We've had some real critical moments in the past couple of years: the COVID pandemic, the 2020 Presidential election and the January 6 aftermath of it, and the definitive break with the "postwar" and "post-Cold War" peaceful international status in the West caused by Putin's invasion of Ukraine.
What's going on now with our 24/7 news cycle is a batch of invented crisis-mongering, whipping ourselves into unwarranted frenzies about lesser issues, or news stories that aren't even issues. Our electoral parties are similarly making somewhat hysterical appeals--for fundraising purposes, of course--in a year where there are really no domestic elections of national significance. On that subject, let's just keep our political contribution powder dry this year, as we will be called upon for 2024, which is certain to be an epic battle with massive potential consequences.
Looking at some of the specific so-called crises:
The Border - The expiration of the Title 42 mandate requiring US border authorities to turn away virtually all migrant asylum-seekers is the opposite of a crisis. It instead marks the official end of pandemic crisis-related policy with regard to immigration. The policy was likely a violation of international law, but we have often seen that concern fall by the wayside when it runs up against national security interest. Personally, I doubt that Title 42 really had all that much to do with protecting public health--the virus never observed border niceties--but was instead a convenient method for our Dickhead 45 to fulfill his populist promise to close down opportunities for immigration.
Now, the promised tidal wave of uncontrolled border crossing has not materialized. If we are looking forward for initiatives to manage likely future surges of unsponsored people seeking to immigrate, I can propose one (see * below), but for the time being our careful preparations are providing for orderly handling of asylum applications. This clear failure of one of the Republicans' pet political rabble-rousing notions is an outcome worthy of public promotion.
"Balloongate" - The publicly-revealed identification of a Chinese spy balloon over us was accidental. (see The Sheep Look Up, an underrated near-future sci-fi novel from a couple decades ago by the hugely underrated, largely-forgotten John Brunner). The balloon's incursion was no big deal, it turns out; they'd sent them over us before, and our intelligence agencies knew it. It was kind of fun to shoot it down, though I thought it would be more spectacular to figure out how to capture it whole. The problem is that it poisoned further our messy relationship with China, which is one of utmost importance. Overreaction should be carefully avoided, on both sides.
The Debt Limit -- Our Federal government's brinkmanship in authorizing this routine measure is totally unnecessary. Congress approved the spending, and the revenue measures which only partially fund them, and thus the debt. The Treasury does not need to have approval to execute the laws that relate to these--that's in the Constitution. They must issue the debt instruments, just as they must seek to collect revenues. If the subject is, instead, reducing that gap between revenue and spending, fine. A different question. President Biden will find a way to have two linked bills, as a concession to the Republican House majority, but the one relating to the debt limit needs to have some measure preventing future inanity of the sort going on now.
Banking Deposits - One unintended consequence of the official interest rate rises the Federal Reserve has used, in its efforts to combat the higher inflation seen since the pandemic receded, has been some banks' competition to attract or retain deposits by raising the rates they offer. Banks naturally want to grow profits, and in order to make more loans they need to have funding to correspond, but there is great danger in getting too far ahead of the pack. The money thus attracted is unstable, ready to pull out when a new, even higher rate is offered by others, or simply because the depositors' timeframe is short-term.
From the accounts I've read, the failed Silicon Valley Bank had this problem. Their management seemed to think they had a nearly-unlimited profit-generating machine, taking in large demand deposits (getting those depositors to promise exclusivity, a different bad practice) and laying off the money in long-term bonds, getting fat spreads between rates offered and loans (bonds are a form of loan). This creates what's called "duration risk"; it is mitigated if a bank has, behind that speculative funding, some more stable core deposits or sufficient capital. Without that, when these well-heeled tech firms found other needs for their deposits and pulled them out, a liquidity crisis occurred at SVB--they didn't have the money to pay back the depositors--and the bank became insolvent and was taken over by regulators. This was a huge error by the bank's asset-liability management function, which is expected to contain such a risk.
Treasury regulators moved to assure that all deposits would be protected and available, even those way in excess of the FDIC's insurance limits. The move was a regrettable precedent, one necessitated by their belated recognition that this medium-large bank's failure presented a risk to the whole banking system. Yet the contagion they spotted has spread to other banks, ones not necessarily afflicted with the same problem: any bank is vulnerable to depositors' panicky flight if enough of them act simultaneously (as in Jimmy Stewart's bank in the movie It's a Wonderful Life). Banking institutions are now obliged to take some unpleasant measures, reducing their spreads and reducing their lending to make sure they protect their liquidity. A broader crisis should thus be averted, and banks will subsequently look for opportunities to start taking deposit rates back down to restore profitability as soon as they feel they can.
This one is more like the "opportunity event" that is supposedly the Chinese term for "crisis". The lesson going forward is that it is not just the identified "too big to fail" extra-large institutions that need close supervision on the management of assets, liabilities, and capital, and that smaller institutions' contributions to the FDIC (an agency which is normally self-funded by the banks that are themselves regulated by it) need to have, in their calculations, the risk of deposit outflow taken more into account.
The real crises for the US, apart from that looming 2024 electoral battle royal, are festering policy problems that are not being addressed, storms that are gathering force. I would list among those our electoral system (voting rights, anti-democratic measures, threats to electoral officials), our decaying education system (especially the lack of grounding in civics, history, and critical analysis in it, along with inadequate funding and inadequate compensation for teachers), lack of commitment to measures to combat or mitigate climate change, our diplomatic impasse with China (subject of more posts here in the near future), lack of a meaningful immigration policy (actually, a global problem), and, of course, guns.
* My long-term proposal would be to work with Mexico (imagine that!) to create a large, well-funded expanded consulate somewhere a decent distance away from our border (Matamoros, or Monterrey, maybe) as a center for handling asylum applications for those coming from beyond Mexico. Additional staffing to handle them, and housing for 30 days for those would-be migrants, along with enhanced security provided both by Mexico and the US, working together. It's not the comprehensive reform of immigration policy we need, but just a sufficiently aggressive provision to cool the issue until such time as we can look at it rationally (post-Trump).
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