Lehman Brothers or Y2K? A Brief Conjecture on the Potential Upcoming Collapse of the U.S. Economy and Ensuing Social Chaos

Evictions, possible housing market crash, could spoil the party


The U.S. and global economies did not undergo a complete collapse during the Covid-19 pandemic, as appeared likely in March of 2020 when stock markets tanked and panic about the novel coronavirus was, understandably, spreading like a forest fire. By the end of that month, as unemployment surged and coronavirus cases soared around the world, President Donald Trump signed the largest financial bailout in U.S. history. Piles of cash followed in three additional bills — including the Orwellian named Cares Act — amounting to a combined $4 trillion in tax breaks, grants and loans, exceeding the cost of 18 years of war in Afghanistan, The Washington Post has reported.

Naturally, the vast majority of aid went to the plutocracy. The biggest recipients were the Federal Reserve, “the wealthy and companies that laid off workers,” the Post said, while only about one-fifth of the money went to individuals. By the end of Trump’s term the stock market was soaring and employment numbers were steadily improving, even if the relentless DoorDasher-ization of the economy meant most Americans were working a lot more and making a lot less.

President Joe Biden’s signed a $1.9 trillion Covid relief bill and while the usual pigs slopped up most of that at the national feeding trough, some money did go to us plebes. Sure, mega-rich dickhead Tom Brady got a government loan (under Trump) of just south of $1 million for his fraudulent “health and wellness” company. But why be bitter towards Brady — or the husband of House Speaker Nancy Pelosi or various Trump associates and family members who cashed in on Covid aid — when you and I were swilling down Dom Perignon and snorting gold flakes off our sushi and designer donuts from the bounty left over after we paid rent and expenses the past 13 months with our gaudy combined $3,200 in relief checks?

(At $100 each, you could buy two dozen of the gold flake covered donuts pictured above, available at a Brooklyn restaurant, and still have $800 left over from your Covid aid winnings to splurge on housing, health care and a vacation.)

So while millions are still suffering the economy hasn’t cratered and most economists are predicting rapid economic growth for the rest of the year. Indeed, the International Monetary Fund is projecting global growth for 2021 to hit a record six percent.

So, we’re out of the woods, right?

Wrong. (Maybe.)

First, the U.S. economy increasingly serves to funnel money upward, even as 80 percent of the population is increasingly pauperized. But more immediately, the teetering housing market, which undergirds the entire national pauperization factory, is far shakier than it appears.

“Teetering?” I can hear you asking. “Why, housing prices where I live have remained steady or are even rising. WTF are you talking about?”

Well, at least 8 million American households are currently behind on rent. The Biden administration extended a national eviction moratorium until June 30, but that’s coming up fast and some states are refusing to honor it. Just yesterday, NPR reported, the Texas state court system “is signaling that it will no longer enforce a federal order aimed at stopping evictions during the coronavirus pandemic. That could clear the way for landlords to push ahead with…eviction cases that have been on hold.”

“We’ve had a failure of leadership that’s going to result in tens of thousands, if not hundreds of thousands, of Texans becoming homeless in relatively short order,” Mark Melton, who heads up a pro bono team of 175 volunteer lawyers in Dallas, told NPR. He said the state had just “stepped off a cliff.”

The same phenomenon is taking place across the country. It’s not attracting as much enough attention as it should now, but it’s going to as evictions step up. In Miami — always a real estate bellwether and an epicenter of the 2008 housing and stock market crash, triggered by the fall of Lehman Brothers due to its disgusting role in the subprime mortgage scandal — tens of thousands of families are on the evictions rolls already, and that number is rapidly growing.

Courts in Miami-Dade county have begun approving eviction orders. Two days ago, a Miami woman was shot and killed by police after she reportedly opened fire on a task force sent to evict her. Yesterday, a woman facing an eviction order jumped to her death from her apartment building. Local banks are already moving to foreclose on hotels. Florida City, a Miami-Dade town and gateway to the Keys and Everglades, recently retained a law firm to process mass evictions. Unsurprisingly, street crime and violence is soaring as the social fabric unravels.

The housing market at the moment seems to be cruising along, but when the national eviction moratorium is lifted — at the end of June or surely within a few months of that if Biden again extends it — it is going to start to wobble, and that wobble could turn into an earthquake when banks and other financial vultures swoop in. “Biden may want to save the world, but Wall Street wants to kill the world,” said Peter Zalewski, a Miami real estate expert. “Wall Street will win.”

(Zalewski, a good friend, famously pranked Michael Moore when the latter was filming Capitalism: A Love Story. Moore’s crew didn’t initially identify themselves when approaching Zalewski, a former newspaper reporter, but he figured out they worked for him and intended to portray him as evil personified. Based on the proven theory that all publicity is good, he played along and gave them a quote that was too good to be true. Moore thought it was a great gotcha; meanwhile, Zalewski rented out a movie theater for a party when the movie opened.)

“No one know how this is going to play out,” Zalewski added. “This could be Lehman Brothers all over again or it could be Y2K.” (Y2K , for those who don’t remember or are too young to remember, was shorthand for “the year 2000.” Back in 1999, every computer programming expert in the country was on cable TV shrieking that chaos and havoc would occur on global computer networks when the clock struck New Years at midnight on December 31st. The clock struck midnight and nothing happened.)

So, yeah, no one knows how this will all play out. But we’re still in the midst of a global pandemic and it’s not clear how that’s going to unwind, and only an idiot (or a cable news analyst, though I guess that’s redundant) thinks the economy is on solid ground. Maybe a wave of evictions never happens, and this is a Y2K event.

But we’re in a particularly vicious period of jungle capitalism, and I wouldn’t bet on that. If mass evictions occur after the moratorium expires, which seems inevitable, we could be looking at Lehman Brothers redux or, short of that, merely the lesser quotidian capitalist calamity of more deaths of despair and social murder.

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Politically eclectic DC-based investigative journalist and CEO, Chief Sleaze Purveyor (CSP) and Creator of WashingtonBabylon.com.