I’ve been wandering around Zuccotti Park quite a bit these past few weeks, interviewing people, joining in marches, and of course, indulging in the abundant offerings of food available for free at the protests. And as I talked to more and more protesters, I got this funny feeling that most of them, though definitely not all, didn’t really have a clear idea of why Wall Street was such a Bad Guy.
That is to say, ideologically, they were pretty sure that capitalism was not a good thing and that it’s led to a highly unequal society. But I didn’t hear anyone talking about specific banks, or particular CEOs, that they wanted to see legally punished. I didn’t find people who were interested in discussing economic theory or, say, debating whether Keynesianism might be a potential solution to our current recession. (And yes, I know that the protest is not exclusively about demands, that it’s about creating a space for radical politics and sociality outside capitalism; I get that.)
Then I asked myself: do I know what I’m angry about? Do I fully understand how we got here?
I was twenty-four and in graduate school, studying sociocultural anthropology, when the financial world came toppling down like a Jenga game. Reading Marx was helpful to some extent, but it wasn’t concrete enough. I realized, as I continued to visit Zuccotti Park, that I needed to refresh my memory of the events that brought us to where we are today.
The book, Diary of a Very Bad Year: Confessions of a an Anonymous Hedge Fund Manager, practically fell into my lap this week. It’s a series of interviews between Keith Gessen, one of the founding editors of the literary magazine n+1, and a charismatic, gregarious manager of a hedge fund located in Manhattan, conducted between September 2007 and August 2009.
Besides being extremely informative, both in terms of facts and as a glimpse into the culture of the finance world, the book has a comical overtone, due to the fact that Gessen is a literary guy with very little knowledge of the banking world. As I read the many laughable moments where Gessen’s lack of understanding is simply wondrous, I realized that this is one of the problems that led us into the crisis in the first place: Americans, even the most educated ones (Gessen went to Harvard and runs a magazine, mind you), really don’t know what goes on in the financial world. And yet we trust it with our savings and we rely on it to keep our economy flush with liquidity.
And without understanding the mechanisms of finance, people were susceptible to the subprime mortgage loans that caused the housing bubble, led to the financial crisis, and ultimately steered us toward this economic recession.
As I read the interviews, I frantically took notes until I had all the details clear. They go something like this:
- 2000: Dot-Com bubble bursts
- 2001: terrorist attacks
- mid-2003: Fed cuts interest rates to historic low of one percent; meanwhile economic boom in China leads that country to park their money in the U.S. in the form of American Treasury bills, bonds & stocks –> results are (1) cheap housing loans available; (2) liquidity creates “paper” on Wall Street
- paper leads to trades (credit swaps) as housing market takes off with building frenzies in California and Florida
- mid-2005: housing market is glutted and prices begin to drop; it becomes clear that subprime mortgage holders will default; hedge funds now own bundles of these mortgages in the form of Collateralized Debt Obligations (CDOs)
- 2007: two Bear Stearns hedge funds begin to go down after they have invested heavily in mortgage-backed securities
- early 2008: Merrill Lynch announces they will be “writing down” over $8 billion in subprime and other mortgage-related assets
- BANKS BEGIN TO FAIL: JPMorgan Chase buys Bear Stearns
- The Euro begins to weaken
- September 2008: Fannie Mae and Freddie Mac go into conservatorship of the Fed
- Lehman Brothers files for bankruptcy; BoA buys Merrill Lyncg; the Fed nationalizes AIG for $80 billion; the Reserve Primary Fund fails
- THE STOCK MARKET BEGINS TO GO DOWN THE TUBES
- Morgan Stanley and Goldman Sachs fold; JPMorgan Chase buys Washington Mutual; Iceland goes bankrupt; the Big Three automakers threaten bankruptcy
- UNEMPLOYMENT RISES CONTINUALLY
- December 2008: Bernie Madoff is busted for his Ponzi scheme
- February 2009: Citi gets partly nationalized
- Newspapers begin to fold due to lost advertising revenue
- California budget crisis
- FORECLOSURES GOING ON ALL THE WHILE
- And meanwhile, the Troubled Asset Relief Program, TARP (commonly known as “the bailout”) was eventually passed by Congress, issuing almost $700 billion to the banks that were failing either directly because of the burst housing bubble or indirectly in its wake. And not long after, banks are reporting profits and CEOs at places like Goldman Sachs are taking home enormous bonuses.
So here we are. What do we do? Who do we blame? Are bankers bad people? Is capitalism a system driven by immorality and insatiable materialism?
Nothing is that black-and-white. But if you look carefully at the above scenario, and not at its details but at what it represents in a “big-picture” way, there is one conclusion that, for this writer, seems apparent.
Growth-based capitalism — the notion that a healthy economy is one in which consumerism drives the engine that creates an infrastructure that we need to live in — is simply not working. It has not created an equitable society where all enjoy the fruits of productivity. It has not proved itself sustainable. It has not made people happier or more appreciative of what life has to offer. It has made us work more and feel more pressure to represent our achievements with massive houses and big cars. It has made the middle-class insecure and brought uncounted numbers of students to enter a life of debt in the interest of having a potential career, only to find that such an American Dream really can only be had while sleeping. It has left our inner cities and small towns to rot. It. Has. Failed.
Is there a solution? Well, that depends on us. Can we live with less? Can we learn to use available resources — neighbors, vacant public spaces, social networks, community organizations — to maintain or enhance our health? Can we accept that overconsumption never really was the route to happiness anyway?
This is where Occupy Wall Street really gets it right. For all their potential sites of criticism — they smell bad, they’re conspiracy theorists, they’re aimless, they’re using MacBooks and Twitter to instigate revolution — they have managed to create a space outside of the logic of capitalism. It’s a space where it’s up to each individual to decide what he or she wants to contribute and wants to take away, and everybody’s talents are taken seriously. Nobody is judged based on class or background or pedigree. The key is finding a way to socialize, to exist, without tying each action to the dollar that has proved so untrustworthy, so faulty, so isolating.
What’s happening on Occupy Wall Street isn’t socialism; it’s radical individualism at it’s best. And nothing is more truly American than that.