelt, 1936

  There are very few Americans still alive who heard President Franklin D. Roosevelt, in March 1933, address the nation as he was being sworn into office. Which is why many Americans today believe that when FDR famously said, “The only thing we have to fear is fear itself,” he was talking about World War II. But Roosevelt said that long before Hitler had even fully consolidated his own power in Germany.

  Instead, the fear—and the war—was here in America. He was speaking of the Great Depression and his “war” against those who caused it.

  The week of his inauguration, every state in the country closed their banks. The federal government couldn’t make its own payroll. A quarter of working-age Americans were unemployed—some measurements put it at a third—and unemployment in minority communities was off the scale.

  While Herbert Hoover, when campaigning against Roosevelt in 1932, had denied there was hunger in America, and said, “Even our hoboes are well fed,” the truth was that the single largest “occupation” at the time among Americans was “scavenger”: people following food trucks and trains, catching the bits that fell off, or doing what we today call “Dumpster diving.”

  It was so widespread that farmers guarded their farms with shotguns. Every night when restaurants dumped their uneaten food in trash cans in back or side alleys, crowds gathered to pick through, and often fight over, the leftovers.

  Roosevelt spoke bluntly about that situation in Great Depression America.

  “Values have shrunken to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; the savings of many years in thousands of families are gone.”14

  Dissatisfaction with our economic and political systems had reached such a height that machine guns guarded the Capitol and White House. “Hoovervilles”—tent cities of homeless people—had sprung up in every city of America. Bankers and the wealthy elite traveled with elaborate and heavily armed security details, and it was no longer safe for John D. Rockefeller to repeat his earlier publicity stunt of going out onto a New York City street to hand out shiny new dimes to beggars.

  This was America during the last Great Crash, a crash that within a decade led to a world war killing more than 60 million people.

  Eighty years later, we are well into the next Great Crash, which future generations will call the Crash of 2016. And this one could be even worse than the last one.

  There are remarkable similarities between the Crash of 2016 and the last Great Crash, which began on Black Tuesday in 1929.

  In fact, there are similarities between both these crashes, and the other two crashes in American history that both led to horrific wars. The first was the economic disaster of the late 1660s to the early 1770s that led Britain to pass (among other things) the Tea Act in 1773, sparking the Boston Tea Party and the Revolutionary War. The second was the Great Panic of 1857, which preceded the Civil War.

  It was roughly eighty years from the Revolutionary War to the Civil War, and eighty years from the Civil War to the Great Depression and World War II. And here we are, eighty years after that great disaster. It takes about eighty years for those who remember to thoroughly die out.

  We have to see these similarities, to hear their stories, and to get a handle on how to move around them if we hope to mitigate the damages of the Crash of 2016.

  The Great Forgetting

  For one, each Great Crash is separated by four generations (there’s those eighty years).

  Arnold Toynbee and others, over the millennia, have pointed out that when the generation that remembers the last Great War has died out, a nation is set on course—some would say doomed—to have another war. While the horrors of war are forgotten, the monuments and “heroes” of war are everywhere.

  The same is true of the death of the last person remembering a Great Crash.

  Daniel Quinn popularized the phrase “the Great Forgetting,” and it’s true not only of civilizations but of generations as well. Our memories—as a culture—are largely defined by the practical memories of those who participate in media and government, mostly people from their thirties to their sixties. So, at the most, we as a popular culture remember fifty or so years of history at a slice.

  My grandfather was a socialist, my dad a Republican. I’m a progressive. My grandfather, in the first few decades of the twentieth century, had no recollection of a crisis during a previous “socialist” time, and so at one time thought the Soviet experiment might even work out well. My dad, born in 1929, had no memory of a crisis during the administration of a Republican; in fact, his experience of Eisenhower’s presidency had been that of a Great Prosperity. And, born in the 1950s, I don’t remember the battles or challenges that my dad saw FDR face.

  There are great cycles to all of history, including American history. And this cycle rolls forward as each new generation comes to power without personal memory of the mistakes previous generations made, and without memory of the solutions previous generations employed.

  Authors William Strauss and Neil Howe suggested, in their seminal 1997 book The Fourth Turning,15 that the United States would, in the first decades of the twenty-first century, once again enter the catastrophic phase of a historic cycle that happens every fourth generation (roughly every eighty years): an economic collapse followed by a great war.

  It was a bold prediction, given the Clinton Prosperity in the late 1990s. But it was prophetic.

  Less than a decade later, in the fall of 2006, the Federal Reserve Bank of Saint Louis—the part of the larger Fed that compiles housing statistics—noted that housing starts dropped 14.6 percent that month, bringing the total for the twelve-month federal budget year of October-to-October to a 27 percent crash.16 To make matters worse, building permits were also in free fall, having dropped 28 percent year-to-year at that point.

  This was the housing bubble bursting, which triggered the financial crisis of 2007–08.

  The Great Forgetting had again descended on the nation, and eighty years after Black Tuesday 1929, the United States was in two full-scale wars and constructing a massive worldwide war machine built on Predator drones.

  In his First Inaugural Address in January 2009, a young President Barack Obama spoke, just as FDR had four generations earlier, to a nation again gripped by an economic crisis.

  It was a balmy 42 degrees in Washington, DC, the day Franklin Delano Roosevelt was sworn in nearly eighty years earlier in the midst of a Great Depression.

  But as if the political and economic world had grown colder and harder, it was only 28 degrees on Barack Obama’s Inauguration Day, with those on the National Mall exhaling white wisps into the freezing air.

  I stood about a hundred feet from President Obama as he was sworn in. Just behind him, George W. Bush rolled his eyes and made silly, exaggerated “flipper” applause motions through much of the speech. Dick Cheney, in a wheelchair and
covered with a blanket, barely twitched. Their wives sat behind them.

  To my left were the assembled members of Congress and the Supreme Court, in front of me the new president, and to my right was the international press corps. In front of the president were nearly two million people, an ocean of humanity that stretched from the Capitol, where we stood on a second-floor balcony, down the National Mall to and beyond where the Washington Memorial pierced the sky.

  He began by talking about how the words dictated by the Constitution to swear a new president into office had “been spoken during rising tides of prosperity and the still waters of peace. Yet, every so often the oath is taken amidst gathering clouds and raging storms.”17

  It was the perfect oratorical device, because that very month over 800,000 Americans had lost their jobs, and over a half million had come to the brink of losing their homes. The stock market had crashed, banks were in a crisis worldwide, and two foreign wars were sucking us dry and devastating our image around the world.

  “That we are in the midst of crisis is now well understood,” President Obama said. “Our nation is at war against a far-reaching network of violence and hatred. Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some but also our collective failure to make hard choices and prepare the nation for a new age.

  “Homes have been lost, jobs shed, businesses shuttered. Our health care is too costly, our schools fail too many, and each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet.

  “These are the indicators of crisis, subject to data and statistics,” Obama continued. “Less measurable, but no less profound, is a sapping of confidence across our land; a nagging fear that America’s decline is inevitable, that the next generation must lower its sights.”