At
Truthdig, Nomi Prins (a TomDispatch regular) takes a look at the
economy in 2018, suggesting that, when the next financial crisis comes,
it could make 2008-2009 look mild. Here's how her piece begins and
ends. Tom
"We’ve made it through 2017. The first-season
installment of presidential Tweetville is ending where it began, on the
Palm Beach, Fla., golf course of Mar-a-Lago. Though we are no longer
privy to all the footage behind the big white truck, we do know that,
given the doubling of its membership fees, others on the course will
have higher stakes in the 2018 influence game.
"The billionaire
who ran on an anti-establishment platform went on a swamp-filling,
deregulatory and inequality-producing tear, in the process creating the
wealthiest Cabinet in modern United States history and expanding his own
empire along the way. His offspring, Russia-related investigations
aside, didn’t do too shabbily either. White House policy adviser Ivanka
Trump’s brand opened a splashy new store in the lobby of Trump Tower in
Manhattan, just in time for Christmas.
"If you look at the stock
and asset markets, as Donald Trump tends to do (and as Barack Obama did,
too), you’d think all is fine with the world. The Dow Jones Industrial
Average rose about 24 percent this year. The Dow Jones U.S. Real Estate
Index rose 6.20 percent. The price of one Bitcoin rose about 1,646
percent.
"On the flip side of that euphoria however, is the fact
that the median wage rose just 2.4 percent and has remained effectively
stagnant relative to inflation. And although the unemployment rate fell
to a 17-year low of 4.1 percent, the labor force participation rate
dropped to 62.7 percent, its lowest level in nearly four
decades—particularly difficult for new entrants to the workforce, such
as students graduating under a $1.3 trillion pile of unrepayable or very
challenging student loan debt. (Not to worry though: Goldman Sachs is
on that, promoting a way to profit from this debt by stuffing it into
other assets and selling those off to investors, a la shades of the
subprime mortgage crisis.)
"Those of us living in the actual
world without billionaire family pedigrees possess a healthy dose of
skepticism over the “Make America Great Again” sect that believes Trump
has transformed America “hugely,” for record-setting markets don’t imply
economic stability, nor do 40 percent corporate tax cuts translate into
40 percent wage growth. We can march forward into 2018 carrying that
knowledge with us.
"But first, a recap. For the U.S. financial
system, 2017 was marked by five main themes: The GOP’s “You All Just Got
a Lot Richer” Corporate Tax Reduction Plan; Big Banks Still Bad; The
Fed’s Minor Policy Shift; Debt; and Deregulators Appointed to Positions
of Regulatory Authority....
"What does that mean? Financially
speaking, 2018 will be a precarious year of more bubbles inflated by
cheap money, followed by a leakage that will begin with the bond or debt
markets. The GOP tax cuts won’t technically kick in monetarily for
corporations until after the year is over in 2019, but the anticipation
of extra funds will fuel more buybacks. This will help to provide cover
for any rate hikes the Fed implements, because it provides corporations
the ability to boost their own share prices further.
"Meanwhile,
the Treasury Department, Federal Reserve and other smaller regulatory
authorities in Washington will push for greater deregulation of the
financial systems and banking industry on any level possible. If there
is another financial crisis in 2018 or later, it will be worse than the
last one because the system remains fundamentally unreformed, banks
remain too big to fail and the Fed and other central banks continue to
control the flow of funds to these banks (and through to the markets) by
maintaining a cheap cost of funds.
"Politically, no one in any position of power will do anything to fix any of this."
