Recent Items

Michael Hudson: America’s Deceptive 2012 Fiscal Cliff, Part II – The Financial War Against the Economy at Large

Posted on by

By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is “The Bubble and Beyond.”

Today’s economic warfare is not the kind waged a century ago between labor and its industrial employers. Finance has moved to capture the economy at large, industry and mining, public infrastructure (via privatization) and now even the educational system. (At over $1 trillion, U.S. student loan debt came to exceed credit-card debt in 2012.) The weapon in this financial warfare is no larger military force. The tactic is to load economies (governments, companies and families) with debt, siphon off their income as debt service and then foreclose when debtors lack the means to pay. Indebting government gives creditors a lever to pry away land, public infrastructure and other property in the public domain. Indebting companies enables creditors to seize employee pension savings. And indebting labor means that it no longer is necessary to hire strikebreakers to attack union organizers and strikers.

Workers have become so deeply indebted on their home mortgages, credit cards and other bank debt that they fear to strike or even to complain about working conditions. Losing work means missing payments on their monthly bills, enabling banks to jack up interest rates to levels that used to be deemed usurious. So debt peonage and unemployment loom on top of the wage slavery that was the main focus of class warfare a century ago. And to cap matters, credit-card bank lobbyists have rewritten the bankruptcy laws to curtail debtor rights, and the referees appointed to adjudicate disputes brought by debtors and consumers are subject to veto from the banks and businesses that are mainly responsible for inflicting injury.

The aim of financial warfare is not merely to acquire land, natural resources and key infrastructure rents as in military warfare; it is to centralize creditor control over society. In contrast to the promise of democratic reform nurturing a middle class a century ago, we are witnessing a regression to a world of special privilege in which one must inherit wealth in order to avoid debt and job dependency.

The emerging financial oligarchy seeks to shift taxes off banks and their major customers (real estate, natural resources and monopolies) onto labor. Given the need to win voter acquiescence, this aim is best achieved by rolling back everyone’s taxes. The easiest way to do this is to shrink government spending, headed by Social Security, Medicare and Medicaid. Yet these are the programs that enjoy the strongest voter support. This fact has inspired what may be called the Big Lie of our epoch: the pretense that governments can only create money to pay the financial sector, and that the beneficiaries of social programs should be entirely responsible for paying for Social Security, Medicare and Medicaid, not the wealthy. This Big Lie is used to reverse the concept of progressive taxation, turning the tax system into a ploy of the financial sector to levy tribute on the economy at large.

Financial lobbyists quickly discovered that the easiest ploy to shift the cost of social programs onto labor is to conceal new taxes as user fees, using the proceeds to cut taxes for the elite 1%. This fiscal sleight-of-hand was the aim of the 1983 Greenspan Commission. It confused people into thinking that government budgets are like family budgets, concealing the fact that governments can finance their spending by creating their own money. They do not have to borrow, or even to tax (at least, not tax mainly the 99%).

The Greenspan tax shift played on the fact that most people see the need to save for their own retirement. The carefully crafted and well-subsidized deception at work is that Social Security requires a similar pre-funding – by raising wage withholding. The trick is to convince wage earners it is fair to tax them more to pay for government social spending, yet not also to ask the banking sector to pay similar a user fee to pre-save for the next time it itself will need bailouts to cover its losses. Also asymmetrical is the fact that nobody suggests that the government set up a fund to pay for future wars, so that future adventures such as Iraq or Afghanistan will not “run a deficit” to burden the budget. So the first deception is to treat only Social Security and medical care as user fees. The second is to aggravate matters by insisting that such fees be paid long in advance, by pre-saving.

There is no inherent need to single out any particular area of public spending as causing a budget deficit if it is not pre-funded. It is a travesty of progressive tax policy to only oblige workers whose wages are less than (at present) $105,000 to pay this FICA wage withholding, exempting higher earnings, capital gains, rental income and profits. The raison d’être for taxing the 99% for Social Security and Medicare is simply to avoid taxing wealth, by falling on low wage income at a much higher rate than that of the wealthy. This is not how the original U.S. income tax was created at its inception in 1913. During its early years only the wealthiest 1% of the population had to file a return. There were few loopholes, and capital gains were taxed at the same rate as earned income.

The government’s seashore insurance program, for instance, recently incurred a $1 trillion liability to rebuild the private beaches and homes that Hurricane Sandy washed out. Why should this insurance subsidy at below-commercial rates for the wealthy minority who live in this scenic high-risk property be treated as normal spending, but not Social Security? Why save in advance by a special wage tax to pay for these programs that benefit the general population, but not levy a similar “user fee” tax to pay for flood insurance for beachfront homes or war? And while we are at it, why not save another $13 trillion in advance to pay for the next bailout of Wall Street when debt deflation causes another crisis to drain the budget?

But on whom should we levy these taxes? To impose user fees for the beachfront reconstruction would require a tax falling mainly on the wealthy owners of such properties. Their dominant role in funding the election campaigns of the Congressmen and Senators who draw up the tax code suggests why they are able to avoid prepaying for the cost of rebuilding their seashore property. Such taxation is only for wage earners on their retirement income, not the 1% on their own vacation and retirement homes.

By not raising taxes on the wealthy or using the central bank to monetize spending on anything except bailing out the banks and subsidizing the financial sector, the government follows a pro-creditor policy. Tax favoritism for the wealthy deepens the budget deficit, forcing governments to borrow more. Paying interest on this debt diverts revenue from being spent on goods and services. This fiscal austerity shrinks markets, reducing tax revenue to the brink of default. This enables bondholders to treat the government in the same way that banks treat a bankrupt family, forcing the debtor to sell off assets – in this case the public domain as if it were the family silver, as Britain’s Prime Minister Harold MacMillan characterized Margaret Thatcher’s privatization sell-offs.

In an Orwellian doublethink twist this privatization is done in the name of free markets, despite being imposed by global financial institutions whose administrators are not democratically elected. The International Monetary Fund (IMF), European Central Bank (ECB) and EU bureaucracy treat governments like banks treat homeowners unable to pay their mortgage: by foreclosing. Greece, for example, has been told to start selling off prime tourist sites, ports, islands, offshore gas rights, water and sewer systems, roads and other property.

Sovereign governments are, in principle, free of such pressure. That is what makes them sovereign. They are not obliged to settle public debts and budget deficits by asset selloffs. They do not need to borrow more domestic currency; they can create it. This self-financing keeps the national patrimony in public hands rather than turning assets over to private buyers, or having to borrow from banks and bondholders.

Print Friendly
Twitter78DiggReddit0StumbleUpon171Facebook401LinkedIn1Google+42bufferEmail

77 comments

  1. Yes, but...

    I think the main point is that it’s no longer a question of who’s doing it to us, why they’re doing it, or what are the means they’re employing to do it. This is all getting to be pretty standard fare now. The main question to be resolved at this point is, is there anything that can be done to stop the further shock-doctrinization of the US and the world absent the “democratic process,” which we now know has been wholly appropriated as well by the new world order.

    In one sense, it’s wholly appropriate that the US get served up a full helping of its own just dessert since we were the primary pushers of this whole abomination, but then again, revenge ain’t gonna really help anything and most Americans truly were helpless and ignorant before a monstrous global theft ring that would have just squashed them anyway. And should any of us have to worry about organized crime rings at the highest levels of world power anyway? Check that last question; asked and answered.

        1. DANNYBOY

          Bob,

          All I got, after reading some thousands of words, to hang my hat on was: “It remains the task of a new economics to revive the classical distinction between wealth and overhead, earned and unearned income, profit and rentier income – and ultimately between capitalism and feudalism.”

          I’m betting that I was right to stick with: “Neither a borrower, nor a lender be”.

          I still figure that was easier to act on.

    1. LifelongLib

      “organized crime rings”

      Morally speaking maybe. But as noted in the article, the bankruptcy and campaign-finance laws (and I assume a lot of other more obscure ones) have been changed to make most of what is being done legal. Why break the law when you can make it?

    2. nobody

      It seems to me that there is plenty “that can be done to stop the further shock-doctrinization of the US and the world,” and one of the starting points is the realization of the fact that “who’s doing it to us, why they’re doing it, [and what] means they’re employing” isn’t actually “standard fare” to anything close to a critical mass. Too many Americans, and Greeks, and others, remain ignorant before the monstrous global theft ring. Part of what is needed to find ways to communicate clearly, plainly, and simply the crucial truths about the Who the Why and their Means to people who are stressed and busy, who have short attention spans, enormous psychological resistance to the necessary realizations.

    3. sgt_doom

      ..is there anything that can be done to stop the further shock-doctrinization of the US ..

      Of course, if you are familiar with your history: the McNamara brothers, Alexander Berkman, Emma Goldman, the bombs going off on Wall Street in 1920, as the McNamara bombed the far rightwing LA Times back in 1910 or thereabouts.

      A mayor once shot in Chicago? I don’t recommend that, the political lackeys (and don’t know about his historical guilt anyway??) aren’t the cause, just as those “lone gunmen” weren’t the real cause either.

      You know the names: they can be found on the membership rosters of the Bretton Woods Committee (lobbyist group for the international uber-rich), the Trilaterial Commission, the CFR, the Peterson Institute, the Group of Thirty.

      Their lackey outfits: ALEC, Hoover Institute, Heritage Foundation, Cato Institute, Manhattan Institute, Brookings Institution (and don’t anyone dare tell me that’s “liberal” for chrissakes!), American Enterprise Institute, etc., et al.

      Sullivan and Cromwell, a lengthy history of being behind the scenes at every majory attack of economic warfare — but again the lackeys, like their Kenneth Raisler, responsible for that ballyhoo’ed Enron “loophole” of 1993, and the London loophole, etc. (with ICE).

      Covington & Burling, again, like S&C, the lackey structure, but dynamic in operation and should be closely watched and followed.

      Nothing really hidden, and everyone by this time should certainly know where to look for the guilty.

    4. diptherio

      Imho, what we have to do is start re-building democracy from the ground up. Worker-owned co-ops is my suggestion for where that could start. Local, alternative currencies is another promising area. A combination of the two, co-ops funded by alternative currencies, might also be possible.

      Working on the national level seems like a fools errand. Fortunately, there is probably more we can be doing at the local level than we currently are.

      1. david

        Worker owned co-ops: YES. VERY GOOD.
        Alternative currencies: NO. BAD.

        The problem is this: The one who controls the exchange between the alternative currency and the federal currency controls the co-op completely.

        We all need goods and services that will have to come from outside the co-op.

        Whoever controls the exchange ends up controlling all that flow. They can profit off of it any way they want to.

    5. DDT

      At TARPLEY.net
      Support a 1% TAX on all Wall Street transactions.
      It’s a good idea.
      How would you ever get it passed though?

    6. nonclassical

      Mr. Hudson is quite late to identify this phenomena…which was perpetrated upon South and Central America, 60′s, 70′s, 80′s, as described by Perkins “Confessions of An Economic Hit Man” and Naomi Klein….AKA (in 70′s-80′s Poly-Sci, “NEO-FEUDALISM”)…

      ..none of this should be a surprise…as we watched bushitters (Kevin Phillips-”American Dynasty”) shift family economic emphasis from munitions to “financial sector”..

  2. DANNYBOY

    I learned all of paragraph 1-3 by playing monopoly, so you are certainly correct.

    In fact, it’s all correct. Hearbreakingly, your last paragraph describing “Sovereign governments” “keep[ing] the national patrimony in public hands rather than turning assets over to private buyers” is too hopeful. Follow the assets at the State, Municipal, and Local government levels. Those Bitches are stealing my park! and my parking, and…

  3. nobody

    A few weeks ago Yves posted a video of Bernard Lietaer on “why the money system is a taboo topic.”

    I have been exploring what he has to say, and am finding much that is worthy of consideration. Here are a few more links:

    http://www.scribd.com/doc/34641415/The-Monetary-Blind-Spot

    http://vimeo.com/49640053

    http://www.youtube.com/watch?v=_AXjotz6h2M&playnext=1&list=PLB9B3EAB78A02F5DA&feature=results_video

    The last one is pretty long — the better part of two hours, in part because of the pauses to translate into Hungarian — but well worth the… investment.

    1. sgt_doom

      Thanks for the links, good citizen, nobody.

      I first came across the brilliant Lietaer on Ellen Brown’s Web of Debt site, a most excellent find.

    2. psychohistorian

      It is interesting to read the posting by Michael here and those by Bill Black and wonder why they never talk in depth, if at all, about private versus sovereign money and inheritance/ongoing private ownership of everything by a few.

      These are underpinnings of the class based social organization we have and until and unless we discuss and modify them we will continue along the same path, IMO.

      1. JTFaraday

        Yes, why don’t they ever talk, in depth, about the use of US sovereign currency to directly enrich a few, who in turn set about enslaving the majority, through debt and labor.

        Whatever could be holding them back?

  4. Lord Koos

    Another enslavement factor is health insurance. I know plenty of people who won’t or can’t quit shitty jobs simply because those jobs do include health insurance.

    1. diptherio

      I’ve known people who couldn’t TAKE crappy jobs because doing so would have made them ineligable for their health coverage (Medicaid). This ol’ economy of ours is just full of catch-22s.

  5. Susan the other

    So doesn’t the problem lie with bond contracts? If they stated the restrictions on demanding the respective pound of flesh, they would have no power to impoverish others. If we are incapable of controlling other countries and the banksters of other countries from marauding the world, then we at least should protect our own country. Other countries will follow. Nationalize finance.

    1. nonclassical

      Susan,

      …read Shaxton’s, “Treasure Islands”=tax dodges-transfer of taxes, financial transactions, for answers..

  6. backwardsevolution

    When you tell yourselves that you were not to blame (even a little bit) for the housing fiasco, you play right into the elite’s hands. You were not children; you knowingly entered into a contract.

    As adults, you needed to stop the bailout of Wall Street when it occurred, but I think many thought, incorrectly, that they would be bailed out too. LOL! The elite are not interested in you.

    Michael Hudson knows history. This is what history is – the elite own the property. If they don’t own it, they tax you out of it.

    Wake up! Envision the worst they could do, and then bank on it happening. Instead of talking about it, do something about it. March on Washington, on your state capitols, and keep marching until they stop what they’re doing.

    They lulled people into thinking that Social Security would be around. People, therefore, didn’t save what they should have for their retirement, spent their money freely (which benefited corporate America immensely). Just imagine what would have happened to corporate America if everybody had cut back on spending and saved some for retirement. This lulling greatly benefited the money machine.

    Look after yourselves! The government is and has always been on the side of corporate America. Look at history, then follow the money.

    The more you keep saying things like, “Well, we didn’t know the interest rate would reset,” or “We thought…..we were under the impression…..they told us…..” – you play right into their hands.

    Of course capital gains should be taxed as regular income. Of course the Wall Street banks should have gone under. Of course there should be tariffs (in order to keep jobs in America).

    Stop using your credit cards. Pay cash for whatever you need. Start saving. Stop relying on the government, who are not there for your benefit at all. Ask yourself whether the current programs are there for the benefit of the people, or whether they’re there to shut people up and placate the masses so as to ensure the money machine keeps grinding.

    Get up out of your seats and TAKE BACK YOUR COUNTRY.

    1. jake chase

      I agree. The fact is that a nation of entertainment addled sheep isn’t going to change anything. Not one person in 100 understands the facts as Michael has laid them out, every word ringing true. The other 99 believe the propaganda being pumped out daily through the TV, find themselves unable to distinguish truth from cant on the web. The system faces no worthy adversary apart from a relative handful of demonstrators clamoring about “the 1%”, who are easily written off as communists and communist dupes.

      Each family, each person, is going to be on his (their) own for the forseeable future. Develop survival skills, trade skills like carpentry, plumbing, electrical, etc. Learn to cook, grow food, live outside the system, earn money without having a boss. People who do these things will continue to do just fine, particularly if they enjoy support in a trustworthy group, at least until the whole system crashes, which is unlikely because the Fed can just print electronic dollars to keep it going, although those dollars will not find the pockets of the 99$.

      Those who run around looking for a “job”, who think life is going to the gym, or playing sports, or watching sports on tv, or cruising bars, or shopping, are simply going to be ground up by shrinking employment opportunity, taxes, interest and rent.

      I have seen this coming for thirty years and managed to prepare myself. You can do it too, but it’s a full time job, which means 16 hours every day, and nobody will pay you for them, either.

      1. nobody

        One in a hundred?:

        “The U.S. government is the absolute sovereign over the dollar. For the past 15 years, I have struggled to make this concept so clear even a child could understand it. Others have struggled even longer. Yet after all this effort, not one person in a thousand has learned this basic idea.

        “Attempts to educate the politicians, the media, the mainstream economists and the public have failed… [T]he ultra-wealthy, the .1%, has spent billions to bribe politicians, control the media, intimidate the economists and brainwash the public about our economy.

        “The key to their success is in getting the public to do the dirty work of misinformation.”

        http://rodgermmitchell.wordpress.com/2012/12/11/you-think-youre-smart-so-why-do-you-do-the-dirty-work-of-the-1/

        1. JTFaraday

          I think they’re actually fairly wrong about this. I think a lot more people in federal government, in particular, understand that a financial and military behemoth like the global hegemon can pretty much contrive to arrange things so as to do whatever it wants.

          However, they don’t really see any benefit to themselves in rocking the financial boat, just like Marshall Auerbach will never “understand” that working a minimum wage sh*tjob is everything every single person in the US wishes to escape, and that having the government for a boss instead of Walmart is really no improvement.

          It’s also exactly akin to how Obama uses the Tea Partisans to effect the policy he really wants to effect anyway. One and the same, in fact.

        2. JTFaraday

          In other words, they think it’s primarily a knowledge problem when it’s really primarily a political problem.

    2. Furzy Mouse

      The only thing that might penetrate the ever-dimming clarity of relentlessly propagandized Americans are actions of mythical proportions….e.g. to show how fed up we are with the gun-nutz, I suggest town square torching and melting of unwanted or surrendered firearms,and for the recalcitrant congress-critters, an impeaching of all who have signed on to Grover Norquist’s pledge of no more taxes, an oath that seems to supersede their oath to care for America’s general welfare and prosperity. What if a major war broke out? Would these fatuous bozos still refuse to finance an imminent necessity?

      1. Antifa

        Of course they would. Wars go on the national credit card, to be paid off later (with interest) by slashing the horrible, reckless and unsustainable spending of government funds on the social safety net FDR provided for Lazy and Sick and Old People.

        Looking after lazy, ill, disabled and otherwise unemployed bums isn’t America’s business, ladies and gentlemen. Nor are we here to feed or educate the children. There’s churches and banks and corporations to do all that, for fees our government is only too happy to pay.

        No, ladies and gentlemen, War is America’s business. For only through war can peace ever be.

        And America will have peace, by God, at any price.

        1. jpom22

          good one. been screaming this since Ike warned America about the Military Industrial Complex. however, i think mr. hudson’s point is that the funding for wars is now being shouldered by taxing the working class, rather than war industry investors having to use their own money. ok, i probably have that wrong, but certainly, 2 vectors must be added to the MIC: the corporate-controlled mass media, from local presses to the 4-5 megaconglomerates (time-warner, disney, cbs, etc.) and Wall St.

          as for giant wrenches to throw into the war machine’s gears, i’ve seen the foundation, described by Buffy st. Marie’s Universal Soldier: “military families”, who raise their children with the implicit understanding that they “serve their country” fresh out of high school, before college, before working, sometimes they enlist while still in their senior year. educating not only the children but their parents, about how military service isnt serving anyone but the disgustingly wealthy upper echelon of the MIC… i’d venture a guess that it would take God Almighty to stick his head out of the clouds and tell these families directly that it’s time to wise up.

    3. nonclassical

      “DO something about it?”…when credit card industry bastardized bankruptcy laws under bushit, we had already known what was coming for enough years to pay off all debt….only possible alternative…surprisingly we found several close friends who had come to same conclusion….millions of Americans were going to go bankrupt.

      But we all have relatives, friends, who simply hadn’t accrued education to comprehend what was-is happening…fewer than 20% of Americans graduate 4 year university or vocational equivalent…how many of these graduate scapegoated “liberal arts” education….capable of understanding-critical thought…?

      1. rotter

        right, “liberal arts” graduates have no “critical thinking skills” ..all that literature, language philosophy and math just makes one stupid…not like business school..or devry intitutes IT program.

    4. rotter

      If you “pay cash for everything you need”, you either A – dont have much,(like a house. did you “pay cash” for your college education? your childs bone cancer treatments? your dads dialysis?)) or B. you are a trust fund twerp and you have WAAAAAY too much.
      This blather is not at all useful.Your advice is smarmy and reeks, frankly, of bong smoke.

    5. Bryan

      There is one point about the bank bailout – many people were promised loans that could later be refinanced. no money down. 2% interest for 3 years, etc. Many of those people were not at all qualified for the loan. Many had NO experience in this level of investment. They lost their homes when they couldn’t refinance at these low rates after the crash and were hit with balloons/normalized interest rates.
      Now, tell me why we helped the banks at ALL? They made this cr*p paper, knew that there was a risk the property values could fall, and their staff made TONS of $$$ processing the initial loan fees. The banks then placed huge additional bets on these loans through the unregulated derivative market.
      The consumer lost whatever money down they gave, the consumer hurt their own credit rating. The banks – many closed by the Feds and bought for pennies on the dollar after the fact. The Feds are NOW supposedly forcing them to actually have cash/assets sufficient to cover their own loan losses. Many banks still have TONS and TONS of foreclosed properties on their hands. One reason they do such slow foreclosure is to keep the property OFF the books as long as possible to forstall the loss. Yet today, much bank profits are coming from unregulated derivative tradings. sorry but what has changed about that market?

  7. Oliver

    The fiscal cliff is just theatrics for the world to see. Obama works for Wallstreet. The so called cliff will no where near cover the deficit. Bernanke will crank up the printing press again very soon.

    1. 6502

      I see that the author in the URL you posted has made a lot of good points, but some points seemed to show a bit of a lack of understanding for the situation her readers might be in.

      For example:

      (1) “Starting a home business”.
      This would be great if everyone else around me weren’t in dire straights. There is no one back in my hometown (much less my county, really) that could really afford to buy any new services. And the ones that could are so spread out and hard to find that I would burn more resources just trying to find them — much less sell them something — than I would just doing something else… like saving the cash and trying to find a job. Which brings me to the next point.

      (2) “Walk away from job offers where they make you sign your rights away.”
      Well, NO.
      You see, this economy s@cks so much that I have to take any job that I can get and sign anything they put in front of me if I want to eat.
      That’s life.
      They created a situation where I cannot afford to be a soldier for the greater good. I have to feed myself and my family. (This is described in the post on *this* website).

      (3) “Pay more at local shops to stick it to the Big Wall St. shops.”
      I want to… but, I can’t afford to.
      When I buy the big $2 sack of chicken legs at Walmart, that’s enough chicken for a few days. That means that I can use another few dollars to buy a gallon of milk and loaf of bread.
      Sadly, when I try to buy local, it would cost all what I paid at Walmart just for half a chicken. :(
      Again, I want to fight… but I cannot.
      I just can’t afford to.

      So, I still drink coffee, but I buy the huge monster jar of the powdered instant. I know that it is not fair trade, but that rocket launcher sized jar only costs $5 and lasts for months.

      I can’t afford fair trade coffee.

      The author of that URL’s post might have some good intentions, but suggested some things that real people just can’t afford to do.

      And certainly with the idea of “starting one’s own business”, I’m afraid shows that that author is not paying attention to the people who have to live at this level. If the author does not live at this low level, then they should really hit the pavement and walk a few miles in our shoes. Really talk to us.

      If this author is one of us, then I fear there is no hope.
      They already walk the hundreds of miles alongside us, yet has learned nothing at all.

      :(

      1. McKillop

        I don’t wish to be a smart alec but I’d suggest that you do not wish to battle against your oppressors if there is any cost or threat to your habits.
        For example, you might choose to drink water without the “coffee” put into it.
        There are foods besides cheap chicken that nourish.

  8. Dave of Maryland

    Ever notice a lot of depressed people on this thread? On the NC site? Susan the Other, Sgt Doom, Backwards evolution, Nobody, Diptherio (diptheria?), Yes, but, Life Long Lib, etc. If Dannyboy is in memory of the Irish ballad, it’s not too cheerful, either.

    Does a general sense of hopelessness pervade the land on the last day of the year?

    1. DANNYBOY

      Dave,

      You’ve got me all wrong. I AM THE MOST DYNAMIC, ALIVE PERSON you’ll ever meet. Women love me. Strangers love me. It must be the pheromones I produce.

      And as to your observation: “If Dannyboy is in memory of the Irish ballad, it’s not too cheerful, either.” My Irish friends, who CRAVE MY COMPANY, EVEN THOUGH I MAKE THEM PAY FOR MY DRINKS, have dubbed me Craic.

      Look that up, and learn to fight. We’re not depressed, we’re fucking angry.

      And you don’t want to be on the wrong side of me, Dr Freud.

      1. nonclassical

        People appear to be missing the point-repubLIEcons push “austerity”….

        dems-bushbama pushes “stimulus” guaranteed to $ubsidize Wall $treet…

        the PEOPLE must demand ACCOUNTABILITY….as are people worldwide…Americans don’t appear able to find TRUTH leading to this conclusion…TRUTH is the issue…

        look what Iceland did…refusing to $ubsidized “criminogenic accounting fraud” (William K Black definition) by bailing out perps…

          1. nonclassical

            ..that’s quite ameriKan…fight with each other-divide and conquer..people need to recognize the enemy, and it isn’t yourselves, or each other…

        1. DANNYBOY

          Larry,

          It’s just that I’ve been so depressed, what with all that’s happening to me, that I thought that I could cheer myself up a bit with a bit of fantasizing; you know, sort of an ego boost.

          But you and Dave are both right about me. Dave makes fun of my name, and my mental condition by extension. And you out me for having my head up my backside.

          Got to agree with you there. Anything else I should do?

    2. backwardsevolution

      Dave of Maryland – I’m very optimistic about the future and, no, I’m not depressed. What could be depressing about finally having your eyes wide open, about having the truth put before you? Depressed people usually do not see, or do not want to see. I want to see, I want to drink it all in, and I’m doing just that.

      Happy New Year to you, Dave.

    3. Yes, but...

      Just call me resigned and realistic I guess. It’s time for all mature adults to take off the rose colored glasses of perpetual sunny optimism now. The American Dream(TM) was always pure marketing hype anyway; our dream being the third world’s nightmare. Now it’s just come home to roost.

    4. rob

      I don’t see a sense of depression around here.It is the facts that are sad.It takes optimism to wade through the sad facts of business as usual,and the political and economic repercussions on the lives of us and those around us.It takes determination to see these facts as clearly as we are able.Even while those around us have not yet seen fit to be so curious.
      Being realistic ,means you sound pessimistic;but really, you have to be an optimist to brave being a realist.
      Everyone fighting the good fight,must have a little don quioxte in them.

    5. diptherio

      Being realistic isn’t the same thing as being depressed. Optimists often mistake it for that, of course.

      There’s something about having to admit that one has a problem before one can deal with it effectively. Denying the extent or the virulence of the social disease(s) we are currently facing may make a person feel better (for awhile), but it won’t help fix any problems.

      As J. Krishnamurti put it, “it is no sign of good mental health to be well-adjusted to a sick society.” Most of the people I have met who are actually committed to working for positive change are people you would probably consider “depressed,” since they’ve given up all hope that our political overlords can be counted on for anything but continued looting.

    6. scraping_by

      The hopeless ones are silent.

      If you can at least speak truth, even if it isn’t the way of the world, you know there’s a better way and perhaps, it will lead to a better day. Joining the gray mass is when you lose hope.

      Silence is consent. Happy and blessed New Year to you all.

    7. R Foreman

      I see a lot of super-wealthy, influential people who don’t have a clue how the world works, and they rely on government kleptocrats to keep their fortunes intact for them. It’s weird how truly inept the super-wealthy really are. If they didn’t have a corrupt system in place looking out for their interests they’d be lost. It’s cronyism and nepotism at its finest. Welcome to the empire.

      1. rob

        I say the cliche’ that fits is,”Those who win a rigged game too long.get stupid.”
        we are in the “stupid”,generation.When the people running the show now are the children and grandchildren of those crooks who were “smart” enough to rig the game in their favor,on the current books….These establishment children are smart enough to rig election choices, and pad their incomes to the 9th…but they are not smart enough to keep the host alive for future parasitic life to feed.

    8. 6502

      Hi, Dave,
      I’m totally new here… I totally just got here today.
      I went back and looked at the names like you suggested.

      Damn… you’re right.

      And the content is pretty downer, too.

      And… sadly… my post is not uplifting, either.

      I can only speak for myself:
      The topic is heartbreaking.
      Speaking for myself, even that I could not perceive the entire beast, I did try to sound warning based on the part of the elephant that I could recognize.

      But nobody listened.

      I warned as far back as 2003 that America was on a train-wreck level path, but nobody listened. 2005 was the last time I really bothered to talk about it.

      So, I put my money where my mouth was.

      I’d already been saving up money.
      I learned a foreign language.
      Got my visas together.
      Secured an entry level job overseas.
      Then left America.
      And finally, watched as the shit hit the fan from overseas.
      And watched how the destruction circled the globe.
      I watched tons of people lose their jobs over here.
      Factories close.
      Immigrants forced to leave from here for lack of work.

      But being over here, meant that I was just far enough from the epicenter that with my savings I lasted long enough to be lucky enough to find a better job (after about a year not working) even that I am in my 40s.

      I hear back state-side, that people in their 40s with PhDs are fight to get jobs at Target and Starbucks… and getting turned down.

      Shit is bad here.
      But, my gamble… no… my calculation was correct and my countermeasure worked.

      But the world is in the crapper.

      I wish I could have made people believe me.
      They all would say things like, “That would never happen to America” or “America will always bounce back… we’ve been down a bit like this before.”

      I kept saying, “There is no law of nature that says America will always bounce back.”

      But everyone said I was crazy.

      Now, they say I should get a masters or PhD in economics.

      Funny…
      But in this world, even if I did… who would hire me, much less believe me.

    9. ebear

      “Ever notice a lot of depressed people on this thread?”

      Ever notice how forums where people can air grievances tend to attract people with grievances to air? Prior to the Internet what was the outlet? Letters to the editor? Town hall meetings? Standing on the corner with a sign?

      How long did it take the before everyone had a telephone or a radio? This is a new medium. We’ve passed the “porn on demand” and “free music” stage and are now at the “airing grievances” point in its development. People are now figuring out how to use this new medium for social and political ends. Give it time. It’s not going away, although it may look completely different 20 years from now.

      The hidden ground of the collective conscience has always been the medium of communication, starting with language, then writing, then print, radio, television and now this. As McLuhan pointed out, the content of the new medium is the old medium. Therefore, study the effects of the new medium, not the content.

  9. Tom

    The take over by finance has happened before. No new methods have been devised that can’t be related to simple theft or a con-game. All old tricks with new names. Just because they go by names like MBS CDO,s and their ‘sophisticated’ derivatives and naked overlays does not make them something new or novel – Same shit, different name.

    Tax the crap out of predatory and non-wealth producing activities. Arrest those responsible for fraud and theft and pull down the curtain of obfuscation they hide behind.

    Let us not forget that companies do not pay actual taxes (they have no standing to talk of lowering business taxes) companies only pass through their ‘tax obligations’ by collecting sums from the consumer of their product. The consumer pays the taxes in the price of the product and corporations pass it through for government revenue. If they did not price in taxes onto the cost of the product sold, they would most assuredly lose money.

    Speculators do not create wealth – they many times destroy wealth. High frequency trading does not create wealth, it extracts it from those who do – tax it to near extinction or make sure it is associated with the real production and consumption economy.

    As Simon Patten, the first economics professor at the nation’s first business school (the Wharton School) explained, public infrastructure investment is a “fourth factor of production.” It takes its return not in the form of profits, but in the degree to which it lowers the economy’s cost of doing business and living.

    Why should public lands and services be sold – A good public school raises property value as does good public infrastructure. Those items were put into place for public benefit. They were not put into place to enrich private business – they are what enables private business to enrich themselves by benefiting from public resources. Public resources are maintained by the public – I protest that what I payed for be given to some ass-wipe who will add costs for profit and do all to undermine public progress for their (speculative benefit)

    “Legal Gambling
    The gloom is fading from the real estate situation. More nibbles during the last few weeks than the last three years. If January brings us good rains, this next year will open the door to the sunshine – a case of rain bringing the sun.
    It is to be hoped, however, that there will never be another boom. The crash of the boom of 1923 was due to the same causes that wrecked the wall street stock market. People sold what they did not own. They made a payment down in the hope of getting the property off their hands before it began to burn. Real estate fell into the hands of sharp-shooting gamblers who had no interest in land. To them it was just a pile of blue chips on a roulette wheel.”

    Written around 1926 (Tax Facts) a news pamphlet published in the 1920s in California

    Tax land value and not what is built upon it – that way taxation pays for services the public wants and discourages land speculation. The public benefits because they have increases in land value that pays for their services and infrastructure.

    “In spite of the ingenious methods devised by statesmen and financiers to get more revenue from large fortunes, and regardless of whether the maximum sur tax remains at 25% or is raised or lowered, it is still true that it would be better to stop the speculative incomes at the source, rather than attempt to recover them after they have passed into the hands of profiteers.
    If a man earns his income by producing wealth (money is not wealth), nothing should be done to hamper him. For has he not given employment to labor, and has he not produced goods for our consumption? To cripple or burden such a man means that he is necessarily forced to employ fewer men, and to make less goods, which tends to decrease wages, unemployment, and increased cost of living.
    If, however, a man’s income is not made in producing wealth and employing labor, but is due to speculation, the case is altogether different. The speculator as a speculator, whether his holdings be mineral lands, forests, power sites, agricultural lands, or city lots, employs no labor and produces no wealth. He adds nothing to the riches of the country, but merely takes toll from those who do employ labor and produce wealth.
    If part of the speculator’s income – no matter how large a part – be taken in taxation, it will not decrease employment or lessen the production of wealth. Whereas, if the producer’s income be taxed it will tend to limit employment and stop the production of wealth.
    Our lawmakers will do well, therefore, to pay less attention to the rate on incomes, and more to the source from whence they are drawn.”

    Written around 1925 (Tax Facts) a news pamphlet published in the 1920s in California

    1. rob

      “To pay less attention to incomes and more to the source from which they are derived”….
      In that a sane tax structure exists.
      Good post.

  10. rps

    Fiscal Cliff–Does it exist in the natural world or an ideological state of mind? That is to say,ideology is abstract and it’s ideology praxis that creates a physical reality through the subjects actions. As an example, we can’t see a god but the physical and symbolic practices of the ideological subjects/believers (bowing, kneeling, praying, etc…) creates a physical reality that is interpreted as proof that a god exists through these human actions. What’s the point? Is money real or abstract? Money is a collective psychosis-consensus that ink-colored paper, metallic coins etc…have a ‘real’ designated value that is exchangeable for our labor. Thus, we enter into an ideological agreement through our daily actions of exchanging these ‘valued’ slips of paper when in reality they are just simply pieces of paper with numbers and ideologic symbols (pyramids, eye, eagle, etc..).

    Obama’s job as the patriarchal figurehead of the Ideological State Apparatus (ISA) is to interpellate/hail us as the ideologic subjects to believe that a fiscal cliff exists. His job along with congress and corporate media– is to chase us to the edge of this mythical cliff. And if we don’t do something soon, we will topple over like a herd of frightened cattle. Therefore, we are being psychologically manipulated. In fact, as good subjects, we must ideologically agree through our physical and psychological practices to a more harsh and repressive state existence.

    The questions not being asked– Are our natural resources that are necessary to our daily existence in danger? No. Are we short on human labor? No. Do we have everything we need for the continuity of civilization? Yes. In fact, we can have a more comfortable existence and become a healthier society with a better lifestyle by demanding redistribution and sharing (gasp!) of resources.

    Then what’s the problem? The commonwealth’s natural resources are privately owned by a few human beings. Natural resources are inherently the property of the commonwealth which have been absconded by the few. It is the RSA’s (represssive state apparatuses) henchmen and ISA’s representatives that work on the behalf of the ‘greedy few’ that reify our class stratified repressed existence. Simply, we take back what belongs to the commonwealth. Good luck with getting the cattle outta the ideological chute.

  11. Curtis

    All the comments can consume a life if they are read. Some are really good and cogent. It is all about the Devil, Interest. Goethe and those before him knew, but not many since. Have an interest free year!

    1. DANNYBOY

      Divide and rule, the politician cries; unite and lead, is watchword of the wise.

      commented on Naked Capitalism, New Years Eve, 2012

  12. Hugh

    This is an excellently concise description of kleptocracy and how looting is carried out by the very people and institutions that are supposed to protect us from such activity.

  13. Marc Lawrence

    You can thank Steny Hoyer (a leading Democrat) for helping re-write federal bankruptcy law in order to stick-it to consumers.

  14. Calgacus

    Glad Hudson is focusing on the Greenscam 1983 Save-SS-by-destroying-it tax shift.

    It can’t be overestimated as the point where financial illiteracy was institutionalized, seared into everyone’s brain. When the bad guys won, when the ravings shat by “academic” morons was turned into a reality that constrained realities, and worse, the thoughts of millions, the welfare of billions.

    Its part in forging this “greatest weapon in the hands of the oppressor”: “the mind of the oppressed” was even worse than the huge direct negative consequences of this overtaxation on the destruction of the American middle class.

      1. diptherio

        Yeah, how about never owning a home or getting an education? Sadly, if you want to fit-in at all in our society your options are 1) be independently wealthy; or 2) go into debt.

        FWIW, most of my econ profs were of the opinion that the only sensible thing to do was “die in debt,” since that way you get to consume more than you produce.

  15. commenter8

    Oil and gas companies, which are raking in record profits, certainly don’t need $4 billion a year in subsidies, and even the oil company CEOs admit they don’t need it!

    Why are cuts to Social Security and Medicare even being discussed while literally billions in corporate welfare are constantly spilling out of the Treasury?

    White House petition to end corporate welfare here: http://wh.gov/Qa6f

  16. Teejay

    Thank you Michael, great posts. For whatever it might be worth I sent a copy of part I to Obama’s chairmen of the Council of Economic Advisors Alan Krueger.

  17. Calgacus

    Marshall Auerbach will never “understand” that working a minimum wage sh*tjob is everything every single person in the US wishes to escape, and that having the government for a boss instead of Walmart is really no improvement.

    Well, I’m glad Auerback will not understand that, since it is not true. Especially when you don’t call JG jobs sh*tjobs, which is not the proposal. The proposal is to offer a decent job with benefits to everyone. Most would say rather better than most Walmart jobs. Millions upon millions would go for that. To their great benefit, and to everyone else’s. Of course some of the benefits like “socialized medicine” should be offered to everyone, like other countries do.

    I don’t think Hyman Minsky thought he was being maltreated in a shit job when he was a WPA worker. As for the minimum wage part, a guaranteed job must be at the minimum wage. It is not a choice. There is no other possibility.

  18. Hannibal

    US Constitution; Article 1, Section 7:
    “All Bills for raising Revenue shall originate in the House of Representatives,…”

  19. jpom22

    i failed Eco 1.1 in college. twice. simply couldn’t relate to the definitions, equations… the abstractions. had similar trouble with principles of art, when we hit abstract painters.
    rps touched on the meat of the matter: “The questions not being asked– Are our natural resources that are necessary to our daily existence in danger? No. Are we short on human labor? No. Do we have everything we need for the continuity of civilization? Yes. In fact, we can have a more comfortable existence and become a healthier society with a better lifestyle by demanding redistribution and sharing (gasp!) of resources. Then what’s the problem?”

    the problem, which a rare few have focused on, is that we are living in an oil-based economy. the reality of Peak Oil is being ignored. no matter what temporary financial solutions are being offered up on the altar of “We Can”, the fact is that our grandchildren will be farmers, either within collective/cooperative villages or on feudal estates, controlled and protected by Land Lords. those who believe the US empire is collapsing from within are only partially right; our civilization itself is devolving. there simply isnt enough time, nor enough will to build alternative energy infrastructure, to save our level of technology.
    and if the dwindling world oil supplies doesnt finish us off, global climate change will. the two most important issues for our american survival are both being swept under the war-profiteering carpet.

    china, who only within the last decade or two, began moving toward oil-based industry, will simply go back to the old ways. the rest of us are finished. without oil-based fertilizers and pesticides, regardless of what hideous abominations Monsanto comes up with, well over 3/4 of our food production will disappear… causing a similar reduction of our population.

    lucky for baby-boomers like myself, we wont be here to see the worst of it. some of us saw it coming a long time ago and began attempting to educate and disseminate information but mass media called us alarmists and tree-huggers, bambi-lovers, communists, etc. Once in a while, there were songs that reached the mainstream rocknroll radio (Tower of Power – Only So Much Oil in the Ground, http://www.youtube.com/watch?v=56_eUJzWOTg ), but the message was lost.

    there was a website, http://www.LifeAfterTheOilCrash.net, created by a guy that was forced from keeping up the site, Matt Savinar. many debunkers immediately attacked his findings, mostly with rhetoric, few with actual data. bottom line, “light sweet” easily-accessible oil was a one-shot deal. no other energy source will be as cheap and plentiful ever again. had we started building alt. energy infrastructure 30-40 years ago, we may have developed ways of using electric systems to replace a good percentage of all the fossil-fuel burning systems that keep our economy afloat. now it’s just too damn late.

    1. different clue

      I used to read Life After The Oil Crash. I don’t remember Matt Savinar being forced to shut down the site.
      I remember Matt Savinar telling us that he was getting interested in Astrology, and he was going to be a Paid Astrological Consultant, and he had lost interest in writing about the Oil Crash once the Oil Crash was “here” now.
      And Dmitri Orlov in one of his Club Orlov posts referred to Matt Savinar as choosing to go into astrology . . . which left Orlov somewhat disappointed, but not implying that he felt Savinar had been somehow “forced”.

      Anyway, Matt Savinar has written a little retrospective of his onetime LATOC site together with a legacy screenshot of what it used to look like, for those who want to see it.
      And all down the right side of the screen are examples of what he has freely chosen to do after closing LATOC down. Here is the link.
      http://northbayastrology.com/?p=243

      And one may well find LATOC at the Internet Archive’s Wayback Machine, if one has or can totally remember every little letter, number, and punctuation mark that went into making up the URL. (How much money would the Wayback Machinists need to create a total list of all the NAMES of all the websites and blogs they have preserved? If someone offered them ALL the MONey they could ever NEED to get the job done, would they take the money and do the job? Or would they just laugh at people who need “names” because they can’t remember a million URLs off the top of their head?)

Comments are closed.