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Cake day: June 12th, 2023

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  • Excerpted from Kim Stanley Robinson’s excellent Ministry for the Future:

    In the United States, the National Students’ Union website showed that thirty percent of the union members had now responded YES to the union website’s standing poll asking them if they were in so much financial distress caused by their student debt that they would like to see the union initiate a fiscal non-compliance strike, by not paying their next debt payment. On joining the union, members had agreed to join any strike requested by thirty percent of the membership, so now the union coordinators called for a strike vote to be sure, and got an eighty percent yes vote, with ninety percent participation. None of this was surprising; student food insecurity, meaning student hunger, was widespread, also student homelessness. So the strike began. Student debt was a trillion-dollar annual income stream for the banks, so this coordinated default meant that the banks were suddenly in cash-flow hell. And they were so over-leveraged, and thus dependent on all incoming payments being made to them on time to be able to keep paying their own debts, that this fiscal strike threw them immediately into a liquidity crisis reminiscent of the 2008 and 2020 and 2034 crashes, except this time people had defaulted on purpose, and precisely to bring the banks down. The banks all rushed to the Federal Reserve, which went to Congress to explain the situation and ask for another giant bail-out to keep liquidity and thus confidence in the financial system itself. There were calls from many in Congress to bail out the banks, as being essential to the economy, and too connected for any of the big ones to be allowed to fail. But this time the Fed asked Congress to authorize their bailing out the banks in exchange for ownership shares in every bank that took the offer. This was either nationalizing finance or financializing the nation, in that now it was clearer than ever that the country was in effect run by the Fed. And since Congress ran the Fed, and people voted in members of Congress, maybe it was all beginning to work, somehow, because of this strike. Definancialization of a sort. End of neoliberalism.