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    There are many ways Trump could trigger a global collapse. Here’s how to survive if that happens | George Monbiot

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    Though we might find it hard to imagine, we cannot now rule it out: the possibility of systemic collapse in the United States. The degradation of federal government by Donald Trump and Elon Musk could trigger a series of converging and compounding crises, leading to social, financial and industrial failure.There are several possible mechanisms. Let’s start with an obvious one: their assault on financial regulation. Trump’s appointee to the US Consumer Financial Protection Bureau (CFPB), Russell Vought, has suspended all the agency’s activity, slashed its budget and could be pursuing Musk’s ambition to “delete” the bureau. The CFPB was established by Congress after the 2008 financial crisis, to protect people from the predatory activity that helped trigger the crash. The signal to the financial sector could not be clearer: “Fill your boots, boys.” A financial crisis in the US would immediately become a global crisis.But the hazards extend much further. Musk, calling for a “wholesale removal of regulations”, sends his child soldiers to attack government departments stabilising the entire US system. Regulations, though endlessly maligned by corporate and oligarchic propaganda, are all that protect us from multiple disasters. In its initial impacts, deregulation is class war, hitting the poorest and the middle classes at the behest of the rich. As the effects proliferate, it becomes an assault on everyone’s wellbeing.To give a couple of examples, the fires in Los Angeles this year are expected to cost, on various estimates, between $28bn and $75bn in insured losses alone. Estimates of total losses range from $160bn to $275bn. These immense costs are likely to be dwarfed by future climate disasters. As Trump rips down environmental protections and trashes federal responsiveness, the impacts will spiral. They could include non-linear shocks to either the insurance sector or homeowners, escalating into US-wide economic and social crisis.If (or when) another pandemic strikes, which could involve a pathogen more transmissible and even more deadly than Covid-19 (which has so far killed 1.2 million people in the US), it will hit a nation whose defences have been stood down. Basic public health measures, such as vaccination and quarantine, might be inaccessible to most. A pandemic in these circumstances could end millions of lives and cause spontaneous economic shutdown.Because there is little public understanding of how complex systems operate, collapse tends to take almost everyone by surprise. Complex systems (such as economies and human societies) have characteristics that make them either resilient or fragile. A system that loses its diversity, redundancy, modularity (the degree of compartmentalisation), its “circuit breakers” (such as government regulations) and backup strategies (alternative means of achieving a goal) is less resilient than one which retains these features. So is a system whose processes become synchronised. In a fragile system, shocks can amplify more rapidly and become more transmissible: a disruption in one place proliferates into disaster everywhere. This, as Andy Haldane, former chief economist at the Bank of England, has deftly explained, is what happened to the financial system in 2008.A consistent feature of globalised capitalism is an unintentional assault on systemic resilience. As corporations pursue similar profit-making strategies, and financialisation and digitisation permeate every enterprise, the economic system loses its diversity and starts to synchronise. As they consolidate, and the biggest conglomerates become hubs to which many other enterprises are connected (think of Amazon or the food and farming giant Cargill), major failures could cascade at astonishing speed.As every enterprise seeks efficiencies, the system loses its redundancy. As trading rules and physical infrastructure are standardised (think of those identical container terminals, shipping and trucking networks), the system loses both modularity and backup strategies. When a system has lost its resilience, a small external shock can trigger cascading collapse.Paradoxically, with his trade wars and assault on global standards, Trump could help to desynchronise the system and reintroduce some modularity. But, as he simultaneously rips down circuit breakers, undermines preparedness and treats Earth systems as an enemy to be crushed, the net effect is likely to make human systems more prone to collapse.At least in the short term, the far right tends to benefit from chaos and disruption: this is another of the feedback loops that can turn a crisis into a catastrophe. Trump presents himself as the hero who will save the nation from the ruptures he has caused, while deflecting the blame on to scapegoats.Alternatively, if collapse appears imminent, Trump and his team might not wish to respond. Like many of the ultra-rich, key figures in or around the administration entertain the kind of psychopathic fantasies indulged by Ayn Rand in her novels Atlas Shrugged and The Fountainhead, in which plutocrats leave the proles to die in the inferno they’ve created, while they migrate to their New Zealand bunkers, Mars or the ocean floor (forgetting, as they always do, that their wealth, power and survival is entirely dependent on other people). Or they yearn for a different apocalypse, in which the rest of us roast while they party with Jesus in his restored kingdom.Every government should hope for the best and prepare for the worst. But, as they do with climate and ecological breakdown, freshwater depletion, the possibility of food system collapse, antibiotic resistance and nuclear proliferation, most governments, including the UK’s, now seem to hope for the best and leave it there. So, though there is no substitute for effective government, we must seek to create our own backup systems.Start with this principle: don’t face your fears alone. Make friends, meet your neighbours, set up support networks, help those who are struggling. Since the dawn of humankind, those with robust social networks have been more resilient than those without.Discuss what we confront, explore the means by which we might respond. Through neighbourhood networks, start building a deliberative, participatory democracy, to resolve at least some of the issues that can be fixed at the local level. If you can, secure local resources for the community (in England this will be made easier with the forthcoming community right to buy, like Scotland’s).From democratised neighbourhoods, we might seek to develop a new politics, along the lines proposed by Murray Bookchin, in which decisions are passed upwards, not downwards, with the aim of creating a political system not only more democratic than those we currently suffer, but which also permits more diversity, redundancy and modularity.Yes, we also – and urgently – need national and global action, brokered by governments. But it’s beginning to look as if no one has our backs. Prepare for the worst.

    George Monbiot is a Guardian columnist More

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      Silicon Valley Bank said it was too small to need regulation. Now it’s ‘too big to fail’ | Rebecca Burns and Julia Rock

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      Silicon Valley Bank was supposedly the type of institution that would never need a government bailout – right until its backers spent three days on social media demanding one, and then promptly receiving it, after the bank’s spectacular collapse last week.Eight years ago, when the bank’s CEO, Greg Becker, personally pressed Congress to exempt SVB from post-2008 financial reform rules, he cited its “low risk profile” and role supporting “job-creating companies in the innovation economy”. Those companies include crypto outfits and venture capital firms typically opposed to the kind of government intervention they benefited from on Sunday, when regulators moved to guarantee SVB customers immediate access to their largely uninsured deposits.Fifteen years after the global financial crisis, the logic of “too big to fail” still prevails. The financial hardship of student debtors and underwater homeowners is a private problem – but losses sustained by titans of tech and finance are a matter of urgent public interest. Moral hazard for thee, but not for me.What’s more, SVB’s meteoric rise and fall serves as a reminder that many of the guardrails erected after the last crisis have since been dismantled – at the behest of banks like SVB, and with the help of lawmakers from both parties beholden to entrenched finance and tech lobbies.Before becoming the second-largest bank to fail in US history, SVB had transformed itself into a formidable influence machine – both in northern California, where it became the go-to lender for startups, and on Capitol Hill, where it spent close to a million dollars in a five-year period lobbying for the deregulatory policies that ultimately created the conditions for its downfall.“There are many ways to describe us,” SVB boasts on its website. “‘Bank’ is just one.”Indeed, SVB’s management appears to have neglected the basics of actual banking – the bank had no chief risk officer for most of last year, and failed to hedge its bets on interest rates, which ultimately played a key role in the bank’s downfall. In the meantime, the bank’s deposits ballooned from less than $50bn in 2019 to nearly $200bn in 2021.From the moment that Congress passed banking reforms through the 2010 Dodd-Frank law, SVB lobbied to defang the same rules that would probably have allowed regulators to spot trouble sooner. On many occasions, lawmakers and regulators from both parties bowed to the bank’s demands.One of SVB’s first targets was a key Dodd-Frank reform aimed at preventing federally insured banks from using deposits for risky investments. In 2012, SVB petitioned the Obama administration to exempt venture capital from the so-called Volcker Rule, which prevented banks from investing in or sponsoring private equity or hedge funds.​​“Venture investments are not the type of high-risk, ‘casino-like’ activities Congress designed the Volcker Rule to eliminate,” the bank argued to regulators. “Venture capital investments fund the high-growth startup companies that will drive innovation, create jobs, promote our economic growth, and help the United States compete in the global marketplace.”After the Obama administration finalized the Volcker Rule in 2014 without a venture capital carveout, SVB sought its own exemption that would allow it to maintain direct investments in venture capital funds, in addition to providing traditional banking services for roughly half of all venture-backed companies.One such firm was Ribbit Capital, a key investor in the collapsed cryptocurrency exchange FTX, which lauded SVB’s tech-friendly ethos in a 2015 New York Times profile. “You can go to a big bank, but you have to teach them how you are doing your investment,” Ribbit’s founder told the Times. At SBV, “these guys breathe, eat and drink this Kool-Aid every day.”In the transition between the Obama and Trump administrations, SVB got what it wanted: a string of deregulation, based on the idea that the bank posed no threat to the financial system.In 2015, Becker, the CEO, submitted testimony to Congress arguing that SVB, “like our mid-size peers, does not present systemic risks” – and therefore should not be subject to the more stringent regulations, stress tests and capital requirements required at the time for banks with $50bn or more in assets.Two years later, SVB was one of just a handful of banks to receive a five-year exemption from the Volcker Rule, allowing it to maintain its investments in high-risk venture capital funds.The deregulatory drumbeat grew louder in Congress, and in 2018 lawmakers passed legislation increasing to $250bn the threshold at which banks receive enhanced supervision – again, based on the argument that smaller banks would never prove “too big to fail”.The Federal Reserve chairman, Jerome Powell, supported the deregulatory push. Under Powell, a former private equity executive, the Fed in 2019 implemented a so-called “tailoring rule”, further exempting mid-size banks from liquidity requirements and stress tests.Even then, the banks’ lobbying groups continued to push a blanket exemption to the Volcker Rule for venture capital funds, which Powell advocated for and banking regulators granted in 2020.Then, in 2021, SVB won the Federal Reserve’s signoff on its $900m acquisition of Boston Private Bank and Trust, on the grounds that the post-merger bank would not “pose significant risk to the financial system in the event of financial distress”.“SVB Group’s management has the experience and resources to ensure that the combined organization would operate in a safe and sound manner,” Federal Reserve officials wrote.Since the financial crisis, SVB has reported spending more than $2m on federal lobbying efforts, while the bank’s political action committee and executives have made nearly $650,000 in campaign contributions, the bulk to Democrats.Among the highlights of this influence campaign was a 2016 fundraiser for the Democratic senator Mark Warner of Virginia, hosted by Greg Becker in his Menlo Park home. A few months later, Warner and three other Democratic senators wrote to regulators arguing for weaker capital rules on regional banks.Warner went on to become one of 50 congressional Democrats who joined with Republicans to pass the 2018 Dodd-Frank rollback. When asked this week about his vote, Warner said: “I think it put in place an appropriate level of regulation on mid-sized banks … these mid-sized banks needed some regulatory relief.”In the wake of SVB’s collapse, Republicans have not renounced their votes for deregulation – nor have most of the Democrats who joined them, even as Biden is promising a crackdown.Warner took to ABC’s This Week on Sunday to defend his vote; Senator Jeanne Shaheen, the Democrat from New Hampshire, told NBC on Tuesday that “all the regulation in the world isn’t going to fix bad management practices”. Senator Jon Tester, the Democrat from Montana and a co-sponsor of the 2018 deregulatory law, even held a fundraiser in Silicon Valley the day after the SVB bailout was announced.Unless they reverse course, the Silicon Valley Bank bailout could prove politically disastrous for Democrats, who just oversaw the rescue of coastal elites in a moment of ongoing economic pain for everyone else.The good news is that there are straightforward steps that Democrats can take to start fixing things.For example: Senator Elizabeth Warren’s legislation to repeal Trump-era financial deregulation.Democrats can also revisit the areas where Dodd-Frank fell short, including stronger minimum capital requirements, and consider longstanding proposals to disincentivize risky behavior by banks by reforming bankers’ pay. And they should demand that Powell recuse himself from the Federal Reserve investigation of recent bank failures and take a hard look at whether his disastrous record merits outright dismissal under the Federal Reserve Act, which allows the president to fire a central bank chair “for cause”.And yet even now – amid the wreckage of deregulation – these and other measures to better regulate the banks may still be nonstarters among both the Republicans and corporate Democrats who voted for the regulatory rollbacks and have so far shown little sign of repentance.The words of the Illinois Democratic senator Dick Durbin still ring true, 14 years after the financial crisis.“The banks – hard to believe in a time when we’re facing a banking crisis that many of the banks created – are still the most powerful lobby on Capitol Hill,” he said back in 2009. “And they frankly own the place.”If that remains true today, the possibility of change looks grim.
      Rebecca Burns and Julia Rock are reporters for the Lever, an independent investigative news outlet, where a version of this article also appeared More

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      The 2009 financial crisis taught us hard lessons. Have Democrats learned them? | David Sirota and Alex Gibney

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      OpinionUS politicsThe 2009 financial crisis taught us hard lessons. Have Democrats learned them?David Sirota and Alex GibneyThe political meltdown of a decade ago crushed faith in hope and change, and led to Maga and mayhem Thu 28 Oct 2021 06.37 EDTLast modified on Thu 28 Oct 2021 07.07 EDTA first-term Democratic president with a majority in Congress and an uncompromising Republican opposition. A country disillusioned by a previous administration’s corruption and mismanagement. A working class traumatized by an economic downturn. An establishment calling not for aggressiveness and boldness, but for half measures and compromise.Democrats’ tax plan to pay for Biden agenda would affect 700 of America’s super-richRead moreIf this sounds familiar, it is not only because it describes this current moment, but because it is the experience we lived through 12 years ago – a political meltdown that destroyed many Americans’ remaining faith in their government, and ultimately birthed Donald Trump’s presidency.That meltdown crushed faith in hope and change, and led to Maga and mayhem. And if Democrats continue making the same choices again, we should expect the same results – or worse.2009 was not 2021, but history tends to rhyme. Back then, the contagion wasn’t a virus, it was a financial panic brought on by the collapse of what had been the American economy’s most stable pillar: the mortgage. But the homes were built atop a precarious foundation. After a spate of bank deregulation, Wall Street giants had transformed themselves into the newest peddlers of the old swampland-in-Florida schemes, enticing borrowers and pension funds to bet life savings on unsustainable housing prices and debt.When enough homeowners couldn’t make their payments and home prices cratered, millions faced foreclosure, retirement systems faced huge losses on mortgage-related investments, 401k plans faced stock market declines, and banks faced the prospect of insolvency.Amid this financial pandemic, though, there was a glimmer of something better – Barack Obama, who had campaigned on an inspiring promise to “bring a new era of responsibility and accountability to Wall Street and to Washington”.That FDR-esque rhetoric resulted in a 2008 election landslide, a huge Democratic congressional majority, and high hopes that a new administration would fight the Great Recession with the same kind of robust New Deal that Franklin Roosevelt deployed to successfully combat the Great Depression.But that didn’t happen.Obama had helped the Bush administration forge the Troubled Asset Relief Program (Tarp), whose name seemed to promise assistance for homeowners, but which instead provided most of its benefits to a handful of financial institutions. When he took office, Obama could have changed how Tarp money was being spent, but he and his administration kept funneling the cash to Wall Street. The relative pittance that trickled out to aid borrowers mostly stretched out foreclosures to “foam the runway” for financial institutions, as Obama’s treasury secretary Tim Geithner reportedly said.Soon after, the Wall Street-bankrolled Obama administration scaled back its economic stimulus plan, backed off its promise to reform bankruptcy laws, refused to prosecute bankers, abandoned legislation to limit the size of too-big-to-fail banks, and allowed bailout money to subsidize lavish executive bonuses.Some lonely voices in Washington tried to sound an alarm. Tarp Inspector General Neil Barofsky warned that the opaque bailout was being misused. Congressman Brad Miller, a Democrat from North Carolina, tried to hold Obama to his promise to let judges write down mortgagors’ loans. And Senators Carl Levin and Ted Kaufman, a longtime aide to Joe Biden, pressed their party to prosecute and break up the banks.They were largely ignored – and Obama later justified the brush-offs by insisting that doing anything more would have “required a violence to the social order, a wrenching of political and economic norms”.But defending the banks and failing to deliver material gains to a nation ravaged by corporate malfeasance gave conservatives a political bailout, allowing them to further shred the social fabric once stitched together by a belief in shared sacrifice.Boosted by Glenn Beck’s blubbering broadsides and Rick Santelli’s CNBC dog-whistle rant against mortgage “losers”, Republicans were able to divide the country and portray themselves as populists – and shellack Democrats in 2010’s Tea Party election.A few years later, Democratic leaders confidently predicted that they would be able to overcome working-class rage with support from wealthier suburbanites. After all, the top 10% of income earners saw their fortunes rise by 27% during Obama’s presidency.But every other stratum saw incomes decline, and countless neighborhoods were eviscerated by more than 6m foreclosures, dooming families to losing battles with bank bureaucracy, government red tape, and a judicial foreclosure machine.There was Detroit’s Sandra Hines, who tearfully told a congressional committee about being thrown out of her home in the dead of winter after she fell behind on her mortgage payments.There was Florida oncology nurse Lisa Epstein, who, just after giving birth to an infant daughter, faced foreclosure and then endured a Kafkaesque struggle to expose fraudulent mortgage practices – which resulted in a slap-on-the-wrist settlement that netted her just $600.These experiences, repeated ad nauseam as Wall Street executives swelled their stock portfolios, convinced many to view the past promises of “hope and change” as a ruse. The subsequent outrage helped Republicans complete their takeover with Trump, a billionaire charlatan ginning up racial animosity and depicting himself as singularly able to “make America great again.”The throughline from the financial crisis to Democrats’ failure to deliver help to the rise of Trump is evident in a study from the Center for American Progress. The Democratic thinktank found that “larger proportions of underwater homeowners were prominent features” of more than a third of the 206 counties won by Obama in 2012 that flipped to Trump in 2016.“The legacy of the financial crisis is Donald J Trump,” concluded Trump consigliere Steve Bannon.For today’s Democrats, the takeaway is not merely that Trump is a pathological liar, a racist and an anti-democratic menace who exacerbated the problems he diagnosed. The lesson is more elemental: when America votes for hope and change and is instead force-fed more of the same, the backlash can be swift – and can benefit conservative opportunists who will make things worse.A dozen years later, with Democrats assuming power amid another national crisis, there were initial signs that this lesson had been learned: the Senate majority leader Chuck Schumer said at the outset of the Biden presidency that Democrats must pass bills that are “big and bold and strong”, and he added that “we will not repeat that mistake” of watering down legislation. The child tax credit in the initial Covid relief package was a solid victory – it significantly reduced child poverty, and a recent poll shows less anti-Biden animus among Trump voters who received it.However, much of the direct aid in that legislation has been stalled, cut off or scheduled for expiration – even as nearly one in five households lost all of their savings during the pandemic. Worse, Biden and Democrats have been considering big cuts to their already scaled-back package of housing, anti-poverty and climate initiatives. They’ve also pondered defanging provisions to reduce drug prices, and considered adding means-testing and work requirements that could make direct aid more difficult to access.Taken together, it feels like 2009 all over again.Billionaires are doing better than ever, while more and more Americans are getting economically pulverized – and simmering with rage. Just a year out from the midterm election, the latest polls show Biden’s approval rating plummeting, with particular erosion among Democratic constituencies who were promised change, but seem to be feeling like they’re only getting more of the same.Once again, progressive voices sounding the alarm are getting drowned out by conservative Democrats, their corporate donors, and pundits demanding surrender. Meanwhile, Trump and his Republican mini-mes are barnstorming the country preening as populists, all while a new crop of rightwing media hucksters are converting popular discontent into increasing support for rightwing authoritarianism.But let’s remember: the past does not have to be prelude. If the Democrats are willing to learn from recent history, they still have time to make different choices.In Congress, Democratic lawmakers can realize there is no “middle-ground” compromise with Republicans or corporate greed. They can end the filibuster and ignore the business lobbyists and the donors trying to halt their legislative program, which may be the last chance to help workers and ward off a climate cataclysm.In the White House, Biden can break from Obama’s fetishization of bipartisanship. He can instead try to be a modern-day Lyndon Johnson, arm-twisting his recalcitrant party members into embracing real hope and change.Though none of this would guarantee success, it would at least give the party a fighting chance to enact its agenda and materially improve people’s lives.That simple objective is often obscured in the social media-driven miasma of politics. But history suggests that going big and delivering tangible help to a nation in need is probably the only way to restore some faith in government, ward off an authoritarian takeover and end the meltdown of disillusionment that threatens to incinerate our democracy.
      Investigative reporter David Sirota and Oscar-winning documentarian Alex Gibney are the executive producers of the new podcast series Meltdown, which explores the aftermath of the financial crisis
      This essay is being published in conjunction with the launch of Meltdown. Find the podcast episodes here
      TopicsUS politicsOpinionDemocratsFinancial crisisJoe BidencommentReuse this content More

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      What led to Trump and what will follow Biden | Letters

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      George Monbiot (The US was lucky to get Trump – Biden may pave the way for a more competent autocrat, 11 November) is probably right about Barack Obama paving the way for Donald Trump, because the former failed to tackle big business. I would go even further and say that Tony Blair, another “breath of fresh air” at the time with his Tory-lite policies, more or less paved the way for our Trump – in the form of Brexit.Both politicians had a clear electoral mandate to bring about fundamental changes to their societies: in Blair’s case, to change our parliamentary institutions, as, when it came to corralling business, the UK was very much, and still is, a bit-part player. In the end, his successor handed over a poisoned chalice to the Tory/Lib Dem coalition to attempt to clean up the mess and, after its failure, to face the consequences. Joe Biden, besides confronting neoliberalism, needs to do to his country’s political system what Blair failed to do to his. John MarriottNorth Hykeham, Lincolnshire• George Monbiot paints a bleak prospect for the US and, by implication, the rest of the free world. He writes at length about the failure of Barack Obama to change the basic course of social and economic conditions during his eight years in office. He also comments on how important it is that Democrats win both Senate seats in Georgia to avoid a Republican-led upper house. Surely it was exactly this that stopped Obama at every turn – the fact that during his presidency he was cursed with a hostile and belligerent Senate.The 2008 global financial crisis was one of his darkest moments, and I believe it was Gordon Brown who took charge of the initial recovery worldwide. Most politicians realised that it was senior bank staff who were responsible for the disaster. But as the old adage says, “If you owe the bank £100 then you have a problem, but if you owe the bank £10,000,000 then the bank has a problem.” They were just too big and important to be allowed to fail. What didn’t happen, but should have, was that no bankers were exposed and prosecuted. Both Obama and Brown must bear some of the criticism. Richard YoellBromham, Bedfordshire• I am appalled by the advocation of “tub-thumping left populism” as a way forward for the US. We have seen enough of tub-thumping populism (whether of the left or right) in the world during the last 100 years to know where it leads – to mass civil unrest, police brutality, military intervention, civil war, governments shutting down parliaments and locking up (or kidnapping and murdering) political opponents. In short, to unbridled anarchy, tyranny and mayhem. So thanks, but no thanks! For all its faults and weaknesses, I’ll stick with democracy based on free and fair elections, even if it doesn’t always lead us to the ideal society that we may yearn to see realised.Philip StenningEccleshall, Staffordshire• George Monbiot overlooks the way in which the neoliberal doctrine of “making wealth before welfare” has been massively overturned by the response to the Covid-19 crisis, where the primacy of health over economics has been forced on even the most ardent neoliberal regimes, not least in the UK. This will certainly leave an indelible mark on the post-pandemic era. Unlike the disastrous neoliberal response to the 2008 crash, this time we are seeing the start of a possible end of its dominance as the prevailing ideology of our times, for the first time since the Thatcher-Reagan years.Adam HartGorran Haven, Cornwall More

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      Cancelling student debt was always the right thing to do. Now it's imperative | Astra Taylor

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      Cancelling student debt was always the right thing to do. Now it’s imperative Astra Taylor With a global pandemic and economic depression looming, we can’t settle for half-measures. Cancel all student debt Coronavirus – latest US updates Coronavirus – latest global updates See all our coronavirus coverage ‘The economy is entering freefall and millions are […] More

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      Coronavirus is draining America's public infrastructure. A federal jobs policy would protect its workers

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      Coronavirus is draining America’s public infrastructure. A federal jobs policy would protect its workers When millions face an uncertain employment future, a federal jobs guarantee program could turn the page on a dark chapter of our nation’s history The Federal Reserve estimates that the Covid-19 pandemic could lead to 47 million Americans losing their jobs. […] More