Michael Hudson on Financialization and Deindustrialization

Yves here. Michael Hudson provided a pre-election take on how Trump policies haven’t changed the trajectory of America’s decline as a manufacturer. We’ve stressed that achieving that goal would take a long term commitment to what amounts to industrial policy…something that America is officially allergic to but in fact practices all the time, witness huge explicit and tax subsidies to favored sectors like real estate, finance, higher education, medicine, and of course armaments.

By Paul Jay. Originally published at TheAnalysis.net

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Paul Jay: Hi, I’m Paul Jay and welcome to theAnalysis.news podcast.

Donald Trump has tried very hard to make this election about his pre-pandemic economic record, which is supposed to be a success story. Of course, he ignores the fact the cyclical upswing of the economy started during the last Obama years.

But what Trump tries to trumpet is his approach to trade with China. He claims his tariffs and remarkable negotiating skills have brought hundreds of thousands of jobs back to the United States.
Well, the Wall Street Journal reported on October 26 that, quote, “President Trump’s trade war against China didn’t achieve the central objective of reversing a U.S. decline in manufacturing, economic data show, despite tariffs on hundreds of billions of dollars of Chinese goods to discourage imports. The tariffs did succeed in reducing the trade deficit with China in 2019. Still, the overall U.S. trade imbalance was bigger than ever that year and has continued climbing, soaring to a record 84 billion dollars in August as U.S. importers shifted to cheaper sources of goods from Vietnam, Mexico, and other countries.

The trade deficit with China also has risen amid the pandemic and is back to where it was at the start of the Trump administration. Another goal reassuring of U.S. factory production hasn’t happened either. Job growth in manufacturing started to slow in July 2018, and manufacturing production peaked in December 2018. Manufacturing job growth began to slow when the trade wars started and had nearly stopped growing before the pandemic”.

A little further down, the article continues, the annual change in manufacturing tariffs are, quote, “are having the effect of bringing manufacturing jobs back to the U.S. U.S. Trade Representative Robert Lighthizer said in an interview, citing statistics that show a net gain of 400,000 U.S. manufacturing jobs from November 2016 until March 2020, when the pandemic forced widespread factory closures. However, about 75 percent of the increase in manufacturing jobs occurred before the first tranche of tariffs took effect against China in July 2018. With annual growth in manufacturing, jobs peaked and then began to decline. By early 2020 even before the pandemic reached the U.S., manufacturing jobs had stalled out, and factories shed workers in four of the six months through March,” end quote. So why is there so little industrial growth despite all of Trump’s rhetoric?
Well, now joining us to help answer that question is Michael Hudson. He’s an economist, a professor of economics at the University of Missouri, Kansas City, and a researcher at the Levy Economics Institute at Bard College. He’s also a former Wall Street analyst, a political consultant, a commentator, and a journalist. Thanks very much for joining us, Michael.

Michael Hudson: Well, it’s good to be back with you.

Paul Jay: So Trump made all kinds of promises and is still blowing his horn about this issue of returning jobs and the rebirth of American industrial manufacturing. But he hasn’t succeeded. Why? And there are some bigger reasons for that, aren’t there?

Michael Hudson: Well, we’ve talked about these bigger reasons for quite a few years now. And my point is that the economy’s been in a slow crash. The reason is that to become an industrial economy, you have to lower the cost of living and lower the cost of doing business. That’s what the whole fight of classical economics was all about. But the economy has become more and more financialized and polarized. It’s impossible to cut costs.

You mentioned the pandemic. Health care now absorbs 18 percent of the GDP. If you look at the other costs, if you’re a wage earner, 15 percent of your income right off the bat goes to Social Security and medical insurance. You have regular taxes, anywhere from about 20 percent. You have mortgage debt that is up to about 40-43 percent of average income. At least that’s what the U.S government is willing to guarantee when bankers make a loan. You have other loans; you have student debt to pay for an education in order to get a job, you have automobile debt to get to the job.
Paul Jay: Add credit card debt to that.

Michael Hudson: Absolutely. Credit card debts have been stable. As people are falling further and more into arrears, their interest rate jumps from about 18 percent to 29 percent or more. So the same amount of debt now absorbs a much larger part of your income. So the result of all this is that if American workers in the industry got all of their food, all of their clothes, all of their transportation, everything, all of the physical goods and services they use for free, they still couldn’t compete.

In fact, if they just had to pay their wage withholding for Social Security, medical care, and overall health insurance alone, that is larger than the wage levels in Asia where we’re importing things from. So the fact is that the United States has made itself uncompetitive because of this idea that, well, if one wants to get rich and the way to get rich is to go further and further into debt to buy houses that are rising in price. But as houses rise in price, then you have to pay more and more debt service or more and more rents to the people who buy the same houses on debt.

The result is that America is priced out of the market. Well, this is what Ricardo talked about in his free-trade theory way back in 1817. He said that industrial capitalism was not going to be able to take off in England if British workers had to pay rising rents as food prices rose behind the agricultural tariffs that England had. And there was a 30-year fight to finally repeal the agricultural tariffs, the corn laws. Ricardo said, if you don’t stop the economy from having to pay the rentier class at that time, the landlords, then you’re going to have the Armageddon of capitalism. You’re going to have the day of judgment that our rents are going to rise to take so much of the wage earners income and the industrialist’s income that there’s no room left for profit.

Basically, if you’re going to compete with other countries and try to sell or buy American goods instead of imports, then you’re going to have to pay enormously high costs to pay the rentier class, which is basically the one percent: the finance, insurance, real estate sector, and the fire sector. Instead of becoming an industrial economy, the United States has become a fire sector economy. And Trump has not done anything at all to reduce that. The economy is getting obviously sicker and sicker, once again. Medical costs are going up. The states and municipalities are broke. Small businesses have been going out of business. So, where is the demand going to be for domestic American manufacturing? And why would one pay for manufacturers with labor that cost 10 or 20 times than what it costs abroad? When you add up all of these rentier costs into the equation, it can’t be done.
Paul Jay: Well, there seem to be different parts to the argument, and they kind of all lead to the same conclusion, a continued lack of industrial jobs in the United States. In the article, in spite of the tariffs against Chinese imports, these American corporations on the whole that we’re producing in China, a lot of them just moved to other cheap wage economies. They’re talking here in Vietnam and Mexico. So the actual balance of trade didn’t change at all.

Michael Hudson: That’s right. American corporations are going after global and multinational, and they’re going to hire labor wherever it’s cheaper than American labor. And that’s almost everywhere in the world because no other country in the world has to pay American style health insurance. No country in the world has to pay residential rents that are charged in the United States. Other countries just don’t have the heavy financial overhead structure that the United States has. So there’s no way in which these countries, these multinational firms are going to produce in the United States.

Paul Jay: The Trump plan and the Republican plan, in spite of all the demonization of China, of being the source of all evil, including the virus itself, never mind taking away industrial jobs, which is all a process. Outsourcing was obviously all an American driven process, American corporations. It leads to this kind of dead-end because the more American workers’ wages and living standards go down, the less they can buy. So even if you’re producing cheaply abroad, your market is still getting smaller in the United States.

Michael Hudson: Yes, the living standards are going down, but not the wages.

Paul Jay: And not the cost of living, just the standard of living. We see this even in the fight over what to do in the pandemic. The Republicans are against another big stimulus plan. The Democrats supported the original plans, but they also supported only so much of those plans actually going to defend the cost of assets or the value of assets of the rich, and more went that way, if I understand it correctly, than actually went to workers and working families.

Michael Hudson: We’re talking about eight trillion to the one percent, two trillion to the rest of the population. Nancy Pelosi and the Democrats made a deal with the Republicans. They both agreed that they wanted to pay their respective campaign contributors, the financial sector, and the real estate sector. They were realistic. We can’t save the economy. We can save the stock market. Let’s put eight trillion into the stock market and the bond market, and let’s save the banks. Let’s have the Federal Reserve use some of this eight trillion to buy the packaged mortgage loans, the packaged oil industry loans, the loans that are going bad. So let’s bail out the rich people. Neither the Republicans nor the Democrats really cared about the working-class. I think Trump had some care for the working-class, but other Republicans didn’t. The Democrats said, will promise the workers that we’ll get to the fact that we know that the states and local localities are broke. We know that the subways are running at a deficit. We know that the cities are broke, and they’re going to have to lay off people. But we really can’t deal with that. Let them go under. Nancy Pelosi said, well, we’ll get to all that later. She knew very well that she wouldn’t get to that later. She wouldn’t even agree when Trump said, well, let’s at least send out another two trillion and the twelve hundred dollar checks to everybody, she wouldn’t even agree to that.

So the Democrats have come out really to the right of the Republicans, or they’ve made a right-wing shift.

Paul Jay: Yeah, I don’t think you can say to the right of the Republicans.

Michael Hudson: It’s almost impossible to say. You’re right. Let’s just say nobody really cared about labor or how it’s been doing. Nobody has made any proposals because, in order to deal with the employment problem and the industrial problem, you’d have to restructure the economy. The economic structure now isn’t simply a question of not having enough money to live or enough money to buy goods and services or enough profit. It’s so male structured that the industrial economy and the wage-labor has been absolutely flat for decades now. All of the growth of income, certainly since 2008, all of the growth and wealth has accrued just to the top ten percent. It’s accrued in the form of rising stocks and bonds and housing prices. But rising housing prices don’t make it easy for wage earners because no workers have to pay more and more for the homes that go up.

So instead of making the economy richer, the boom in stock prices and also the stock and bond market is making the economy more debt-strapped. If you’re a worker expecting a pension, the pension funds are only able to make less than one percent on risk-free capital. So they’re taking a lot of risks, and they’re usually taken advantage of by the Sharpies of Wall Street that sell them derivatives, as to which occurred with CalPERS, the California pension fund group.

I don’t see any way out of it without either writing down the debts, certainly for the debts run up during the pandemic, writing down the rents. If you leave the last six months of rent in place and debts in place, then you’re going to try to start any kind of recovery after the virus is over with this huge backload of rent hanging over you, the huge backload of debt service.

There’s no way that a lot of companies can stay in business, the fracking industry, for instance.

There’s no way that a lot of workers can avoid being laid off, especially if they’re public employees for cities and states or public agency employees. The New York City Transit Authority says, well, we’re going to have to lay off our transit workers because we don’t have enough money to pay because people haven’t been taking public transit during the pandemic. We’ve had to pay labor, we’ve had to pay our bondholders. Obviously, something has to give. And I think the Democrats and Republicans are in agreement that what give this is going to be is in labor, whose economic conditions, not those of their respective campaign contributors.

Paul Jay: Well, let’s say you got a phone call, and I have absolutely no doubt, and there are very few things I have no doubt about, but I have no doubt you will not get this phone call. But let’s say you do.

Biden calls you and said, OK, I’ve been listening to you, and you’re talking about restructuring. So what should I do? And I know Biden’s not going to call you, but what should a Biden administration do? It’s a very critical, dangerous moment in so many ways.

Michael Hudson: Well, you’re personalizing it. And the problem is, what could any president do? The tax laws are made by Congress. And you’ve seen with Donald Trump; it doesn’t matter what he tries to do, it wouldn’t matter who’s president coming in, because one of the things that are needed to be done is to write down the debts that are owed to the banks. The economy cannot recover when it’s working under this debt burden. Many people have talked about at least starting by writing down student loan debt with the huge default rates there are now. As long as you leave the student loan debt in place, students are not going to be able to qualify for mortgage loans. So they can’t buy houses of their own because they’re already pledging too much of their income to pay student loan debts.

Paul Jay: Student Loan debts are around a trillion dollars?

Michael Hudson: Yeah. It’s larger now than credit card debt. Thanks to the bankruptcy law that Mr. Biden put in, you can’t wipe out the student debt with bankruptcy. I mean, it was really Mr. Biden more so than Donald Trump that has screwed up the economic system by what he did in sponsoring the laws. He was the senator from Delaware, New Jersey, which is basically the corporate banking state. They called him the senator from the credit card companies. He represented the credit card companies against labor. His whole career has been fighting against labor. And it’s inconceivable that he would ever call someone like me any more than what he said on 60 Minutes on Sunday. He said people think that I’m going to be like Bernie or AOC, but I beat those guys. You’ll never call me a socialist.
When Kamala Harris was asked if she was a socialist or a left-winger, she just laughed and laughed and said, how could anyone possibly believe that? And of course, if you look at what she did in California by supporting Mnuchin in all of his fraudulent evictions, she supports the real estate owners even when they’re illegally acting against the renters. So neither of them is a friend of labor. So what they would call me to say is what we need is a patter talk from you, Mr. Hudson.
Paul Jay: Don’t take the phone call thing too seriously. But what I’m getting at is a progressive people’s movement and the progressives that have been elected to Congress, what should they be demanding? What do real solutions look like?

Michael Hudson: What they should be demanding is something that cannot be done within the existing two-party system. First of all, the way to keep down housing prices and to get the cities and states out of their deficit is to tax unearned income. Tax the land, have a real estate tax that’ll collect all this rent that is being paid right now to the banks as mortgage interest. Either you pay the banks the contractual interest that they’re due on all of these loans, and you go broke. Or you realize the banks have become averse to economic welfare. You have to let the financial system go and replace it with banking and credit as a public utility.

That’s what makes China so competitive. Why is China able to outstrip American labor? The Chinese have almost; I’d say, an equal standard of living from everything that I’ve seen there. Well, the reason is that China is doing exactly what the United States did to become an industrial power in the late 19th century. China has public utilities, public enterprises providing basic needs, and basic public services at a subsidized rate or freely, such as education, it’s free. Foreign labor doesn’t have education debt like the United States. Education is free. Health care is public. It’s provided freely. There’s no huge limit.

Paul Jay: Let me say, I think that’s not quite as rosy as it appears. My understanding is that while health care is supposed to be free and public, that you actually have to wind up having to pay doctors some cash, or you really can’t get in to see them.

Michael Hudson: Yes, that is fair. I do acknowledge that fact. But the most important public utility to answer the question that you brought up, the important thing is that banking and finance in China is a public utility. The government is the creditor. When there’s a pandemic like this and companies cannot afford to pay the debts or have to lay off labor, the government, as a banker, can say, OK, we’re just not going to collect the debt and force you to go under and force you to lay off your labor force.

It’s easy to cancel debts when you, the public, and the government are the creditor. Because you’re canceling debts owed to yourself, and that’s one of the main reasons why banking should be a public utility.

Paul Jay: Well, in some ways, banking is a public utility if you’re a big bank or if you’re a big corporation because the Fed actually did essentially give corporations and banks so much cash during the pandemic, they were able to pay off their debts. So it kind of is a public utility if you’re in the one percent.

Michael Hudson: Yes, you’re right, what I meant as a public utility serving the public interest. Obviously, who is going to control the state? And that really is the key. Will it be progressives that control the state, or will it be the one percent? And right now, you mentioned what progressives in Congress could do?

Paul Jay: Well, before you do that, let me just add one thing to what you just said. The ability of the major financial corporations and large corporations, although I think finance is by far the dominant force because if you look at who owns almost all of the major corporations, the majority owners are big financial institutions. The majority of shares are held by big banks and, in particular, by asset management companies like BlackRock, State Street, and Vanguard. But not only them, but there are also others.

The power that the financial institutions wield over government is what Roosevelt defined as fascism. He said that when one sector of the economy, one group of companies essentially controls or owns the government, that’s fascism. And we are virtually, or we are there.

Michael Hudson: You’re quite right. You’re absolutely right.

That is the problem, we are in a centrally planned economy, but central planning is done on Wall Street, not in Washington. Now that you’ve essentially privatized and financialized the political process, the Supreme Court ruled that corporations are people, and corporations can buy control of the political process. So that’s basically what the problem is.

Let’s get back to fascism because that’s very important. Around the time that Roosevelt made that comment, Trotsky analyzed fascism in Germany and Italy, and he said that fascism is what occurred when the socialists don’t have a solution to the problems.

I think we are indeed emerging in that kind of fascism today because you don’t have the left or the progressive interests really coming up with a solution to the problems. And that’s because the only kind of solution is so radical that it can’t be solved within the existing political framework and the existing legal framework. There has to be the equivalent of a revolution. It’s not going to be an anti-fascist revolution; then it’ll be a fascist revolution. What we’re seeing is that kind of a slow revolution.

Warren Buffett said there is a war and we’re winning, but we seem to be the only people that know that the wars on. The war is on, and we’re moving towards an economy ruled by the one percent. And I mean, fascism basically is the integration of corporations and the state leaving out the voters and the working class. It’s a corporate state. And as you pointed out, we’re not simply a corporate state here. Otherwise, the industrialists would be trying to run the economy to promote the industry. We’re in a financialized state, and that’s finance capitalism, which is very different from industrial capitalism. Many of the Left, especially the Marxists, still talk about industrial capitalism as being the problem. And yet industrial capitalism is being phased out in the United States, as you pointed out at the beginning of this show. And it’s being phased out by finance capitalism. And that isn’t even being discussed here, either by the media or even on the left; there’s not much discussion of it.

Paul Jay: I wouldn’t say, from what I understand, industrial production is being phased out.

Michael Hudson: That’s the dynamic of industrial capitalism.

Paul Jay: But there are certain areas of the economy that are still very industrialized, and the amount of industrial production is still not great. But it’s only in very specific kinds of areas, the higher-tech areas and such, anything that can be farmed out, offshore gets farmed out. But this issue of public banking is critical, and I think it needs to be focused on because it’s not nearly enough in the focus of the demands of the progressive movement, in the Green New Deal, and other places.

It is breaking the hold of finance over the government. And I don’t see how that happens without public banking. There’s still a lot of talk about breaking up the big banks and regulation. Breaking up big banks probably is a good thing. But it only really works if, at the same time, you build public banking on a large scale. Diverse ownership, it could be owned at federal level states, cities, regions, cooperatives, co-op banks. But you need something on a scale that when the big banks try to threaten, too big to fail, a government needs to be able to say, well, you’re not to go off and fail. You can’t blackmail us anymore because we have a real public banking system. I don’t see it happening within this Democratic Party.

On the other hand, the demand needs to be raised far more forcefully.

Michael Hudson: Well, the problem is what kind of banking are you going to have? And the whole tradition of American and British banking has been to lend against assets. So banks will not make a loan unless you have collateral to pledge. And the collateral is going to be assets and property that’s already in place, mainly mortgages on real estate, but also it could be stocks and bonds or other assets. Banks don’t lend the finance industry building a new capital. They’ll lend to corporate raiders who buyout industry. They will lend to the industries you cited, and that includes high tech industries. This isn’t the old kind of industrial capitalism industry; these are monopolies. Amazon, Apple, and Google make their money from monopoly rents, if not really profits. That’s why they sell it for nearly a trillion dollars.

The economy is geared towards not only land rents and interest but monopoly rents. And when I talked about industrial capitalism, I was talking in the Marxist sense of the dynamic of industrial capitalism, certainly, as it was developing in the 19th century, was to cut the cost of living, to cut the cost of doing business by getting rid of all rents. It was the business class in the United States. It was the industrial class; it was the Republicans and the 1880s and 90s that pressed for public enterprises. And Simon Patten, who was the first economics professor at the Wharton School of Economics, said public enterprise is a fourth factor of production. Unlike business investment and industrial investment, it’s not there to make a profit. It’s there to provide basic services at a low price to subsidize the cost of living and the cost of doing business so that industrialists can minimize what they have to pay the basic wage to labor and what they have to pay to do business with. They can afford to undersell their rivals.

Now, that’s exactly what China is doing by having the public enterprises headed by public banking to provide credit. That’s exactly what Germany did. Its banking was very different from American banking and British banking. German banking would actually create credit to finance capital investment by heavy industry, especially the war industries, but also steel. All the big industries got their financing from the banks that also organized the stock investment not to support stock prices, not to get quick dividend payouts, but to keep reinvesting the earnings and capital expansion.

That, again, is what China has done, as Germany did and as the United States did in the 19th century. But that was the whole dynamic of industrial capitalism to keep economic rents at a minimum. But now we’re in a rentier society backed by financial interests. And you’re absolutely right. It’s the banks that are the mother of Monopoly. It’s the banks that are protecting the large monopoly industries. It’s the banks that are pressing for states and municipalities to sell off their assets, like how Wall Street forced Chicago to sell its sidewalks to put parking meters up to vastly increase the cost of driving around, in Chicago. When Goldman Sachs lent against that.

So it’s the banks and the financial sector that are turning regular highways into toll roads. And now they’re coming to New York and say, well, maybe your subways are broke. Well, we don’t think they’re really creditworthy, but why don’t you privatize them. We’ll do what Margaret Thatcher did with the transportation in England. And of course, once it’s privatized, they’re going to build debt service and interest rates, management fees, and stock buybacks all into the cost of providing subway service or bus service or road service. And the economy is on the same trajectory that England was on under Thatcher and Tony Blair. And that’s really the problem. What kind of capitalism are we going to have?
Paul Jay: If you look at the critical problems facing our society and societies around the world, really, the solutions are socialized solutions. There’s no way that you can deal with the climate crisis without some kind of central planning, without government driving it, and without socialized solutions. Just the way Medicare for all makes perfect sense. Medicare for all makes perfect sense. The same principle can be applied in other areas of the economy, certainly starting with banking.

But the more problems cry out for more socialized solutions. If you want, you can use this terminology of a mixed economy for the more socialist characteristics of the economy to come more to the fore. It’s so obvious that’s what needs to be done, or the society is not going to last.

But even when you read some of the documents, I follow BlackRock, and I read their research papers. They even recognize, at least in words that the urgency and danger of the climate crisis, but it’s obvious from what they say, they don’t reach a conclusion, but they come right up to the edge of the conclusion that the marketplace on its own will never allow or force investors to change the way they actually invest. BlackRock claims they’re getting out of coal, but it’s smoke and mirrors. If people want to see the analysis, I did, of that, and I have an article on the website about BlackRock.
But the market mechanism will never change the course to phase out fossil fuels relatively quickly, have a massive investment in green, sustainable energy. That doesn’t happen when the model of the financial industry, which is quickest maximum return on their capital investment, that only government can do that. But the government can’t do that when it’s controlled by finance.

So this issue of a more socialized solution like you asked, is what version of capitalism solves it. I think the version of capitalism is no version of capitalism. In the sense that the socialistic characteristics of capitalism really have to come to the fore, that there really has to be a transition to far more public ownership.

Michael Hudson: Well, a century ago, everyone thought that capitalism was leading to socialism, and that was shared by large industrial firms. They wanted to socialize the costs of the economy. They wanted to socialize the land. It was the industrialists, Ricardo and John Stuart Mill, who were the industrialists that wanted to get the land tax and to get rid of the landlord class in England.
Now and all throughout Europe, it was the upper house of government, the House of Lords, or the Senate that tried to block any kind of reform, not only leading to socialism, but that helped capitalism. There had to be a political revolution strengthening the House of Commons relative to the House of Lords. And that occurred in 1909-10 in England. Now, here you’re going to have a similar constitutional crisis in order to do the socialist policies that you mentioned. The crisis is not only because there’s federalism in the United States, states’ rights that are written in the Constitution, to have an economy that can rescue the American industry, and rescue the American working class, you need to rewrite the Constitution.

But the efforts to make plans for a constitutional convention have all been done by the ultra-right, by the Federalist Society, and by the people that you and I have made fun of for many years. And I don’t see any movement on the left to say the situation is so serious that we need a radical rewrite of the Constitution in order to become really a parliamentary democracy that can provide the political context in order to introduce socialist policies.

So the problems not only economic; the problem is that to solve the financial and rentier economic problem, you need to restructure the political problem here along the lines that were restructured in Europe and obviously in China.

Paul Jay: Well, I don’t want to get too much into China because I find it too complicated, and it’s a whole other conversation.

But that said, we’re in a moment where we don’t have much time climate-wise. We’re talking less than a decade. The truth is, given the way the politics is right now, we’re not going to make the kind of moves that need to be made in less than a decade.

But at least, I have to say, with a Biden administration, as much as I agree with your critique of the Democrats and Biden, at least it’s a conversation about what a climate policy should be. I think four more years of climate denial will be a complete disaster.

But there is something about the 19th century, which I think is informative about what might be possible here, and this is a bit of a Hail Mary, but anyway. When it came to child labor, I guess we’re in the mid 19th century; the section of the capitalist class understood that if the mines and mills and factories continued to exploit child labor as intensely as they were, they were actually going to prevent the reproduction of the working class. There weren’t going to be enough workers. They were literally wiping out the working class of England. Those voices that saw the systemic interests of the class interests of capitalists was served with laws prohibiting child labor, and it won.

Of course, the working class was still just getting organized into unions and fought for these laws as well. But the systemic interest asserted itself, and they did outlaw child labor. Well, we’re in that kind of moment now; the systemic interest, the threat of climate disaster is going to demolish much of the assets of the capitalists. Maybe not tomorrow, but certainly it’s within sight, 10, 20, 30 years.

Every time you look at the scientists’ assessment of what’s happening in terms of climate change, it always seems to be changing faster than they thought it would. The estimates of the IPCC always turn out to be conservative, and it’s actually more dangerous than people thought.

So the problem is we don’t have time to politically win the power to rewrite a constitution, and we also don’t have the time to have a kind of political revolution, the way Bernie Sanders even talks about. To the point where you can develop these socialist characteristics or socialistic side of the economy, even though it has to happen.

There has to be a way that a mass movement can both force, persuade, demand that at least some sections of the elites, and it’s going to be hard for finance because they are in an orgy of profit-making. But they need to get they’re not going to be able to reproduce their own wealth the way this is going because the climate is going to destroy it.

Michael Hudson: But, Paul, they don’t care. The Financial Times is short term. What you’re talking, in reference to climate change does not exist within this year. And this year is where their perspective ends. Finance lives in the short run. They think they can always take their money and run. And as long as they live in the short run, they only care about their bonuses. They care about the stock price. What you’re talking about is something that’s going to happen in more than 12 months. Just as politicians usually don’t care more than the four years, presidential term or the six-year Senate term. Their time frame is a mentality, and the mentality of the one percent being financialised is the financial mentality of living in the short run. When you criticize the market, as you correctly did before, the problem is that the market is short term. The market is a cross-section at a given moment of time, and you’re talking about where it’s all leading in the future. This is what business economists call an externality. Statistics will treat global warming as an externality, external for their economic models.

In other words, it doesn’t matter for the things that they care about. The one percent cares about quite different things than the 99 percent and progressives care about. So it’s that mentality that you’re dealing with, and the mentality is not going to change. Even on the interview on 60 Minutes on Sunday night, Vice President Biden said, don’t worry, he’s not going to cut back fracking. It’s more important to support fracking profit, even if it pollutes all of the water sources. Even if it pollutes the water and destroys the environment, we’re going to be for it because Wall Street lent money against it. And we’re supporting the banks that support and rely on fracking, or the banks will be in trouble.

I mean, that’s where we are right now. Nobody is making a move to save the environment apart from global warming, the water supply, the air supply, nobody. I don’t see any way of introducing this in an economy where the whole mentality of the powerful people who make the laws are short term.
Paul Jay: Yeah, I know they once asked Marx what the mentality of a capitalist is? He said, ‘Après Moi, le déluge,’ which means ‘after me comes the floods.’ It’s a quote from King Louis XV.

Michael Hudson: They’re going to buy houses in New Zealand if they can get there, somewhere high up.
Paul Jay: I don’t have any great hope that it happens. I certainly don’t have any great hope that it happens other than a few individual cases. But whatever might happen only happens if there’s a very large scale, well-organized, progressive mass movement with a political agenda. Within those conditions, it may be the science gets clearer. The threat gets clearer on climate.

There is a point where the effects of climate change would get so profound, so serious that finance would see it in their interests. And I think there are some sectors, I’m told by people that know people high up in finance, and quite a few of them are getting the urgency and danger of it, but they can’t break out of their business model.

Michael Hudson:That’s the problem. I mean, what surprises me, all you need are a few billionaires. A few rich people to endow a progressive movement. Even in the Roman Empire, as it was collapsing and leading into the Dark Ages, you had members of the elite saying this is a hell of a way to make a living or make an empire. Things have to change. And of course, that led to such a revulsion against wealth and short-termism that you had Christianity spreading. People just revolted at the selfishness and the greed and the short-termism of the Roman Empire.

I would have thought something would happen here in the Senate. But that takes individuals. If you look at what wealthy people are giving donations to, it’s not the foundations that are what you and I would call progressive.

Paul Jay: All right, we’ll continue this conversation. Thanks for joining us, Michael.

Michael Hudson: Good to be here, Paul.

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  1. Watt4Bob

    And my wife and daughter are quite disappointed in my mood, they can’t understand why I’m not ebullient with Biden’s ‘victory’.

    I don’t see any reason to celebrate a changing of the guard in our little corral full of sick, and starving people and hungry tigers.

    This post lays all that out in stark terms.

  2. Bob Hertz


    Dr Hudson is really the prophet without honor of this economic age.

    His criticisms of Nancy Pelosi are devastating. Her Heroes Act proposal had a big push on preserving the SALT deduction for wealthy homeowners.

    She got so out-maneuvered that we wound up with Trump being the one who announced an eviction moratorium. This from a man whose father and son-in-law have both been slumlords.

  3. a different chris

    Yeah, I don’t think you can say to the right of the Republicans.

    I think the whole left-right paradigm needs to be replaced with a Top/Down paradigm.

    Trump is useless for the economy and dangerous for the planet (the Tongrass, really? You couldn’t even leave that alone?) but he and The Squad, comically enough, are the only representatives of the Down side.

    1. .Tom

      Yes but I wish we could have more discussion about the kind of economy we want.

      I’m not convinced that a production-consumption economy is desirable even if it leads to full employment with decent income for every household. I think we need an economy that supports people while minimizing consumption because environmental degradation. We need more caring, repairing and maintaining and less producing, creating, innovating, disrupting and travel. We need to reconsider our consumer economy and all the ideology supporting it, including individualism.

      1. digi_owl

        This seems to harken back old man Marx.

        His basic vision, after observing capitalism in action, was for the workers to take over the means of production (factories etc) and run them for the best of the many rather than the few.

        But that meant that the communist takeover had to come from inside a industrialized nation, something it has seldom done thus far.

        He also observed that during a crisis, it would be better for industrial capitalists to side with the workers against finance, but that if they ever do so they do it far too late.

        I must say i also love Steve Keen’s little thought model on why private debt paired with a government surplus is bad news btw. The money to pay for living expenses, interest and taxes has to come from somewhere. And the two available sources are ultimately private debt (mortgages, credit cards, etc) and the government running a deficit.

        And frankly the problem of excess production have been with us since the dawn of industrialization, leading to the creation of marketing after the great depression in order for people to switch from a needs to a desires mentality around buying.

        Never mind that in the end, we are all living beyond our means geologically speaking. The only reason Malthus was “proven” a fool was the introduction of industrially made fertilizer. But that fertilizer is directly or indirectly coming from fossil fuels. And thus we are still slaves of thermodynamics.

      2. johnm33

        I think everyone competing for cash created only for the entrenched rich has run it’s course, time for everyone to have access to the spigot. I’d guess a credit line of about $25,000 per annum interest free but once you owe the full amount a 10% rollover fee together with a 2.5% transaction tax on all transactions from the start, towards payback, would ease the transition. Maybe allow up to 10 years credit at this level, with the rollover fees counted seperately, and after 10 years the 2.5% would have grown to 25% this way there’d be an incentive not to get to a rollover point so some urgency to find work some cushioning when there is none, no handouts and no welfare. This would go some way to relieving the burden of 40% upstream interest charges which currently exist on all consumer items, and allow for the economy to be built from the bottom up.

  4. Susan the other

    I’d just like to submit that everyone in this country, regardless of their “wealth” feels trapped. It’s the main reason I’m so concerned Biden, or even Trump, will take us off to war. It’s the ultimate distraction, no matter how irrational it is. And I disagree with Hudson that there is no way to change the constitutional foundations of democracy to serve democracy. I believe there is a pretty quick way to do it and it is to make the Federal Reserve the Fourth Branch of Government with a mandate to maintain Democratic Money. It would be the quickest reform we could pass; it would solve all the ridiculous intransigence caused by debt; it could happen within one session of Congress. I do agree we don’t have time to mess around with convoluted and contested ideologies – but we do all have this sense of urgency. If Neoliberalism as we know it – financialized economics – is now the fabric of the entire economy like the fabric of space, then we should fight fire with fire, fabric with more fabric. Spend the money we need to turn global warming around and restore society – just spend it. It’s so very simple. And that circumvents more financialization – in fact it will dry up the well – as it provides what society needs. All it is is money: It is meaningless unless it is democratic. Give the Fed the power to make social decisions. Things would be off and running just that fast.

    1. Terence Dodge

      That is a very interesting idea. I cannot imagine how it would done as it is so alien to our political process. Thanks for expressing it.

      1. juliania

        It is not alien to our political process! I was reading the lecture given by Chinese Professor Zhang Weiwei at the Schiller Institute in Germany ( can be accessed by using those search terms; excellent presentation!) which gave a link to US tradition — Abraham Lincoln’s famous quote concerning government of the people, by the people, for the people. That is, or should be, the basis of the US political process, our heritage in this country.

        What has China done to become the success it is? I submit that with all the national and unique heritage differences it presents, it has taken up this core value and made it China’s fundamental priority. We can argue did it always have this commitment? Doesn’t matter one twig if it always did. Somewhere along its path it has come to incorporate this truth, that the people’s livelihood is the first priority for government; it is sovereign.

        Seems to me the US Constitution is all about that.

      2. John Rose

        I have been writing to whomever I thought would listen, futilely so far, urging the Fed to offer monthly loans to any citizen asking for them, no interest, no term and callable only at the same monthly rate instead of the Fed making the necessary trillion dollar a year increases in the money supply through the banks. Same process, different actors.

        With the ability to call were inflation to arise, the Fed would no longer be limited to pushing on a string and feeding money at such a retail level would be immediately stimulative as were those $1200 checks and boosts to unemployment insurance.

        Given the creative efforts the Fed has employed recently, they could well do it on the basis of their current mandate.

        1. tegnost

          except that everyone would pay off their student loans with that money and where would 100 billionaires park their ill gotten gains? 10 year treasuries?

      3. Thor's Hammer

        re the American Political Tradition
        Tell it to the First Nations—-

        “Violence is as American as Apple Pie” —- H. Rap Brown, Black Panther leader

        Uncle Warren says there is a class war and his class is winning, His flagship company Berkshire Hathaway purchased Burlington Northern Railway from Denny Washington to gain monopoly price control over the mile long coal trains heading to the Midwest. A logical business decision, exactly what we should expect from one of the Deciders, and exactly why his class and it’s values must be overthown lest it destroy the future of the planet..

        The Malignant Overlords of American “Capitalism” have a monopoly, not only over Capital but the means of Power—- Propaganda and armed force. Elections are merely circuses held for the entertainment of the rabble and change nothing except perhaps the division of spoils among the .001%. The Deep State bureaucracies do their bidding without any concern for the commoners. Warfare is a permanent feature of State policy designed to keep the engines of Demand Creation whirling.

        All the logical economic arrangements a Michael Hudson may propose will vanish into a black hole until the Power of the financial Overlords is broken. The pace of climate change tells us we do not have a century to evolve new economic and political systems. The instrument of terror for the French Revolution may have been the guillotine, or In the USA it may be the AK47 and the 50 caliber machine gun. Or if we still retain a measure of civilized behavior it could be a culling of the Trillionaire Malignant Overlords, stripping them of every possession, and banishing them to a peaceful retirement in a cinder block house somewhere in the outer Bahamas.

    2. Gulag

      Doesn’t the Fed already have the power to make crucial credit/money/social decisions?

      And isn’t the Federal Open Market Committee of the New York Federal Reserve Bank already one of the most powerful and undemocratic entities in the United States.

      How exactly are FOMC decisions subject to democratic control? The last time I looked the FOMC doesn’t even have to take complete minutes of its committee meetings–a privilege I believe is granted to no other institution of government, including the intelligence services.

      As Alan Binder noted in the 1990s this makes FOMC decisions, for all practical purposes immune from reversal.


      1. Susan the other

        Not completely sure, but I’d say the problem is that our banking system is quasi-private but completely controlled by private capitalist interests which are frequently at odds with social interests. Especially now that everything is so completely out of whack. So we generously funnel sovereign fiat money through the private bankers whose charter probably ends with admonitions to maintain price stability and full employment (which is impossible but never mind) – and all sorts of things that have proven themselves to not and never work. And to that ridiculous end we immediately – hot off the press – we give private banks the ability to allocate money (we actually just” back” them as we let them create money by writing up debt obligations (which can no longer be serviced but also never mind) by the old English methods based on collateral (Hudson above) which leads to monopoly capitalism – it should now be our first clue – the first thing we need to change. Not so much change (as change is such an intrinsic process we might never achieve it) but go around it. Just tell the banks “whatever”. If you think this is a loan that the private economy can service then go for it. Otherwise and in the meantime public, democratic, socially responsible money will fund our social well being by spending sovereign fiat directly into the social economy. If we passed new legislation to this effect the Fed would indeed have the power to make economic decisions based on social necessity and etc.

        1. Gualg

          Hi Susan:
          What I don’t understand is why you believe that our present Central Bank and its capacity to create fiat money is in alignment with the interests of the average U.S. citizen?

          Shouldn’t the nature of its emergency lending over the past 12 years, in itself, indicate that this entity has little interest in supporting your average working stiff in any way, manner or form?

          How can “public, democratic, socially responsible money” ever emanate from such an institution?

          It seems to me that the primary purpose of the Federal Reserve is to absorb as many reserves of sovereignty as possible via a combination of relatively esoteric knowledge and irrevocable policy-making power.

          1. Susan the other

            Central banks do make me nervous too. Their latest push for an international digital currency is clearly an attempt to make them more efficient payment settlement providers. To make the world of neoliberal capitalism go around and around smoother, imo. I’m not against digital currencies, I’m in favor of efficient banking, certainly – but I keep up my wishful thinking that central bankers cannot deny reality much longer. That reality is now social/environmental well being. So if the bankers do go international in an effort to maintain neoliberal capitalism they will fail miserably if they do not become realistic enough to provide a source of demand. Demand as it is now has been devastated by giving all the money to the supply side and none to the consumer and further indebting the consumer to poverty and hopelessness because both society and the environment have been ruined. Main Street knows this first hand. Corporations themselves know this. Banks know this. Central banks know this. The people playing desperately fast and loose with easy money and derivatives and tax foolery also know this. So I don’t think it is a stretch to expect a change in the institution we casually refer to as “money”. It’s a no-brainer, no? The wrong choice to my thinking is to trust Congress. That’s a disgraceful track record if there ever was one – and nobody can “police” Congress even though they need it more than any other organization. Voting, as we are seeing as we comment, is a joke.

    3. Kouros

      The majority of legislators to enact such a move is inexistent. They will all be bribed, blackmailed, or accidented such that nothing to change the status quo will be done… Why do you think the Deep State is there for?

      1. Susan the other

        I think the “deep state” is as hapless as the rest of us. Maybe more so at this point.

        1. Gulag

          Does this summary of the capabilities of the NSA, by Barton Gellman, make it sound like its a hapless entity?

          “By the years 2000 most of the world’s communication traveled as pulses of light over strands of spun glass the width of a human hair, arranged in ribbons and then twisted into braids. Fiber optic cables revolutionized data in transit. Digital storage revolutionized data at rest. The NSA had to remake itself from the ground up. When it learned to master its new domains, it maintained a span of control over information that no human endeavor had ever aspired to reach.”

    4. Jeremy Grimm

      I would far far rather the Government shutdown the Fed entirely and let Treasury handle tasks of managing the money supply and dealing with inflation and full-employment! The Fed is already a de facto Fourth Branch of Government. It is already serving to hide/launder how trillions of dollars have been allocated by Congress and ‘selectively’ handed out to Big Money players. The US Constitution assigns the Congress authority and responsibility to authorize funding and determine who will manage the funds allocated. The abdication of Congress, its reluctance to act or assume responsibility is a clear and dire indication we need a new Congress — NOT that we should as you propose so openly hand over the management of our economy to the Big Money banks and financial conglomerates that control the Fed. The Fed acted quickly and efficiently to … what ends? Cui Bono? The Fed and Big Money already manage our economy and have done so purely for their own benefit at great costs to the Common Good.

      1. Susan the other

        One of my points is that, in addition to making money democratic and using it wisely, it is in the interest of corporate America, of international corporations and of sovereign nations individually to do this. It works for the whole world, theoretically.

        1. Jeremy Grimm

          Much must be implicit in your notion of making the Fed a fourth branch of Government. I have no idea what you might mean by “Democratic Money”. Your impatience with Congress is evident through “quickest reform” and “ridiculous intransigence”. The US representative Government does not represent the interests of the Populace. The Fed has already been considerable power and mandate to “make social decisions” and has made those decisions in favor of Big Money. The Fed is charged with holding down inflation while maintaining employment — assuming that could be done through monetary policy alone. Without knowing further details of your proposal I can only wonder whether you truly desire to so durably convey Government into the hands of the Big Money Banks and Financial Corporations. Do you believe the Fed would make money democratic and use it wisely?

  5. gulag

    “…what I meant as a public utility serving the public interest. Obviously who is going to control the state? And that really is the key. Will it be progressives that the control the state or will it be the one percent.

    “We are a centrally planned economy but centralized planning is done on Wall Street not in Washington.”

    It would be really interesting to hear your personal description of the apparatus of power which you believe actually runs this country.

    Would you include the system of mass surveillance centered in the National Security Agency and tightly coupled to the CIA, the FBI, the Pentagon as well as the monopoly power firms in Silicon Valley?

    Would you include our present Federal Reserve System which has successfully integrated private financial markets into the practice of Government and has become a key entity used for the management of both the U.S. and the international economy?

    Why should these cartel-like entities be allowed to exist if you actually want to reform our institutional structures to serve the average citizen?

  6. JEHR

    Actually, if we continue to do what we are doing now because of the pandemic, but continue to do it after the pandemic, it would be equivalent to creating the need for public support of all our needs: banking? make it public; education? make it public so everyone goes and learns how to make the commons work; finance? make it public without any profit; healthcare? make it public, and so on. No profit; just support for the needs of human beings.

    Susan the Other has the right idea. Once the central bank is made public (again) then the money flows outward for all the other public needs. It would take someone like DJT but with the smarts and the desire to help others attain a life that provides for the needs of ALL the people not just the financiers and the rentiers and the monopolists. I do not think billionaires can be depended upon to start such a revolution.

    It might just happen as the first wave of climate change flows over the whole landscape and threatens to endanger and destroy all the people lying in its path.

    1. Jeremy Grimm

      We have seen in miniature what happens when a “wave of climate change flows over the whole landscape” in New Orleans. You advocate make public — banking, education, finance, healthcare. Can you remember banking, education, finance, healthcare in the 1960s and 1970s? They weren’t ‘public’ but they were controlled by the public and their costs were more in line with actual costs, and they had different ‘missions’ [in a military sense] in Society.

      Susan the Other’s idea is a very bad idea. Who controls the Fed? Do you believe tossing it into a Constitutional Amendment as a Fourth Branch will do any more than legitimize its de facto activities as a Fourth Branch of ‘government’ … a Fourth Branch that very much belongs to Big Money? Even Vito Corleone holds more regard for and more concern for the needs of the Populace than the Fed.

  7. Glen

    Yeah, watched this earlier and figured you would post it along with a transcript.

    Basically it seems that without massive government involvement, we are not going to be able to revitalize our country. I knew that Michael Hudson paints it in some stark terms

    What do you think of the ideas for fixes being pushed by these guys? They are proposing some creative stuff.

    The Economics of Anger: How We Got a Rigged System (w/ Mark Blyth and Eric Lonergan)

    1. Jeremy Grimm

      Sorry, I don’t ‘do’ Google’s youtube. Would you please sketch out or outline the ideas for fixes “these guys” are proposing? I know this is often easier said than done but your efforts would be much appreciated.

    2. deplorado

      Mark Blyth is proposing to add a little fiancial institutional contraption like a citizen’s wealth fund (a la Norway) on to the existing system and voila, all problems solved.

      I may have understood it too crudely but I still think solutions of that sort are weak ior distracting.

  8. PeasantParty

    Thank you for sharing! I hold Michael Hudson in high regard. He is a truth teller, and definitely has the experience to back up his content.

  9. Synoia

    Very good analysis of the problem. thank you.

    I come away with not a clue as to what actions, I personally, could do.

    I perceive we’re trapped in a maze of possible actions, none of which look feasible, and many not survivable.

    I understand better the falls of Rome and Constantinople, even when I believe Rome changed strategies (from Might to Christianity,) and succeeded very well with Christianity

  10. Sound of the Suburbs

    Banks – What is the idea?
    The idea is that banks lend into business and industry to increase the productive capacity of the economy.
    Business and industry don’t have to wait until they have the money to expand. They can borrow the money and use it to expand today, and then pay that money back in the future.
    The economy can then grow more rapidly than it would without banks.
    Debt grows with GDP and there are no problems.
    The banks create money and use it to create real wealth.

    1. Tom Pfotzer

      The assertion that banks extending credit (creating money) results in additional wealth creation has been true in the past in the U.S., and it’s true in some parts of the world today.

      It is much less true in the U.S. today.

      If it was still true here in the U.S., then the gargantuan increase in commercial and public debt over the past 2 decades should have resulted in a great deal of new wealth being created. That hasn’t happened. Wealth has been transferred from the middle class toward the top of the economic pyramid, but there hasn’t been any big-bang wealth creators (like electric motors, automobile, telecomm did, for ex) of late, and that hasn’t been due to lack of “liquidity”.

      Middle class increases in wealth have recently occurred in several other countries lately, but the U.S. – in spite of all the credit creation – isn’t one of them.

      Why do you think the net world investment flows are generally moving to Asia and the developing world? Because that’s where much of the new wealth is being created.

      I’m not confident that Mr. Hudson’s solution of “canceling debt” is going to work. After the cancellation, one must still answer the question of “where in the U.S. does one invest money to create new wealth?”. Cancelling debt just transfers wealth from one player-set to the next. It doesn’t create anything.

      Let’s solve the problem where it actually is: Middle class U.S. households need to create new wealth. What new capacity(ies) do HHs need in order to create wealth? Let’s invest in that.

      If we’re going to do stim-bucks, let’s get something for our (newly devalued) money.

  11. McWatt

    I believe that what Michael is saying is that in our debt burdened economy the lenders have made bad loans. They have made loans to people who can not pay them back. Ultimately who are the lenders? The stock and bond holders.

    In order to move the economy back to health the bond and stock holders need to take a haircut. They should not be bailed out by the government as they have been so many times before. If they don’t take a haircut, then the debts stay in place, and so begins a slow decline that will eventually creep into everyone’s economic lives.

    You can’t have a system where one group of people never loose and the other, larger group of people, always loose.

    I think of one of my old neighborhood kids. Just a kid. 28 years old. He has $250,000.00 of medical debt,
    credit card debt, student debt (never was able to graduate, so no degree) and runs from job to job until the creditors catch up to him and begin garnishment. I think this probably is not an uncommon story. If his debts are left in place, he will be in debt his entire life and when he is eligible for social security they will be garnishing that. And this whole scenario started with the discovery of a heart problem.

    Michael Hudson calls this debt peonage. Which is true.

    Others might call it criminal.

    1. Telee

      One of Michael Hudson’s basic positions is that a recovery for the Real economy (goods and services) is not possible unless the big banks are left to fail and debt from bad loans is restructured or forgiven.

    2. Louis

      Some might also call it lack of personal responsibility.

      Medical debt is one thing–sometimes life just happens.

      However, as politically incorrect as it may be to say, having tens of thousands (if not hundreds of thousands) of dollars in student and credit card debt suggests more than just a bit of bad luck.

  12. politicaleconomist

    Wall Street forced Chicago to sell its sidewalks to put parking meters up to vastly increase the cost of driving around, in Chicago.

    Not quite right. Mayor Daley made a deal of a lifetime to raise money thereby avoiding raising taxes in the short term. A Spanish firm bought most of the meters–they already were there–of course it raised parking meter rates, making the deal very lucrative for it and Daley t of thought well this way I won’t have to raise the rates and take the blame for it. But Chicagoan–surprise, surprise–understand parking meters. He did not run again. It seems obvious that some people connected to Daley did well on that deal. Daley could hardly show his face after that and his successor, Emanuel, squelched all investigating into the deal. He himself had a difficult time gaining reelection and after the Laquan McDonald video was released did not run for a third term.

    But he is one of a number of disgraced politicians you might see on Sunday morning TV.

    1. Shiloh1

      Daley was inches away from bidding out a 100 year lease on Midway Airport, but that fell through. Daley’s brother Bill made money on many of the privatization deals as a middle-man.

  13. John Anderson

    Nobody gets it! All this economy baloney is really about live people grabbing for as much as they can from their neighbor. Case in point: The stock market is a farce. It’s all about absentee ownership. They don’t care about the product-all they want is profit and that comes from the workers, who for the most part, do not have ownership (read stocks). It a particular stock doesn’t pay, the stock owner goes somewhere else for money. Get it! The stock market is what it is, a crap shoot.
    Not to mention the super high bill for military-and the super high bill for medical-and the super high bill for credit card debt-and the super high bill for private health insurance. What did I miss?
    Jay and Hudson oughta know this. The one thing they seem to know is that the scheme cannot go on.

    1. Jeremy Grimm

      That you could suggest “Jay and Hudson oughta know this.” assumes they don’t know “this” — which suggests you haven’t been following Jay and Hudson for long or that you do not fully understand their positions.

      1. Jeremy Grimm

        Grabbing a couple of quotes from this post from Michael Hudson:
        “Nancy Pelosi and the Democrats made a deal with the Republicans. They both agreed that they wanted to pay their respective campaign contributors, the financial sector, and the real estate sector. They were realistic. We can’t save the economy. We can save the stock market. Let’s put eight trillion into the stock market and the bond market, and let’s save the banks. Let’s have the Federal Reserve use some of this eight trillion to buy the packaged mortgage loans, the packaged oil industry loans, the loans that are going bad. So let’s bail out the rich people. Neither the Republicans nor the Democrats really cared about the working-class.”

        “So instead of making the economy richer, the boom in stock prices and also the stock and bond market is making the economy more debt-strapped.”

        And the stock market is not a “crap shoot” if you own the Government and control the Fed.

  14. Shiloh1

    When Perot ran his opponents didn’t defeat him, the media did. He wanted to end the overseas military adventures and one-way trade. He was savagely attracted and ridiculed.

    1. Eric Patton

      Just like Bernie beat Bernie, Perot beat Perot. He was winning, then he dropped out, only to later re-enter the race. Personally, I think he didn’t really want or expect to win, so when he did so well, he dropped out. Then, this happened, so he got back in.

  15. j cazador

    Story in wsj today says intel is having great difficulty manufacturing new/better chips,
    so it is considering buying them from Korea and/or Taiwan. This has nothing to do with the cost of labor. It is because Intel does not have the capital to invest in new plant/equipment to make the new chips.
    Meanwhile USA has sanctioned Huawei, which is no longer allowed to buy chips from Intel or from Taiwan/Korea. So Huawei is being forced to figure out how to make them in China.
    So China gains long term economic/scientific/military strength, and USA loses.

  16. Steven

    There is a twist to Wall Street’s short-termism that is going to be a huge problem for Biden – or anyone else serious about doing something about climate change. People the world over, not just in the United States, can only think about wealth in terms of money. As long as the numbers keep going up in their 401ks they think they and the country are getting ‘wealthy’ – and don’t need to worry about people who aren’t. Wall Street and the West’s financial capitalists have been off-shoring the West’s real wealth so they can create ever-more money to keep stock and real estate prices rising.

    The problem of course is what happens to those account balances when the needed ‘creative destruction’ bites, when monetarily wealthy people discover they can’t buy what they need to enjoy life.

    The pandemic SHOULD have been a lesson in what constitutes real wealth. It was China, not the U.S., that could produce everything needed to test its people and control the COVID 19 outbreak – because China had or could produce the wealth required to do it. But it probably won’t be. People will still keep looking at their financial portfolios and assuming all is well – until the rest of the world, the people who possess or produce real wealth refuse to exchange it for yet more of the West’s unpayable debts.

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