Crisis rescue shifted private sector insolvency onto sovereign state accounts

Evidence

There is one very basic example how Team Regulation has served to betray the left, a lethal dynamic that has played out in the previous three decades. When financial crises erupted, first in peripheral countries, and then increasingly in the metropoles, technocratic economists in alliance with the neoliberals claimed they could contain it and “clean it up” by substituting sovereign state debt and rich-country guarantees for the insolvency of private actors; hence, when the Big One hit in 2007–8, responses reverted to the standard scenario. The mantra had always been to have the government in question “rescue” the collapsing sectors by shoring up their balance sheets, through the instrumentality of taking more debt onto its own accounts; and then purportedly when the worst had finally passed, subsequent efforts could be devoted to addressing any structural flaws, perhaps with more regulation. Imprimatur was sought indifferently from both Milton Friedman and John Maynard Keynes for this practice. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 49

Categorization

• QUESTION: The claim that Keynesian states were incapable of immobilizing endemic crises — need to verify counter-examples (e.g., the US savings and loan cleanup, or Nordic banking crises) where state intervention did work.
• XREF: connects to: REBLL states cut sovereign debt while private sectors borrowed hugely for construction — Mark Blyth, Austerity: The History of a Dangerous…, 598; A banking guarantee transformed private debt into sovereign debt overnight — Mark Blyth, Austerity: The History of a Dangerous…, 184; IMF bailouts transferred debtor countries’ public assets to foreign oligarchs — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 570 (+8 more)

Broader Connections

• Rescue merely shifted crisis risk onto government balance sheets #corroborates (0.85) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 946
• The sovereign debt crisis is a transmuted and camouflaged banking crisis #complicates (0.80) — Mark Blyth, Austerity, 35
• IMF bailouts transferred debtor countries’ public assets to foreign oligarchs #complicates (0.78) — Yanis Varoufakis, Technofeudalism, 570
• Banking crises precede sovereign debt crises in 80 percent of cases #corroborates (0.72) — Mark Blyth, Austerity, 206
• Neoliberalism’s crisis strategy redirected blame from banks onto state debt #expands (0.72) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 475
• Europe’s rising debt ratios resulted from private financial crisis, not government profligacy #complicates (0.70) — Mark Blyth, Austerity, 149
• The European debt crisis resulted from banking losses, not sovereign overspending #complicates (0.70) — Mark Blyth, Austerity, 40
• Private asset managers designed and ran government bailout programs #responds-to (0.70) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 944