Many Americans are still suffering the consequences of the financial crisis. Donald Trump’s former chief strategist, Steve Bannon, believes that without the crisis, the billionaire would not be president today.
September will mark ten years since Lehman Brothers collapsed — the zenith of the financial crisis which changed America. The Wall Street crash was a prelude to the housing slump, with many Americans unable to pay their mortgages and having to forfeit their homes as a result. These crises had long-term political effects, with many experts tracing both the radicalization of the right, as well as a growing acceptance of ideas which are considered markedly left-wing, in American discourse, to precisely this moment. Stronger banking regulations, higher taxes on equity gains and assets, as well as a nationwide minimum wage — these are the demands heard, above all, from Democratic candidates. Republicans are more for stimulating the economy with tax breaks and deregulation, and the Donald Trump supporters among them would like to isolate the American market with high import tariffs.
Though the American economy may have recovered, many people are still suffering financially from the consequences of the crisis. But it was not only homes that were lost to foreclosure auctions. The pension system is also very much reliant upon individuals having set aside private capital. Since these savings happen via the so-called 401(k) plans, which are also invested in shares, many people lost a portion of their retirement provisions. “Americans stopped believing in the American dream,” wrote columnist Frank Rich on the anniversary of this terrible event. The country has had a new drug crisis to contend with in recent years, with the number of suicides rising and the birth rate in certain population groups falling. For Rich and others, these are signs of a profound lack of prospects caused by the economic upheaval.
”Nobody Kept Them in Check”
In recent years, right-wing populists have discovered how to exploit the consequences of the crisis. Some of them, in fact, agree with the left in their analysis of the situation – it is only their responses that differ. Time and again, Trump has promised to bring back jobs, jobs that will be unsustainable due to structural changes in the industry; coal mining, for instance. Resentment towards immigrants who allegedly steal American jobs has also been fueled by many of those who lost their homes and pension savings during the crisis. But Trump also scored points with many workers by once promising to tighten regulations on larger banks. During the election campaign, his former chief strategist, Steve Bannon, called for the suppression of large financial institutions. This has since disappeared from Trump’s governmental policy. On the contrary, companies and the well-off, in particular, are benefitting from tax breaks, with banking regulations also set to be partially relaxed.
Meanwhile, Bannon, who currently wants to establish a new right-wing coalition movement in Europe, while also continuing to have a voice among right-wing Trump supporters, has stuck to his ideas. He is now disseminating his very own brand of “America First” nationalism, paired with his critical analysis of the financial crisis, outside the White House. “Donald J. Trump is the legacy of the financial crisis,” said Bannon in an interview with New York Magazine. The fact that the government dug the banks out of their plight with billions of dollars, and yet the common man lost a lot of money, and often the roof over his head, he argues, led to a massive crisis of confidence. In agreement with many leftists, Bannon, who previously worked at Goldman Sachs, sees the radical market trend of American economics as one of the initiators of the crisis. “When I got to Harvard Business School in 1983, a bunch of professors were coming up with a radical idea that’s had a horrible negative consequence on this country and to the fabric of our society: the maximization of shareholder value,” Bannon said.
Since then, stock exchange trading, which has become increasingly removed from real value creation, has determined corporate decisions. “The whole thing of the financialization of Wall Street, of looking at people as pure commodities and of outsourcing and globalization, came from the business schools and the financial community that had these radical ideas, and nobody kept them in check.” For Bannon, the Democratic Party did not grasp the workers’ anger and desperation about the structural transformation and financial crisis. Trump, in contrast, understood the workers and fought for them, according to the populist.
Many on the left side of the political spectrum agree with this analysis, but set different priorities and promote different solutions. While right-wing racism mixes with fears about loss in social standing, the presidential candidate Bernie Sanders, for instance, emphasized that African-American families in particular were, and remain, the victims of the crisis. “The African-American community lost half of their wealth as a result of the Wall Street collapse,” Sanders said in 2016. For him, it is now more important than ever to ensure that the poorest people in the country receive an inexpensive education, higher wages and universal health insurance. The Pew Research Center estimated the financial loss of African-American families as a result of the 2014 financial crisis to be 43 percent, with other estimates calculating losses of up to 60 percent.
As a result of the real estate and financial crises, the wealth gap between white and black citizens widened once more. According to figures from the Federal Reserve Bank, which the Center for American Progress used, black families had, on average, 14 percent of the assets of white families in 2007; in 2016, this was 10 percent. According to the American Census Bureau, an average African-American family’s assets amounted to $17,600 in 2016; for a white family this figure was $171,000. According to a study by the Center for Investigative Journalism, the differences can be seen among the numbers of homeowners. Interest rates rising since 2006 meant that many borrowers were unable to repay; meanwhile, housing prices fell. For decades, even African-Americans with good credit were not awarded affordable mortgages, forcing them to take out subprime mortgages with higher interest rates. When this practice was uncovered, the American government forced banks to end any discrimination. However, in reality, things were different: In the 2009 Wells Fargo trial, employees said they were encouraged to sell subprime mortgages to African-Americans, even if they were eligible for better mortgages. When the subprime mortgage market collapsed, a disproportionate number of African-Americans lost their homes, according to a study by Princeton University.
”The Left Wing, You’re a Bunch of Pussies”
The fact that banks were rescued from the crisis by the government and no one was held criminally responsible leaves a bitter taste in the mouths of many — although a list provided by the Department of Justice contains 200 people considered potentially liable. Leftists like Bernie Sanders decry this at almost every event and are greeted with applause, and Bannon takes the same line: “The elites save themselves. They just created money,” he told New York Magazine. Trump is the first to declare war on the establishment, according to the former Breitbart News Network chief. “And we’re just in the beginning stages, and that’s why right-wing populism’s gonna win, because the left wing, you’re a bunch of pussies.” The fact that many people in rural areas are so badly off is a consequence of the financial crisis and the subsequent economic changes; the Democrats have not yet understood this, says Trump’s former chief strategist. “There’s a direct correlation between the factories that left, the billets and jobs that left with them, and the opioid crisis. This is what the Democrats miss: Tariffs are more than economics, it’s about dignity and self-worth.”
Right-wing populism, as Bannon calls his political leaning, is about giving one’s own citizens a “better deal.” He doesn’t want work visas until Americans have their jobs back. “Until we get Baltimore, Detroit, and St. Louis with, you know, youth unemployment down to zero, and people making high value-added jobs, I don’t need any foreigners. And I’m not a racist.” This is well received by right-wing supporters, though Bannon neglects the fact that the youth in these cities would also often need affordable educational opportunities and other support. He also ignores that this “America First” nationalism goes hand in hand with racism and isolation. Yet many of Trump’s voters applaud, as the president has long been implementing the latter components of Bannon’s populism.
However, many are still waiting for the fulfillment of other promises that more of their material needs would actually be met.