Dear President Trump: Breaking Up (Banks) Isn't So Hard to Do

By Noms Prins, TomDispatch

10 June 17

 

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Remember when “draining the swamp” was something the Bush administration swore it was going to do in launching its Global War on Terror?  Well, as we all know, that global swamp of terror only got muckier in the ensuing years. (Think al-Qaeda in the Arabian Peninsula, think ISIS.) Then, last year, that swamp left terror behind and took up residence in Washington, D.C.  In the 2016 presidential campaign, Donald Trump swore repeatedly that, along with building his wall and locking “her” up, he was going to definitively drain the Washington swamp, ridding the national capital of special interests once and for all.  (“It is time to drain the swamp in Washington, D.C.,” he typically said. “This is why I'm proposing a package of ethics reforms to make our government honest once again.”)  “Drain the swamp” became one of the signature chants at his rallies.

No sooner had he been elected, however, then he decided to “retire” the concept of draining the swamp -- and little wonder.  After all, he quickly began appointing hordes of “former lobbyists, lawyers and consultants” to agencies where they were to help “craft new policies for the same industries in which they recently earned a paycheck.” Then his administration started issuing waivers to those new appointees, allowing them to “take up matters that could benefit former clients.”  News of just who got those waivers was kept secret and only released after publicity about them took a truly bad turn.  Here’s a typical example of one of them, as reported by the New York Times: “A... waiver was given to Michael Catanzaro, who until January was registered as a lobbyist for companies including Devon Energy, an oil and gas company, and Talen Energy, a coal-burning electric utility. Mr. Catanzaro moved from lobbying against Obama-era environmental rules to overseeing the White House office in charge of rolling back the same rules, an activity permitted by his waiver.”

You want swamp?  You’ve already got the start of a genuine mire, a true bog in Donald Trump’s Washington.  Having yesterday’s corporate lobbyists oversee today’s government policies for the very industries that employed them last week doesn’t exactly increase the odds of instituting the sort of “populist” economics Trump promised on the campaign trail; nor, as TomDispatch regular Nomi Prins, author of All the Presidents' Bankers, reported for this site back in late January, is appointing a veritable who’s who of Goldman Sachs executives to key positions, including Treasury secretary, the most obvious way to drain the swamp when it comes to, say, America’s banks and other financial institutions.  As for those banks -- remember the “too big to fail” financial meltdown of 2007-2008? -- let Prins tell you just what’s at stake in Washington right now.

-Tom Engelhardt, TomDispatch

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Dear President Trump: Breaking Up (Banks) Isn’t So Hard to Do
Glass-Steagall or Another Economic Meltdown?

onald, listen, whatever you’ve done so far, whatever you’ve messed up, there’s one thing you could do that would make up for a lot.  It would be huge!  Terrific!  It could change our world for the better in a big-league way!  It could save us all from economic disaster!  And it isn’t even hard to grasp or complicated to do.  It’s simple, in fact.  Reinstitute the Glass-Steagall Act. Let me explain.

In the world of romance, if you break up with someone, it’s pretty simple (emotional complications aside).  You’re just not together anymore. In the world of financial regulation, it used to be as simple as that, too. It was like installing a traffic light at a dangerous intersection to avoid deaths. In 1933, when the Glass-Steagall Act was passed, it helped break up the biggest banks of the day and for good reason: they had had a major hand in triggering the most disastrous economic depression our country ever experienced.

Certain divisions of those banks were no longer allowed to coexist with others. The law split the parts of banks that placed bets by creating and trading certain risky securities and those that took deposits and provided loans.  In other words, it ensured that the investment bank and the commercial bank would no longer cohabit. Put another way, it separated bankers with a heinous gambling habit from those who only wanted a secure nest egg. It was simplicity itself.

After 1933, the gamblers and savers went their separate ways, which proved a boon for the economy and the financial system for nearly seven decades. Then legislators, lobbyists, bankers, and regulators started to chisel away at the wall separating those two kinds of banks. By November 1999, President Bill Clinton signed into law the Gramm-Leach-Bliley Act that repealed the Glass-Steagall Act totally. The abusive marriages of gamblers and savers could once again be consummated.

And who doesn’t remember the result: the financial crisis of 2007-2008 that led to taxpayer-funded bailouts, subsidies, loans, and sweetheart fraud-settlement deals. Just as the Crash of 1929 had been catalyzed by the manufacturing of shady “trusts” stuffed with shady securities, this crisis was enabled by the big banks that engineered complex assets stuffed with subprime mortgages and other loans that were sold around the world. 

Under President Obama, the 2010 Dodd-Frank Act was signed into law. The Act sought to limit the ability of big banks to trade the riskiest types of securities. Through inclusion of something called the “Volcker Rule,” Dodd-Frank prohibited the trading of securities (even if with many loopholes). What it didn’t do was actually break up the big banks again.  That meant another 1933 still awaited its moment. 

Then along came the bizarre 2016 presidential election campaign during which, strangely enough, Democrats and Republicans found one issue on which they had some common ground: the banking system.  Key figures in both parties agreed that it was time to stop the investment bank and the commercial bank from commingling. Bernie Sanders ran on a campaign to break up the banks -- and so did Donald Trump. At at an October campaign rally in Charlotte, North Carolina, Trump even stated, “It’s time for a twenty-first-century Glass-Steagall.”

The Democratic National Committee platform offered a similar message. “Banks,” it said, “should not be able to gamble with taxpayers’ deposits or pose an undue risk to Main Street. Democrats support a variety of ways to stop this from happening, including an updated and modernized version of Glass-Steagall as well as breaking up too-big-to-fail financial institutions that pose a systemic risk to the stability of our economy.”

The Republican National Committee wasted even fewer words making the point in their platform: “We support reinstating the Glass-Steagall Act of 1933 which prohibits commercial banks from engaging in high-risk investment.” And it didn’t even suggest that the act should be “modernized” or mention a “twenty-first-century” version that didn’t do what the twentieth century one had done.

For the first time since its repeal, in other words, a return to the Glass-Steagall Act had bipartisan support. It couldn’t have been simpler, right? Two parties, one idea: split banks into two pieces. But then, as if you hadn’t already guessed, it got complicated.  

Breaking-up, Republican-Style

In the new administration, two key figures are now offering quite different and conflicting views of what a resurrection of the Glass-Steagall Act might mean.  At his Senate confirmation hearings, Steven Mnuchin, former Goldman Sachs partner and Trump's nominee to be secretary of the Treasury, faced Senator Maria Cantwell (D-Wash.) as she bluntly asked “Do you support returning to Glass-Steagall?”

He replied, “I don’t support going back to Glass-Steagall as is. What we’ve talked about with the president-elect is perhaps we need a twenty-first-century Glass-Steagall. But, no, I don’t support... taking a very old law and say we should adhere to it as is.”

Cantwell then pressed him further: “And so, is that the position of what the Republican platform was? Because I thought it was Glass-Steagall?”

To this, Mnuchin responded, “Again, the Republican platform did pass at the convention Glass-Steagall and... [when] we talked about policy with the president-elect, our view is we need a twenty-first-century Glass-Steagall.”

The skepticism in the room was thick enough to cut with a knife. Here, after all, was a man who had made windfall profits on the fallout from the 2007-2008 “too big to fail” financial crisis by organizing a cadre of hedge-fund billionaires to buy the collapsed IndyMac Bank at a discount. He then proceeded to foreclose on some of its mortgages and resell it for a $2.5 billion profit. Why should such a man want to restrict banking activity, Glass-Steagall-style, when his loan practices had allowed him to make a fortune off the taxpayer bailouts that were the result of not doing so? What would the point be when a crisis, as history had just shown, forced the federal government to subsidize risk and failure?

The only problem he faced: the Republican platform said he should.  

Last month, testifying before the Senate Banking Committee and under questioning from Senator Elizabeth Warren, he backtracked even further: “The president said we do support a 'twenty-first-century Glass-Steagall,' that means there are aspects of it that we think may make sense. But we never said before we support a full separation of banks and investment banking.”

Warren responded incredulously, “Tell me what twenty-first-century Glass-Steagall means if it doesn’t mean breaking up those two parts. It’s an easy question.”

Mnuchin replied, “It’s actually a complicated question... We never said we were in favor of Glass-Steagall. We said we were in favor of a twenty-first-century Glass-Steagall. It couldn’t be clearer.”  Which, of course, couldn’t have been murkier.

And then there's that other former Goldman Sachs man, Gary Cohn, Trump’s director of the National Economic Council.  He had quite a different Glass-Steagall tale to tell Senator Warren. According to Bloomberg News, he insisted that he “generally favors banking going back to how it was when firms like Goldman focused on trading and underwriting securities, and companies such as Citigroup Inc. primarily issued loans.” That sounds a lot like breaking up the banks.

This division and the as-yet unresolved nature of the Trump administration response to the Glass-Steagall question could, in the face of another financial crisis, come back to haunt us all, if it translates into more bailouts and systemic failures.

The Democrats' Dilemma

As with the proverbial difficulty of chewing gum and walking at the same time, certain Democrats seem to find the very idea of supporting both Dodd-Frank and a new Glass-Steagall Act perplexing. Many of them have promoted the idea that no big bank actually failed in the Great Recession moment (which was true only because those banks got huge infusions of federal aid to remain solvent).  As a result, they avoided all responsibility for the way the repeal of Glass-Steagall allowed too-big-to-fail banks to come into existence in the first place. 

In the process, they also conveniently ignored the way the big banks lent money to, or funded, the investment banks that did fail like both of my former employers, Bear Stearns and Lehman Brothers. Without those loans or that funding, those outfits couldn’t have purchased the overload of toxic assets that, in the end, imploded the whole system.

President Obama summed up this position when he told Rolling Stone in 2012, “I've looked at some of Rolling Stone's articles that say, 'This didn't go far enough, we didn't institute Glass-Steagall' and so forth, and I pushed my economic team very hard on some of those questions. But there is not evidence that having Glass-Steagall in place would somehow change the dynamic. Lehman Brothers wasn't a commercial bank; it was an investment bank. AIG wasn't an FDIC-insured bank; it was an insurance institution. So the problem in today's financial sector can't be solved simply by re-imposing models that were created in the 1930s.”  He needed a more astute team.

Hillary Clinton took a similar tack in her campaign and it may have contributed to her devastating election loss.  The continued promotion of such fallacies does not bode well for the future of the party if it continues to adopt that view. A return to a safer system on the other hand, would be more populist -- and far more popular.

Glass-Steagall’s Bipartisan Past

Fortunately, current legislation is circulating in Congress that would promote the long-term stability of the financial system by restoring Glass-Steagall for real. H.R. 790 (“Return to the Prudent Banking Act of 2017”) is one of two reinstatement bills in the House of Representatives. It has 50 co-sponsors from both parties and its passage is being spearheaded by Marcy Kaptur (D-Ohio) and Walter Jones (R-N.C.).  The second bill, H.R. 2585, sponsored by Mike Capuano (D-Mass.), bears a close relationship to Senate bill S.881 (the "Twenty-First-Century Glass-Steagall Act of 2017”), sponsored by Elizabeth Warren (D-Mass.) and nine cosponsors including John McCain (R-Ariz.), Maria Cantwell, and Angus King (I-Maine). Either of the bills, if enacted, would do the same thing: break up the banks.

In order to understand just why passage is so crucial, a little history is in order.  Glass-Steagall, or the Banking Act of 1933, was signed into law by President Franklin Roosevelt. It represented a bipartisan effort and was even -- perhaps not surprisingly given the devastating nature of the collapse of 1929 and the Great Depression that followed -- actively promoted by some of Wall Street’s most powerful bankers. In its 66 years as law, it effectively prevented systemic banking and economic collapse.

Even before Roosevelt began his first term, congressional Republicans had initiated an investigation into bankers’ practices.  In early 1933, as Roosevelt was preparing to take office with an incoming Democratic Senate, outgoing Senate Banking and Currency Committee chairman Peter Norbeck, a Republican from South Dakota, hired former New York Deputy District Attorney Ferdinand Pecora to lead the Senate Banking Committee in a new investigation.

Later known as the Pecora hearings, they would shed light on the kinds of financial manipulations by unscrupulous bankers that had led to the crash of 1929. They would also provide the new president with the necessary populist political capital to enact America’s most sweeping financial reforms. No less crucial was the way banking leaders aligned themselves with Roosevelt’s new program. Duty to country over balance sheets seemed then to be the order of the day, even on Wall Street.  (It’s not an attitude that lasted into the twenty-first century.)

Two days after his inauguration, for instance, Roosevelt invited incoming National City Bank Chairman James Perkins to the White House for a secret meeting. The next day, under Perkins’ direction, his bank board passed a resolution splitting apart its trading and deposit-taking divisions. Chase National Bank chairman Winthrop Aldrich, a major financial power player, lent a hand as well.  Both Perkins and he would back the new Glass-Steagall bill. (Lest you think that all was sweetness and light, they were also convinced that it would diminish the strength of their main competitor, the Morgan Bank.)

Three days after Roosevelt called Perkins to the White House, Aldrich’s views on breaking up the banks hit the front page of the New York Times when he announced that Chase National Bank and Chase Securities Corporation would become separate entities, effectively enforcing the bill before it even became law. It wasn’t simple -- the Chase Securities Corporation was the biggest of its kind in the world -- but it happened.

Aldrich then took part in a series of private meetings with the president at the White House about the pending legislation. Without the support of Aldrich and Perkins, it’s possible that the bill wouldn’t have passed. After all, a far weaker version proposed during the previous administration of Herbert Hoover hadn’t.

The Glass-Steagall Act also created the Federal Deposit Insurance Corporation to insure citizens’ bank deposits. This left commercial banks with a choice to make. If they took deposits and made loans, they could not speculate with depositors’ money. If they wanted to create and speculate, they were on their own. There’s much to be said for protecting hard-working Americans in this fashion.

How the Walls Came Tumbling Down

In the 1980s, the walls between investment and commercial banking first began to crumble.  The deregulation of the financial sector that followed would prove to be as bipartisan as the passage of Glass-Steagall had been.  In 1982, as the Republican presidency of Ronald Reagan began, Congress passed the Garn-St. Germain Act, deregulating the kinds of investments that savings and loan banks could make to include riskier real estate loans. This had the effect of exacerbating the savings and loan debacle, which hit its pinnacle in the late 1980s. By 1989, more than 1,000 S&L banks in the U.S. would crash and burn. In total, the crisis wound up costing about $160 billion, $132 billion of which was footed by taxpayers. And the suppliers of risky S&L securities tended to be the big banks.

In 1987, still in the age of Reagan, Federal Reserve Chairman Alan Greenspan, a past board member of JPMorgan, said that non-bank subsidiaries of bank holding companies could sell or hold “bank ineligible securities” -- that is, securities prohibited by Glass-Steagall, including mortgage securities, asset-backed securities, junk bonds, and other derivative products.  The move exacerbated the S&L crisis, but it also offered an avenue for commercial banks to stock up on some of the securities at the heart of that crisis.

And so commercial banks began investing in hedge funds, whose very purpose in life is to gamble on securities, stocks, and commodities.  In 1998, in an early warning of what the future might hold, one of them, Long Term Capital Management, crashed and nearly brought down the whole financial system with it.  Fifty-five commercial banks had invested in it using depositors’ money to back their bets.  Only an emergency meeting of the presidents of the major banks at the Federal Reserve averted a larger economic meltdown, but because Glass-Steagall was still in place, they had to figure out how to save themselves.  No government bailouts were forthcoming.

Having narrowly avoided disaster, Wall Street only plunged deeper into financial deregulation. In 1999, Glass-Steagall itself was repealed. On December 21, 2000, Congress passed the Commodity Futures Modernization Act deregulating derivatives trading.  The big commercial banks then merged with investment banks, insurance companies, and brokerage firms.  By 2007, the assets of those big banks had tripled. The four largest -- Bank of America, JPMorgan Chase, Citigroup, and Wells Fargo -- by then controlled (and still control) more than half the assets of the banking system.

In the fall of 2007, that system finally started buckling because of the problems of Citigroup, not because of the investment banks, which would not have been covered by Glass-Steagall. The catastrophe that hit Citigroup makes it clear just how crucial the repeal of that act was to the financial meltdown to come. Citigroup would “require” a taxpayer-financed bailout of $45 billion, $340 billion in asset guarantees, and $2 trillion in near-0% Federal Reserve loans between the fall of 2007 and 2010. That in itself was staggering and Citigroup wasn’t alone. Federal Reserve Chairman Ben Bernanke would later testify that, by 2008, 11 out of the 12 biggest commercial banks were “insolvent” and had to be bailed out.  The entire banking system was rotten to the core and the massive buildup of bad paper, high leverage, and speculative bets (derivatives) that made disaster inevitable can be traced directly back to the repeal of Glass-Steagall. 

Today, a fresh bubble is inflating. This time, it’s not U.S. subprime mortgages at the heart of a budding banking crisis, but $51 trillion in corporate debt in the form of bonds, loans, and related derivatives. The credit ratings agency S&P Global Ratings has predicted that such debt could rise to $75 trillion by 2020 and the defaults on it are starting to increase in pace. Banks have profited by the short-term creation and trading of this corporate debt, propagating even greater risk. Should that bubble burst, it could make the subprime mortgage bubble of 2007 look like a relatively small-scale event.  

What Will the President Do?

On the positive side, there’s a growing bipartisan alliance in Congress and outside it on restoring Glass-Steagall. This increasingly wide-ranging consensus reaches from the AFL-CIO to the libertarian Mises Institute, in the Senate from John McCain to Elizabeth Warren and Maria Cantwell, and in the House of Representatives from Republicans Walter Jones and Mike Coffman to Democrats Marcy Kaptur, Bernie Sanders, and Tulsi Gabbard.  In fact, just this week, Kaptur and Jones announced an amendment to the pending Financial Choice Act in the House of Representives, that would represent the first genuine attempt to bring to a vote the possibility of resurrecting the Glass-Steagall Act since its repeal.

So, Donald, here’s the question: Where do you -- the man who, in the course of a few weeks, embraced Middle Eastern autocrats, turned relations with key NATO allies upside down, and to the astonishment of much of the world, withdrew the U.S. from the Paris climate agreement -- stand? In just a few months in office, you’ve turned the White House into an outpost for your family business, but when it comes to the financial well-being of the rest of us, what will you do? Will you, in fact, protect us from another future meltdown of the financial system? It wouldn’t be that hard and you were clear enough on this issue in your election campaign, but does that even matter to you today?  I noticed that recently, in an Oval Office interview with Bloomberg News, when asked about breaking up the banks, you said, “I’m looking at that right now. There’s some people that want to go back to the old system, right? So we’re going to look at that.”

Your party and your own appointees are split on the subject.  Where will you fall?  You could still commit yourself to securing the financial well-being of our nation for generations to come.  You could commit yourself to Glass-Steagall.  The question is: Will you? 

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Nomi Prins, a TomDispatch regular, is the author of six books. Her most recent is All the Presidents' Bankers: The Hidden Alliances That Drive American Power (Nation Books). She is a former Wall Street executive. Special thanks go to researcher Craig Wilson for his superb work on this piece.

Follow TomDispatch on Twitter and join us on Facebook. Check out the newest Dispatch Book, John Dower's The Violent American Century: War and Terror Since World War II, as well as John Feffer's dystopian novel Splinterlands, Nick Turse’s Next Time They’ll Come to Count the Dead, and Tom Engelhardt's Shadow Government: Surveillance, Secret Wars, and a Global Security State in a Single-Superpower World.

It's Time to Fight Back Against the Politics of Fear

By Naomi Klein, Guardian UK

10 June 17

Political shocks, security shocks, climate shocks – however unstable the world seems now, things could get a lot worse. But we can unite for a better future

hock. It’s a word that has come up again and again since Donald Trump was elected in November 2016 – to describe the poll-defying election results, to describe the emotional state of many people watching his ascent to power, and to describe his blitzkrieg approach to policymaking. A “shock to the system” is precisely how his adviser Kellyanne Conway has repeatedly described the new era.

For almost two decades now, I’ve been studying large-scale shocks to societies: how they happen, how they are exploited by politicians and corporations, and how they are even deliberately deepened in order to gain advantage over a disoriented population. I have also reported on the flipside of this process: how societies that come together around an understanding of a shared crisis can change the world for the better.

Watching Donald Trump’s rise, I’ve had a strange feeling. It’s not just that he’s applying shock politics to the most powerful and heavily armed nation on earth; it’s more than that. In books, documentary films and investigative reporting, I have documented a range of trends: the rise of superbrands, the expanding power of private wealth over the political system, the global imposition of neoliberalism, often using racism and fear of the “other” as a potent tool, the damaging impacts of corporate free trade, and the deep hold that climate change denial has taken on the right side of the political spectrum. And as I began to research Trump, he started to seem to me like Frankenstein’s monster, sewn together out of the body parts of all of these and many other dangerous trends.

Ten years ago, I published The Shock Doctrine: The Rise of Disaster Capitalism, an investigation that spanned four decades of history, from Chile after Augusto Pinochet’s coup to Russia after the collapse of the Soviet Union, from Baghdad under the US “Shock and Awe” attack to New Orleans after Hurricane Katrina. The term “shock doctrine” describes the quite brutal tactic of systematically using the public’s disorientation following a collective shock – wars, coups, terrorist attacks, market crashes or natural disasters – to push through radical pro-corporate measures, often called “shock therapy”.

Though Trump breaks the mould in some ways, his shock tactics do follow a script, one familiar from other countries that have had rapid changes imposed under the cover of crisis. During Trump’s first week in office, when he was signing that tsunami of executive orders and people were just reeling, madly trying to keep up, I found myself thinking about the human rights advocate Halina Bortnowska’s description of Poland’s experience when the US imposed economic shock therapy on her country in the midst of communism’s collapse. She described the velocity of change her country was going through as “the difference between dog years and human years” and she observed that “you start witnessing these semi-psychotic reactions. You can no longer expect people to act in their own best interests when they’re so disoriented they don’t know – or no longer care – what those interests are.”

From the evidence so far, it’s clear that Trump and his top advisers are hoping for the sort of response Bortnowska described, that they are trying to pull off a domestic shock doctrine. The goal is all-out war on the public sphere and the public interest, whether in the form of antipollution regulations or programmes for the hungry. In their place will be unfettered power and freedom for corporations. It’s a programme so defiantly unjust and so manifestly corrupt that it can only be pulled off with the assistance of divide-and-conquer racial and sexual politics, as well as a nonstop spectacle of media distractions. And, of course, it is being backed up with a massive increase in war spending, a dramatic escalation of military conflicts on multiple fronts, from Syria to North Korea, alongside presidential musings about how “torture works”.

Trump’s cabinet of billionaires and multimillionaires tells us a great deal about the administration’s underlying goals. ExxonMobil for secretary of state; General Dynamics and Boeing to head the department of defence; and the Goldman Sachs guys for pretty much everything that’s left. The handful of career politicians who have been put in charge of agencies seem to have been selected either because they do not believe in the agency’s core mission, or do not think the agency should exist at all. Steve Bannon, Trump’s allegedly sidelined chief strategist, was open about this when he addressed a conservative audience in February. The goal, he said, was the “deconstruction of the administrative state” (by which he meant the government regulations and agencies tasked with protecting people and their rights). “If you look at these cabinet nominees, they were selected for a reason, and that is deconstruction.”

Much has been made of the conflict between Bannon’s Christian nationalism and the transnationalism of Trump’s more establishment aides, particularly his son-in-law, Jared Kushner. And Bannon may well get voted off this gory reality show entirely before long (or maybe, given current legal troubles, it will be Kushner). Given these palace intrigues, it’s worth underlining that when it comes to deconstructing the state, and outsourcing as much as possible to for-profit corporations, Bannon and Kushner are not in conflict but in perfect alignment.

Under the cover of this administration’s constant cloud of chaos – some deliberately generated by Trump, much of it foisted upon him by his incompetence and avarice – this shared agenda is being pursued with methodical and unblinking focus. Trump and his cabinet of former corporate executives are remaking government at a startling pace to serve the interests of their own businesses, their former businesses and their tax bracket as a whole. For instance, within hours of taking office, Trump called for a massive tax cut, which would see corporations pay just 15% (down from 35%), and pledged to slash regulations by 75%. His tax plan includes a range of other breaks and loopholes for very wealthy people like the ones inhabiting his cabinet (not to mention himself). The healthcare plan he has backed will cause approximately 23 million people to lose coverage, while handing out yet more tax breaks to the rich.

He has appointed Kushner to head up a “Swat team” stacked with corporate executives who have been tasked with finding new regulations to eliminate, new programmes to privatise and new ways to make the US government “run like a great American company”. (According to an analysis by Public Citizen, Trump met with at least 190 corporate executives in less than three months in office – before announcing that visitor logs would no longer be made public). Pushed on what the administration had accomplished of substance in its first months, budget director Mick Mulvaney cited Trump’s hail of executive orders and stressed this: “Most of these are laws and regulations getting rid of other laws. Regulations getting rid of other regulations.”

That they are. Trump and his team are set to detonate programmes that protect children from environmental toxins, they have told gas companies they no longer need to report all of the powerful greenhouse gases they are spewing, and are pushing dozens and dozens of measures along the same lines. This is, in short, a great unmaking.

What Donald Trump’s cabinet represents is a simple fact: the people who already possess an absolutely obscene share of the planet’s wealth, and whose share grows greater year after year – the latest statistic from Oxfam shows eight men are worth as much as half the world – are determined to grab still more. According to NBC News in December 2016, Trump’s picks for cabinet appointments had a staggering combined net worth of $14.5bn (not including “special adviser” Carl Icahn, who’s worth more than $15bn on his own).

So let’s be honest about what is happening in Washington. This is not the usual passing of the baton between parties. It’s a naked corporate takeover, one many decades in the making. It seems that the economic interests that have long since paid off both major parties to do their bidding have decided they’re tired of playing the game. Apparently, all that wining and dining of elected officials, all that cajoling and legalised bribery, insulted their sense of divine entitlement. So now they’re cutting out the middlemen – those needy politicians who are supposed to protect the public interest – and doing what all top dogs do when they want something done right: they are doing it themselves.

Which is why serious questions about conflicts of interest and breaches of ethics barely receive a response. Just as Trump stonewalled on releasing his tax returns, so he has completely refused to sell, or to stop benefiting from, his business empire. That decision, given the Trump Organisation’s reliance on foreign governments to grant valuable trademark licences and permits, may in fact contravene the United States constitution’s prohibition on presidents receiving gifts or any “emolument” from foreign governments. Indeed, a lawsuit making this allegation has already been launched.

But the Trumps seem unconcerned. A near impenetrable sense of impunity – of being above the usual rules and laws – is a defining feature of this administration. Anyone who presents a threat to that impunity is summarily fired – just ask former FBI director James Comey. Up until now, in US politics there’s been a mask on the corporate state’s White House proxies: the smiling actor’s face of Ronald Reagan or the faux-cowboy persona of George W Bush (with Dick Cheney/Halliburton scowling in the background). Now the mask is gone. And no one is even bothering to pretend otherwise.

This situation is made all the more squalid by the fact that Trump was never the head of a traditional company but has, rather, long been the figurehead of an empire built around his personal brand – one that has, along with his daughter Ivanka’s brand, already benefited from its merger with the US presidency in countless ways (membership rates at Mar-a-Lago have doubled; Ivanka’s product sales, we are told, are through the roof). The Trump family’s business model is part of a broader shift in corporate structure that has taken place within many brand-based multinationals, one with transformative impacts on culture and the job market, trends that I wrote about in my first book, No Logo: Taking Aim at the Brand Bullies. What this model tells us is that the very idea that there could be – or should be – any distinction between the Trump brand and the Trump presidency is a concept the current occupant of the White House cannot begin to comprehend. The presidency is the crowning extension of the Trump brand.

The fact that such defiant levels of profiteering from public office can unfold in full view is disturbing enough. As are so many of Trump’s actions in his first months in office. But history shows us that, however destabilised things are now, the shock doctrine means they could get a lot worse.

The main pillars of Trump’s political and economic project are: the deconstruction of the regulatory state; a full?bore attack on the welfare state and social services (rationalised, in part, through bellicose racial fearmongering and attacks on women for exercising their rights); the unleashing of a domestic fossil-fuel frenzy (which requires the sweeping aside of climate science and the gagging of large parts of the government bureaucracy); and a civilisational war against immigrants and “radical Islamic terrorism” (with ever expanding domestic and foreign theatres).

In addition to the obvious threats this entire project poses to those who are already most vulnerable, it’s a vision that can be counted on to generate wave after wave of crises and shocks. Economic shocks, as market bubbles – inflated thanks to deregulation – burst; security shocks, as blowback from anti-Islamic policies and foreign aggression comes home; weather shocks, as our climate is further destabilised; and industrial shocks, as oil pipelines spill and rigs collapse, which they tend to do when the safety and environmental regulations that prevent chaos are slashed.

All this is extremely dangerous. Even more so is the way the Trump administration can be relied upon to exploit these shocks to push through the more radical planks of its agenda.

A large-scale crisis – whether a terrorist attack or a financial crash – would likely provide the pretext to declare some sort of state of exception or emergency, where the usual rules no longer apply. This, in turn, would provide the cover to push through aspects of the Trump agenda that require a further suspension of core democratic norms – such as his pledge to deny entry to all Muslims (not only those from selected countries), his Twitter threat to bring in “the feds” to quell street violence in Chicago, or his obvious desire to place restrictions on the press. A large enough economic crisis would offer an excuse to dismantle programmes such as social security, which Trump pledged to protect but which many around him have wanted gone for decades.

Trump may have other reasons for upping the crisis level. As the Argentinian novelist César Aira wrote in 2001: “Any change is a change in the topic.” Trump has already proven head-spinningly adept at changing the subject, using everything from mad tweets to Tomahawk missiles. Indeed, his air assault on Syria, in response to a gruesome chemical weapons attack, won him the most laudatory press coverage of his presidency (in some quarters, it sparked an ongoing shift to a more respectful tone). Whether in response to further revelations about Russian connections or scandals related to his labyrinthine international business dealings, we can expect much more of this topic changing – and nothing has the ability to change the topic quite like a large-scale shock.

We don’t go into a state of shock when something big and bad happens; it has to be something big and bad that we do not yet understand. A state of shock is what results when a gap opens up between events and our initial ability to explain them. When we find ourselves in that position, without a story, without our moorings, a great many people become vulnerable to authority figures telling us to fear one another and relinquish our rights for the greater good.

This is, today, a global phenomenon, not one restricted to the United States. After the coordinated terrorist attacks in Paris in November 2015, the French government declared a state of emergency that banned political gatherings of more than five people – and then extended that status, and the ability to restrict public demonstrations, until July 2017. In Britain, after the shock of the Brexit vote, many said they felt as though they’d woken up in a new, unrecognisable country. It was in that context that the UK’s Conservative government began floating a range of regressive reforms, including the suggestion that the only way for Britain to regain its competitiveness is by slashing regulations and taxes on the wealthy so much that it would effectively become a tax haven for all of Europe. Theresa May attempted to further exploit fear of the unknown to justify her decision to call a snap election; voters were told that the only way to not get bullied by the EU was to hand her an overwhelming mandate for “strong and stable leadership”.

The use of fear did not sit well with many voters, and that’s instructive. Because here’s one thing I’ve learned from reporting from dozens of locations in the midst of crisis, whether it was Athens rocked by Greece’s debt debacle, or New Orleans after Hurricane Katrina, or Baghdad during the US occupation: these tactics can be resisted. To do so, two crucial things have to happen. First, we need a firm grasp on how shock politics work and whose interests they serve. That understanding is how we get out of shock quickly and start fighting back. Second, and equally important, we have to tell a different story from the one the shock doctors are peddling, a vision of the world compelling enough to compete head to head with theirs. This values-based vision must offer a different path, away from serial shocks – one based on coming together across racial, ethnic, religious, and gender divides, rather than being wrenched further apart, and one based on healing the planet rather than unleashing further destabilising wars and pollution. Most of all, that vision needs to offer those who are hurting – for lack of jobs, lack of healthcare, lack of peace, lack of hope – a tangibly better life.

I don’t claim to know exactly what that vision looks like. I am figuring it out with everyone else, and I am convinced it can only be birthed out of a genuinely collaborative process, with leadership coming from those most brutalised by our current system. In the United States, led by networks such as Black Lives Matter, Fight for $15 (who are demanding a raise in the minimum wage) and National Nurses United, we are starting to see some very hopeful grassroots collaborations between dozens of organisations and thinkers who are beginning to come together to lay out that kind of agenda, one capable of competing with rising militarism, nationalism and corporatism. Though still in its early stages, it is becoming possible to see the outlines of a progressive majority, one grounded in a bold plan for the safe and caring world we all want and need.

All this work is born of the knowledge that saying no to bad ideas and bad actors is simply not enough. If we accept the premise that, from here on in, the battles are all defence, all about holding our ground against Trump-style regressive attacks, then we will end up in a very dangerous place indeed. Because the ground we were on before Trump was elected is the ground that produced Trump; ground many of us understood to constitute a social and ecological emergency, even without this latest round of setbacks.

Of course, the attacks coming from Trump and his kindred demagogues around the world need resisting fiercely. But we cannot spend the next four years only playing defence. The crises are all so urgent, they won’t allow us that lost time. On one issue I know a fair amount about, climate change, humanity has a finite window in which to act, after which protecting anything like a stable climate becomes impossible. And that window is closing fast.

So we need, somehow, to fight defence and offence simultaneously – to resist the attacks of the present day and to still find space to build the future we need. In other words, the firmest of nos has to be accompanied by a bold and forward-looking yes – a plan for the future that is credible and captivating enough that a great many people will fight to see it realised, no matter the shocks and scare tactics thrown their way. No – to Trump, to France’s Marine Le Pen, to any number of xenophobic and hypernationalist parties on the rise the world over – may be what initially brings millions into the streets. But it is yes that will keep us in the fight.

Yes is the beacon in the coming storms that will prevent us from losing our way.

Here is what we need to remember: Trump, extreme as he is, is less an aberration than a logical conclusion – a pastiche of pretty much all the worst trends of the past half-century. Trump is the product of powerful systems of thought that rank human life based on race, religion, gender, sexuality, physical appearance and physical ability – and that have systematically used race as a weapon to advance brutal economic policies since the earliest days of North American colonisation and the transatlantic slave trade. He is also the personification of the merger of humans and corporations – a one-man megabrand, whose wife and children are spinoff brands, with all the pathologies and conflicts of interest inherent in that. He is the embodiment of the belief that money and power provide a licence to impose one’s will on others, whether that entitlement is expressed by grabbing women or grabbing the finite resources from a planet on the verge of catastrophic warming. He is also the product of a business culture that fetishises “disruptors” who make their fortunes by flagrantly ignoring both laws and regulatory standards.

Most of all, he is the incarnation of a still-powerful free-market ideological project – one embraced by centrist parties as well as conservative ones – that wages war on everything public and commonly held, and imagines corporate CEOs as superheroes who will save humanity. In 2002, George W Bush threw a 90th birthday party at the White House for the man who was the intellectual architect of that war on the public sphere, the radical free-market economist Milton Friedman. At the celebration, then US secretary of defence Donald Rumsfeld declared: “Milton is the embodiment of the truth that ideas have consequences.” He was right – and Donald Trump is a direct consequence of those ideas.

In this sense, there is an important way in which Trump is not shocking. He is the entirely predictable, indeed cliched outcome of ubiquitous ideas and trends that should have been stopped long ago. Which is why, even if this nightmarish presidency were to end tomorrow, the political conditions that produced it, and which are producing replicas around the world, will remain to be confronted. With US vice president Mike Pence or speaker of the House Paul Ryan waiting in the wings, and a Democratic party establishment also enmeshed with the billionaire class, the world we need won’t be won just by replacing the current occupant of the Oval Office.

So, we first need to be very clear on what we’re saying no to – not just to an individual or even a group of individuals (though it is that too). We’re also saying no to the system that has elevated them to such heights. And then let’s move to a yes – a yes that will bring about change so fundamental that today’s corporate takeover will be relegated to a historical footnote, a warning to our kids. And Donald Trump and his fellow travellers will be seen for what they are: a symptom of a deep sickness, one that we decided, collectively, to come together and heal.