I'm no Naomi Klein, but many crises have been followed by large shifts in opinion. One, I think there will be significant backlash overseas. The European bankers, Chinese state-run investment firms, and Sovereign Wealth Funds all bought worthless US paper all the way down and were rarely transparent about it to their investors. I imagine we'll see angry conspiracy theories thrown out about malevolent American coercion forcing these trades, some of this directed at the funds too. This will curb global capital flows and trust; both foreign money coming in and the willingness of people to accept American money flowing out.
Obviously, the crisis will be blamed on poor "regulation" and free market practices. For why that's not the best way of looking at it, see Cowen. But the outrage against corporate overlords will be strong, and there will be a strong push towards greater federal oversight. My guess is that retroactive analysis will emphasize the powerful and beneficial role of the Federal Reserve and Treasury in stopping the crisis, and people will demand similar action elsewhere. After all, we bailed out Bear Sterns, so why not bail out the little guy as well? It's easy to look at the situation and see failing markets and effective federal regulators.
Government manipulations of the housing market--tax credits for capital gains and mortgage payments--are likely to continue.
So I guess this is just saying that the country will shift left, which is what many people expected anyway. It's not the worst thing in the world. As Lawrence Summers said recently, markets have worked well in delivering people tradable goods and services, while problems lie in the delivery of social services such as healthcare, education, and poverty assistance.
Intellectually I have to imagine that there will be a, well, malaise. It's been close to a decade now of stagnant growth in GDP and equity prices; combine that with a global crisis, a housing collapse, one war that's seen as failed (Iraq) and another that's seen as misguided (terror), higher commodity prices, and failures in leadership from politics and economics. Everyone talks about the iconic status of Jon Stewart in this generation, but maybe we'll see the more disaffected and hopeless side of that. Timewise, I'm thinking late '80s-early '90s, or mid to late '70s as a model. I suspect a new narcotic will become popular. If nothing else, people will start to spend all of their time on the internet. People will associate with others on finer and finer gradiations; trust and community will collapse as xenophobia rises. Materially, it will be the best time ever in human history.
Looking back, this doesn't make a lot of sense, but predicting things is hard.
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