Senator Elizabeth Warren (D., Mass.) warned Monday of a looming economic crisis that can only be avoided if Congress acts now to more stringently regulate the financial sector and reduce middle-class and corporate debt.
“Warning lights are flashing. Whether it’s this year or next year, the odds of another economic downturn are high — and growing,” Warren (D., Mass.) wrote in a Medium post. “I see a manufacturing sector in recession. I see a precarious economy that is built on debt — both household debt and corporate debt — and that is vulnerable to shocks. And I see a number of serious shocks on the horizon that could cause our economy’s shaky foundation to crumble.”
The Medium post, entitled “The Coming Economic Crash–And How to Stop It,” restates an argument that Warren has made from the stump in recent months: that the top-line GDP, stock-market, and job numbers, while encouraging, conceal the harsher economic reality facing the middle class.
“The overall numbers about GDP or the stock market are great but they don’t reflect the lived experiences of most Americans,” Warren told reporters in May after a town hall in New Hampshire. “Go around a room like this. For most people, wages haven’t gone up in a generation and yet the cost of housing, the cost of health care, the cost of child care, the cost of sending a kid to college have all gone through the roof. The middle-class squeeze is real and it has gotten tougher for people over the last few years.”
Warren, in her blog post, cited the warning signs that preceded the 2008 financial crisis and suggested that similar indicators — notably a substantial rise in corporate and household debt — are present today.
“These high-risk loans now make up a quarter of all American business loans, and they look a lot like the pre-2008 subprime mortgages: poorly underwritten loans with minimal protections that are then packaged and sold to investors,” she wrote.
Warren’s particular mix of progressive policy proposals, including a $15 minimum wage, a $600 billion student-loan-forgiveness program, and a so-called Green Manufacturing Plan, are uniquely suited to stave off the coming crisis, she argues.