Why would former Treasury Secretary Tim Geithner--the brain who helped Barak Obama reverse engineer America out of the 2008-09 financial crisis-- pen a five page article called "Are we Safe Yet. How to Manage Financial Crisis?"
The piece that appeared in Foreign Affairs quarterly--mouthpiece of the Cathedral's (America's) captains of empire--was not a warning. It was a crisis management tool for a when, not if moment.
Geithner's assessment is insightful. "The 2008 financial crisis" he says "was the most damaging economic event since the Great Depression, for both the United States and much of the global economy. But how safe is that system today? The answer is important, because although the United States may not face a major crisis anytime soon, it is certain to at some point...The U.S. economy is less vulnerable to a modest crisis but more vulnerable to an extreme one."
Implicit in Geithner's statement is the admission that the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, lacks the tools to manage a sharp financial downturn. True, banks today are better capitalized, have more liquid assets on hand, and are less leveraged than in 2008. Hence Geithners statement that the "economy is less vulnerable to a modest crisis."
However, since Dodd-Frank passed in 2010, Wall Street has been fighting back. Led by Eugene Scalia-brother of the late Supreme Court Justice Antonin Scalia, the houses of finance have spent millions for their lobbyists to gut the bill piece by piece.
As for the notion that government won't bail out financial institutions "too big to fail," forget about it. Through mergers and acquisitions, the concentration of capital has exploded in the financial sector. Financial institutions have grown, rather than contracted since 2008. Now more than ever, the failure of one major bank or European Union country going into a tailspin, could send shock waves through the U.S. economy and beyond.
Geithner's warning is clear; the system's firefighting tools to mitigate a real emergency are weaker now than in 2008. Why? Because, the emergency powers of the Fed, the FDIC and Treasury Department to wind down a failing financial entity are now restricted by Dodd-Frank.
Specifically, their ability to inject massive government funds to backfill shortages of private capital would require congressional approval. That means their capacity to prevent panic from turning into a run on financial firms, which happened when Lehman Brothers collapsed in 2008, would be problematic.
Grappling with the dynamics of how an economic crisis can escalate into a financial meltdown here and internationally is not on the radar screen of America's Bicoastal Left (ABL), the center, or the right. To their credit, the Alt Right is more critical of workings of globalization than the ABL and the center.
The 'Heresy" at Alt-Black.com advances the position that we are living in an era marked by the decline of American empire, the nerve center of Global North's international finance system. Further, while political crises, revolutions, and wars in geopolitical hotspots can dramatically impact American empire, the sudden emergence of a financial crises could pose an existential threat to its unipolar superpower status. For example, Great Britain did not lose World War 1, but it was so weakened that it could no longer maintain its global empire.
In Great Britain's case, the collapse of its global empire resulted in it degenerating into a second-rate capitalist country. They were lucky because the Atlantic Alliance won.
Imagine the United States being reduced to a second-rate economic power, with it's chief adversaries, Russia and China being the two most formidable global powers. It could happen. A steep or sudden economic collapse could also throw millions of Americans into political turmoil, more devastating than the Great Depression.
Today, the bards of Cathedral (America) boasts that Global North under the Sun King's helmsmanship is humming. Since the Sun King Trump has been in the White House,
the unemployment fell to 3.8 percent in June, the lowest level in 18 years. But after all the hype about America's muscular economy, the Sun King has only lowered the unemployment rate by little more than one percent.
The economic growth rate stood at 2.3 percent in the first quarter of 2018, but remains below what Trump promised. It's also lower than the best years under Barack Obama (2.9 percent). Inflation has risen 1.2 percent and the U.S. trade deficit continues to rise, up 13.6 percent. After the Sun King passed the "Billionaires Tax Cut," the federal debt rose by more than $1 trillion.
Despite all the rhetoric about Global North's economic fortunes being on the rise, these economic indices don't conceal the fact that beneath the surface the seeds of a sharp economic downturn are germinating, Moreover, economic indicators don't obviate the reality that right now, the ruling class has given the green light to a Soft Coup to remove the Sun King from the Oval Office.
Crisis--political and economic-- are often opposite sides of the same coin. Today, Global North, led by the reactionary, racist demagogue Sun King has launched unprecedented attacks on the Darker Nation, Muslims, immigrants, women and Latinx. He is converting the GOP into a white nationalist party, and stacking the Supreme Courts with conservatives for years come.
It may be difficult to envisage new opportunities for radical change under today's conditions. But we remind you that the revolutionary storms of the 1960's occurred when the unemployment rate was less than four percent. To see the revolutionary opportunities in today's situation also requires us to dispel notions of slow incremental change. Crisis in the age of advanced imperialism and empire can emerge quickly. This is precisely the type of crisis Tim Geithner is suggesting when he ask the question "Are We Safe Yet."