I am creating an alternate history timeline for the 2000-2015 economy.
Dot-com bubble is different, despite not hurting the GDP directly (in the short-term), it bankrupts small or medium companies at time, like Amazon, Apple, Google, PayPal and Netflix, that was due bad decisions of them and not being “too big to (be let to) fail”, the survivors like Microsoft, AOL and IBM are damaged and more conservative. Other projects like Facebook, Tesla, Twitter don’t get traction, for being very risky.
By late 1990/early 2000 wall street makes political moves, it lobbies to reduce regulations and to increase FED term duration, it results in two things - Alan Greenspan being reapointed in 2006 and by 2008 banks are being leveraged at up to 35:1 for investment banks and 20-25:1 for commercial ones. Enron is bailed out due 9/11, because it was considered a strategic asset in this scenario, and of course a close allied to Bush 43, instead of letting it fall it was helped during the crisis and kept functioning. Sarbanes-Oxley doesn’t pass here either.
Gold is very discredited here, with a consensus to see this as a thing of the past from many economists, with central banks dumping them, no ETFs being released, with its prices falling under $250/oz, reaching valleys of $120/oz in rare periods. No 1999 Washington agreement on gold is done. Greenspan policies are still on - there is low quantitative easing, but interest rates are at 1%. There is no fear to house market bubbles, as Greenspan dismissed these in OTL.
China sees subprime as a valuable asset, because it is AAA risk and had higher interest returns from it compared to treasure bonds. Due CCP orders their banks and firms invests heavily on subprime, specially their real estate, construction, industry and development (institutions like ICBC, CDB and Evergrande) and places the majority of its reserves (around 2 trillion USD in 2008) in subprime assets. This is to improve growth. BRICS doesn't form here either, in real life it was a Goldman Sachs invented acronym, but here it doesn't take off.
But due butterfly effects, in 2005 Bush dies in the country of Georgia (by Vladimir Arutyunian), Cheney becomes president, he appoints McCain as VP, Rumsfeld is kept on defense, Bolton is appointed as state secretary, keeps Greenspan on FED and on treasure appoints Glenn Hubbard, responsible for tax cuts in Bush era. Senate is majority republican due these changes.
And in May 2008 Israel attacks Iran nuclear installations, Cheney follows soon, invades the gulf coast to secure oil installations. It peaks oil price to $400 in june, but in august it lowers to $200. There is a “mission accomplished” speech, that galvanizes the nation, despite only the Gulf Coast being occupied.
The 2008 election is three way - McCain/Huckabee (GOP), Hillary/Sebelius (Dem-main) and Obama/Biden (Ind-Dem), the PUMA had split the democratic party in this scenario. McCain wins, with a 51/49 senate and 220/210 house, both GOP dominated. He and the GOP won by a small margin due PUMA and the crisis not happening during the campaign.
But a few days later after the results the Lehman brothers declares bankrupcy, that is due China keeping the banks afloat. Bear Sterns, Fannie and Freddie are considered zombie banks, the other banks are very leveraged, even JP Morgan isn't healthy, it is discovered that subprime is toxic, worthless paper, but was sustained by Chinese money.
A cascading bankrupcy effect happens during mid-november to early-january, with banks and institutions like Bear Sterns, Freddie, Fannie, AIG, Merryl Lynch, BoA, JP Morgan, Citigroup, Wachovia, Fargo Wells, Merryl Lynch, Morgan Stanley, WaMu, GEFinance, GM, Ford, Chysler. There were attempts to do rescues, with the FED coordination, but the banks were so overleveraged, that didn’t worked, Cheney was a lame duck, forbid nationalizations and both Treasure and Congress weren’t much keen to do bailoits. The FED chair resigned due lack of sucess.
It hit the other corners of the world at the same time, EU banking was very connected to US systems, and the PIIGS defauted. China discovered that a good chunk of its reserves were just toxic worthless subprime, causing a massive financial collapse, ruining real estate, with Evergrande collapsing and needing a massive bailout that caused hyperinflation. Iran lanched a major missile attack on gulf refinaries, causing severe damage, with major ones like Abqaiq becoming ruins.
President elect McCain appoints Phil Gramm on treasure and Martin Feldstein as FED chair, its policy is to stimulate the economy by tax cuts, not by QE, no nationalizatons like Cheney and increase interest rates to avoid inflation. But the major priority is to end the Iran war, by winning of course, it creates a job program that is actually a compulsory draft and invest on the MIC. At the same time in early 2009 a group using the fake name “Satoshi Nakamoto” is arrested, they are indicted by disrupting the financial system and by inventing "irregular currency". Their operations are shut down and the so-called Bitcoin and criptocurrency are criminalized.
The draft is a “sucess”, with troop numbers in Iran reaching a half million by 2010, and they keeping the peace in Iraq, Afghanistan and eventually making a road to Tehran and taking the city, capturing the Ayatollah Khamenei, and placing Moussavi as interim president. But this causes massive protests in US, making the government response on new laws, it passes anti-terrorism laws and finally SOPA and PIPA to curb internet (or what remained of it) and its decentralized power.
Obama/Biden wins in 2012 due massive war opposition and leaves Iran in 2013, it causes a massive conservative backlash due the loss and TV broadcasts of the fall of Tehran similar to the Fall of Saigon in 1975. The 2014 midterms are a GOP victory, specially Tea Party members, it blocks every attempt of reform, regulation, healthcare. In 2015 there was an attempt to raise the debt ceiling, but the denied it until the country technically defauted, to enforce “fiscal discipline”.
The timeline ends here, because it is getting close to current political events and personalities.
What do you people think?
