In September 2008, images of Lehman Brothers employees leaving their offices with cardboard boxes became a powerful symbol of the global financial collapse. Millions lost homes, retirement funds evaporated, and the myth of perpetual economic growth shattered. Economist Hyman Minsky had long argued that prolonged stability encourages excessive risk-taking until the system eventually fails. Today, similar red flags—excessive borrowing, speculative investments, and leadership prioritizing image over substance—are reappearing. Despite claims of economic strength, the financial sector appears increasingly unstable. Policies promoting deregulation and political interference in regulatory bodies are exacerbating vulnerabilities, potentially setting the stage for an even more severe crisis.
The U.S. economy is currently under significant strain due to high levels of debt. The federal deficit stands at approximately 7% of GDP, more than double its level in 2008. Since 2021, interest payments on the national debt have nearly tripled and now rank as the second-largest item in the federal budget, behind only Social Security. Projections suggest that within a decade, debt servicing could consume one-third of tax revenue—up from less than 15% in the 1990s and around 20% before the last financial downturn. This imbalance persists because voters favor tax reductions and increased spending, yet penalize leaders who attempt fiscal correction.
Major financial institutions are also showing signs of vulnerability. Citigroup and Bank of America, for example, operate with minimal equity buffers—akin to purchasing a home with little or no down payment. A small drop in asset values could leave them insolvent. The buildup of debt is no longer confined to traditional banking; it has spread across the financial landscape.
A growing segment of unregulated lending, often referred to as shadow banking, operates beyond the reach of standard oversight. These entities—such as private lenders, hedge funds, and private equity firms—function without the safeguards imposed on conventional banks. This lack of supervision allows for high-leverage transactions with limited accountability. During the 2008 crisis, complex financial instruments outside regulated channels played a major role in the collapse. Under recent deregulatory policies, these risks have expanded. Private equity firms frequently acquire companies using borrowed capital, then slash expenses to boost short-term returns. When such strategies fail, job losses and community disruptions follow, while public resources often end up covering the fallout.
The push to position the U.S. as a hub for cryptocurrency introduces additional instability. Crypto platforms enable large-scale borrowing with minimal oversight, creating fragile financial structures. As seen in past market corrections, rapid price declines can trigger cascading failures across the system.
Minsky’s framework outlines a progression from prudent lending to speculative behavior and ultimately to Ponzi finance—where repayment depends solely on rising asset prices. Today, sectors like cryptocurrency, meme stocks, AI startups, and commercial real estate exhibit such patterns. Billions are being funneled into AI ventures with unproven business models, driven more by hype than revenue. A market correction could erase investor capital and hinder genuine technological advancement, mirroring the dot-com bust. Meanwhile, commercial real estate faces declining occupancy and falling rental income, threatening owners burdened by debt. A sudden loss of confidence could cause widespread collapse.
Regulatory oversight has weakened, particularly under political pressure. The Federal Reserve, meant to operate independently for long-term economic stability, has faced increasing influence from political actors. While both parties have historically exerted some pressure, recent actions have intensified this trend. In the 1970s, politically motivated low interest rates led to rampant inflation and eroded public trust. A repeat scenario—forcing rate cuts despite inflationary pressures—could yield similar consequences.
Certain financial institutions remain so large and interconnected that their failure would destabilize the global economy. Citigroup and Bank of America are among those with leverage ratios comparable to Bear Stearns before its 2008 collapse. A future crisis might necessitate massive government bailouts—what Minsky termed “contingency socialism,” where private profits are retained but public funds absorb losses. This dynamic fosters moral hazard, encouraging reckless behavior based on the expectation of rescue. Policymakers tolerate this risk, fearing blame for economic collapse more than they fear enabling irresponsible conduct.
Supporters of deregulation argue that lighter rules promote innovation and short-term economic gains, such as lower borrowing costs, tax reductions, and rising stock prices. However, these benefits are often temporary, while the underlying risks persist. After 2008, billions were spent rescuing major banks. While this prevented total systemic failure, it protected financial elites while ordinary citizens suffered job and home losses. Repeating this imbalance remains a real danger if regulatory safeguards continue to erode.
The current system is increasingly fragile. Households and small enterprises are already under pressure. When combined with Wall Street’s high leverage, unregulated financial channels, inflated asset markets, and weakened oversight, the risk of another major crisis grows. The next phase should shift from identifying problems to implementing solutions—strengthening regulation, restoring the independence of monetary authorities, and rebuilding economic security for the middle class. The objective is clear: prevent a repeat of 2008 and create a more inclusive economy.
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“One hundred and fifty-five years after the enactment of the Fifteenth Amendment, this Court can complete the ‘unfinished work’ of the Fifteenth Amendment and end the allocation of power based on skin color,” the brief explains. Unlike the balancing tests required by the Fourteenth Amendment, “the simplicity and comprehensiveness of the Fifteenth Amendment provides the Court with a simpler path to decide this case.” n nPILF notes that “if a legislative map was enacted with a racial purpose, it violates the Fifteenth Amendment.” n nThe racial intent behind the map was common knowledge in Baton Rouge. Lawmakers themselves openly declared that “race was the purpose, race was the aim, and power was to be allocated to a favored race.” n nPILF President J. Christian Adams emphasized the gravity of those admissions: “Louisiana legislators said on the record that race was the driving force behind this map. The Court should seize this opportunity to restore the Constitution’s promise and put an end to race-based gerrymandering once and for all.” n nThe summary argument of the filed amicus brief patiently states: n n”This case can be decided under the Fifteenth Amendment and not reach any other issue. No words in the Constitution were purchased with the staggering amount of blood and treasure as the Civil War Amendments were. American lives and fortunes were destroyed so that the promise of equality before law could become law. Black and white, North and South, free and slave, all suffered the chaos and carnage.” n nThere is a long and painful history of racial gerrymandering in the United States. After the Civil War and the brief period of Black political gains during Reconstruction, many Southern states redrew district lines to suppress Black voting power. These efforts coincided with poll taxes, literacy tests, and other Jim Crow laws designed to disenfranchise Black citizens.” n nMore recently, the 1990s saw a series of Supreme Court cases that reaffirmed the constitutional limits on race-based redistricting: n nShaw v. Reno (1993): The Court struck down a North Carolina district drawn to concentrate Black voters into a single, oddly shaped district. While the intent was to increase minority representation, the bizarre shape suggested race was the predominant factor, violating the Equal Protection Clause. n nMiller v. Johnson (1995): Georgia’s 11th Congressional District was invalidated for similar reasons. It was drawn to create a majority-Black district but was so irregular that the Court found race had been used improperly as the primary criterion. n nBush v. Vera (1996): Texas attempted to create majority-minority districts, but the Supreme Court ruled that the districts were racially gerrymandered and unconstitutional due to their contorted shapes. n nDespite the landmark Voting Rights Act of 1965, which outlawed racial gerrymandering and empowered federal oversight of district maps in states with histories of voter suppression, these tactics persist nearly 60 years later. As exemplified by the current Louisiana map under challenge, gerrymandering continues to be weaponized—often cloaked in legal complexity—to suppress voter rights and distort democratic representation. n nThis is not just a legal issue—it is a moral one. When maps are drawn to dilute the voices of communities based on race, we betray the very promise of equal citizenship. Unfortunately, racial gerrymandering is not a relic of the past; it is a present injustice that corrodes trust, deepens division, and denies dignity. n nThe Court now has a chance to affirm that our democracy does not belong to one race or party; it belongs to every citizen, equally. That promise must be more than words. It must be enforced. n nRead the full amicus brief here. n nDavid Nevins is the publisher of The Fulcrum and co-founder and board chairman of the Bridge Alliance Education Fund. n nIn September 2008, the sight of Lehman Brothers employees carrying boxes out of their headquarters became a symbol of the global financial meltdown. Families lost homes, retirement savings vanished, and the illusion of endless growth collapsed. Economist Hyman Minsky had long warned that stability often breeds risky behavior until the system breaks. Today, similar warning signs—too much borrowing, risky bets, and leaders focused more on spin than substance—are flashing again. Despite Trump’s claims of a booming economy, the financial sector looks fragile. His policies of deregulation and political pressure on regulators add fuel to the fire, making the next crisis potentially worse. n nLeverage and the Debt Overhang n nBorrowing fuels financial booms, but it also triggers busts. In 2008, too much debt left households and banks vulnerable. Currently, the U.S. economy is experiencing similar stress. The federal deficit is around 7% of GDP—more than double its 2008 level. Since 2021, interest payments on the national debt have nearly tripled, now second only to Social Security in the budget. Within ten years, debt service could consume a third of tax revenue, compared to less than 15% in the 1990s and approximately 20% before the last crash. Leaders tolerate this imbalance because voters prefer tax cuts and spending increases, but they punish anyone who tries to address deficits. n nBig companies are feeling the pressure too. Some major banks are approaching the same risky levels they had before the 2008 financial crisis. Citigroup and Bank of America, for example, have thin equity cushions. It’s like buying a house with barely any down payment—if prices dip, you owe more than the house is worth. Just like before, the U.S. is stacking debt on top of debt. The problem now extends well beyond traditional banks. n nShadow Banking and Fringe Finance n nPrivate lending has grown rapidly, but it remains largely outside the reach of regulators. These hidden channels—known as shadow banking because they operate outside traditional banking regulations—resemble the complex financial products that contributed to the 2008 economic crash. Unlike regular banks, private lenders face fewer regulations, allowing companies to borrow heavily with minimal oversight. Problems often go unnoticed until they spill over. Trump’s deregulatory push has widened this gap, dismantling rules designed to contain risk. n nHedge funds and private equity firms now rival traditional banks. Private equity often buys companies using borrowed money, then cuts costs to boost short-term profits. If things go wrong, workers lose jobs, communities lose employers, and taxpayers end up covering the losses. Supporters claim this makes companies more efficient; in practice, it shifts risk onto workers and the public. Trump’s effort to make the U.S. a crypto hub adds another layer of risk. Crypto platforms let people borrow large sums with little oversight, making them unstable. Once prices fall, the entire system can unravel. n nThe lesson from 2008 was clear: hidden risks affect everyone when things go south. Under Trump, the safety rails are coming off just as shadow finance grows. n nPonzi Finance and Asset Bubbles n nMinsky warned that financial systems transition from safe lending to speculation, and then to Ponzi finance—borrowing that can only be repaid if asset prices continue to rise, much like a pyramid scheme. Today, crypto, meme stocks, speculative AI startups, and commercial real estate all show signs of this pattern. n nThe AI sector is especially shaky. Billions are flowing into startups with weak business models, driven more by hype than actual revenue. If the bubble bursts, it could wipe out investor money and stall real innovation, like the dot-com crash. Commercial real estate has its own problems, with empty offices and falling rents threatening heavily indebted property owners. Confidence can evaporate overnight, and when it does, these markets collapse and the damage spreads across the economy. n nRegulatory Retreat n nIn good times, regulators often loosen their regulations. Trump has accelerated this trend by cutting oversight and leaning on the Federal Reserve. A Fed driven by politics instead of long-term stability risks making bad decisions. Both parties have pressured the Fed in the past, but Trump has taken it to extremes. We’ve seen the danger before: in the 1970s, political pressure kept interest rates too low, leading to runaway inflation and a loss of public trust. It took painful rate hikes in the 1980s to restore balance. Forcing the Fed to cut rates now, despite lingering inflation risks, could repeat the mistakes of the past. n nToo Big to Fail 2.0 n nSome financial institutions remain so large and interconnected that their collapse would significantly shake the global economy. Citigroup and Bank of America are at the top of that list, with leverage levels similar to those of Bear Stearns before its 2008 collapse. A future crisis could lead to massive bailouts—what Minsky called “contingency socialism,” where losses are socialized but profits remain private. That cycle reflects moral hazard: when people or institutions take bigger risks because they assume someone else—usually the public—will absorb the losses. Politicians tolerate this imbalance because they fear being blamed for collapse more than they fear encouraging reckless behavior. n nTo be fair, advocates of deregulation argue that lighter rules encourage innovation and growth. Borrowing can also help keep the economy afloat in downturns and deliver short-term benefits that voters notice—cheaper credit, tax cuts, and rising stock values. The danger is that these gains are fleeting, while the risks they create can endure. n nWe saw this after 2008, when the government spent billions to rescue major banks. Those moves stopped a total collapse, but they also protected Wall Street while everyday Americans lost homes, jobs, and savings. That imbalance—saving the powerful while others suffer—is the risk we face again if regulation fails. n nA System on Borrowed Time n nThe system is brittle, and the cracks are widening. Households and small businesses are already under strain. Now, Wall Street’s debt, shadow finance, asset bubbles, and weak regulation add layers of fragility. Together, these problems could trigger another major crisis. n nThe next article will transition from diagnosis to prescription, outlining reforms to strengthen oversight, restore the Federal Reserve ‘s independence, and rebuild middle-class stability. The goal is straightforward: avoid another 2008 and create an economy that benefits more than just the top tier. n nRobert Cropf is a professor of political science at Saint Louis University.