You can measure the health of the American republic, or at least its governing institutions, on a weekday-morning Acela train from Washington to New York. It’s too expensive to use for pleasure ($337 if you plan late and are unlucky), too time-consuming (almost three hours for the 225-mile trip) to permit idling in the café car. So the train is always full of strivers, working their cell phones. On Tuesday morning, the phone chitchat was anxious. Even in Washington, where analysts and economists had been working all weekend to contain the collapse of Silicon Valley Bank, the reeling of the financial system when markets opened on Monday caught people by surprise.
It shouldn’t have. The last time bankers ran off with the savings of their compatriots was only fifteen years ago. A lot of people at the time asked: “How could we have been so gullible?” But really, Americans, Englishmen and other finance-dependent peoples had reason to be trusting. The young bankers in all those photos from the time may have looked ridiculous — standing with their backs to the plate-glass windows of a Lehman Brothers conference room to receive their walking papers, or lined up with cardboard boxes to cart their office possessions home. But what strikes us now is that they were so numerous. There were whole skyscrapers full of them, devising their multivariable hocus-pocus and bragging about their sailboats to young women in wine bars after work. Few liked them as a group. But they seemed the product of a real, stable, indispensable service industry. By contrast, whenever SVB has been mentioned in recent days, you see a lot of B-roll of automatic teller machines. You wonder if they have any employees. Whenever the cryptocurrency-focused Signature Bank is mentioned, you see empty shop fronts in malls. You wonder if they have any customers.
We will at least be able to drink the problem away. Since February, Irish tricolors have been fluttering along the main street of our Washington neighborhood in anticipation of St .Patrick’s Day. No longer is March 17 merely an occasion for the Irish working classes of Boston, New York and Philadelphia to sing and fight and get a Lenten indulgence. It’s an occasion for everyone to honor and celebrate what Ireland represents to humanity: abortion and corporate tax avoidance. Strangely, the holiday is celebrated in almost identical fashion, and in the same commercial spirit, as the Mexican-American Cinco de Mayo seven weeks later. Except that the Think-o de Mayo, as the corporate multiculturalists earnestly call it, is for selling tequila rather than Guinness. Since Covid there has been something phoned-in about the economy. In 2020, the nearby pet shop worked fifteen-hour weeks —11 a.m. to 2 p.m. on weekdays — to serve the local dogs. We were grateful. The nice couple who run the shop, though, are still working 11 to 2. They want to drink cappuccino and do the crossword instead of working. That is OK but they will have less money. We are not their only customers who cannot be in the neighborhood at midday.
Afew months ago I took a shuttle to the San Diego airport with a local businessman who was trying to restart his real-estate firm. He had paid his employees while the business flatlined, but in the spring of 2021 he summoned them all back to the office. About a quarter of them had to make special arrangements to get back to San Diego from their country places, and a tenth of them had moved thousands of miles away, to Montana, Florida, Texas. They expected to keep collecting a paycheque in exchange for the occasional Zoom call.
The real problem came when the government did that. Remember, the investment strategy that got SVB into trouble — plowing everything into long bonds — is supposed to be the safest strategy there is. That’s why it’s beloved of widows and curmudgeons. The only way it could go wrong would be if inflation spun out of control… if, say, the federal government decided to spend $10 trillion to reconfigure public spending around a concept (race-based “equity”) that didn’t exist a decade ago, and then to ship the West’s most sophisticated weaponry to the Eurasian steppes in order to keep a war going.
Maybe this is simpler than it looks. The Great Recession of 2008 was, like the Great Depression of the 1930s, an economic phenomenon. But the problem now seems wider, more attitudinal. One of these days we’re going to get the Great Comeuppance.
This article was originally published in The Spectator’s UK magazine. Subscribe to the World edition here.