The Reality of Bidenomics: How Good Was Biden for the Economy?

Yves here. Radihka Desai and Michael Hudson provide an in-depth, data-driven takedown of the Democratic party cheerleading over the supposedly great state of the economy under Biden.

By Radhika Desai and Michael Hudson. Originally published at Geopolitical Economy Report

To read a transcript with the charts embedded, please visit Geopolitical Economy Report

RADHIKA DESAI: Hello and welcome to the 23rd Geopolitical Economy Hour, the show that examines the fast-changing political and geopolitical economy of our time. I’m Radhika Desai.

MICHAEL HUDSON: And I’m Michael Hudson.

RADHIKA DESAI: And working behind the scenes to bring you this show every fortnight are our host, Ben Norton; our videographer, Paul Graham; and our transcriber, Zach Weisser.

2024 is being billed as the greatest election year in history. More than 50 countries are going to the polls, that’s 7 out of its 10 most populous countries, with a combined population of 4.2 billion, that is more than half the world’s 8 billion population.

Among these, for good or ill, one might add, the US election will be the most consequential, deciding life and death questions such as how much war the world will witness, how well its economy will do.

This is not because the US is a force for peace and development. On the contrary, it’s been weighing down on the prospects of peace and development for decades. Of course, the formal choices before the US public promise to change little, though a worsening on both fronts is entirely in the cards, no matter which of the two main contenders on the scene at present win the election.

But will they even, will either of them win the election because there are so many uncertainties around this election? Will Biden run? Can Trump run? If not they, then who will represent this increasingly divided country?

And if no one can, is civil war a possibility that has been canvassed in practically every major news outlet on the cards? And what will civil war in the US mean for the rest of the world?

All these questions are part of the story of the 2024 elections. These are the circumstances in which they are being held.

Biden’s approval rating is only 38%. Indeed, it had dipped into negative territory by August of the first year he took office. And since then, they have only gotten worse.

MICHAEL HUDSON: Well, what does the public see that Biden and his supporters are not recognizing? That’s really the question that I think we have to talk about today.

RADHIKA DESAI: Exactly. And what is the public seeing and what is the public experiencing to give him these negative ratings? Biden’s one hope was to unite the country behind him through good economic stewardship.

After all, it was James Carville, Bill Clinton’s campaign manager, the guy who helped reshape democratic politics in the aftermath of the Reagan electoral earthquake, who said, it’s the economy, stupid. You can’t win elections without a good economy.

And you can’t say Biden hasn’t tried. He’s even ponied up a new term: “Bidenomics”. We are told that this is going to solve the US’s deep-seated economic problems.

And certainly his Bidenomics has included considerable sops to the biggest US corporations, the idea being that somehow this is going to induce them to invest, although it is not clear what sort of quid pro quo had actually been set up. And nor is it clear that they’re actually investing even after receiving these sops.

The pro-Biden establishment, of course, has picked up this term and run with it. They’re trying hard to set up an election year narrative that under Biden, the US economy has done very well, Bidenomics is working, and it has moreover achieved that miracle of miracles, a soft landing, by which is meant that it has slain the dragon of inflation without inducing a recession.

However, their job is not easy, and the holes in the story that they’re trying to weave together are widening.

So Michael and I thought it would be a good time to do a 360-degree check on the US economy, and we want to do it by going through a number of major topics.

We’ll talk about employment, we’ll talk about the investment situation, the trade situation, the real story about inflation in the US, because it’s not so clear that the dragon of inflation has been slain, the problem of financial stability, and finally, of course, the issue of the budget. So these are the topics we are going to go through.

But before that, before we go through these topics, we must begin with a contrast. On the one hand, the stock market is soaring.

Let me just show you a few of the stock market indices here.

This is the S&P, so Standard and Poor 500. You can see it is at the highest point it’s ever been in its history.


This is the Dow Jones Industrial Average, similarly at a peak.


And the NASDAQ is, if not at a peak, at a peak pretty close to its previous peak.


So you can see that all the stock markets are doing really, really well. But Michael, does this mean that the US economy is doing well?

MICHAEL HUDSON: Well, it certainly means that there is a tech bubble and a war industry bubble. But let’s look at all the things that are increasing. Since your chart, not only are stocks going up, but when stocks go up, economic polarization increases, because most of the stocks are owned by the top 10% of the population.

So economic polarization is increasing as wealth is concentrated at the top of the economic pyramid. And a lot of voters see this as unfair.

So to say that the stock market and the 1% are doing well is not really a good political selling point, unless you can convince people that, well, you can be a capitalist in miniature.

You can invest your pension funds in the stock market, you can invest your savings, and maybe you can get rich just like the billionaires.

How do you get them to think of themselves not as wage earners, but as stock market investors? If you can convince voters to think that they’re finance capitalists instead of wage earners, you’ve got a good selling point.

But let’s look at other things that are up: Crime is up. Shoplifting, robbery, phone and internet scamming. I’ve already got my morning internet scam call.

Rents are up, utilities are pricing, and food outside the home is pricing. I think we’ll get to these charts later. There we go:


Basic food, eggs. All of a sudden, people are having to pay more, whether they’re eating at home or whether they’re buying the food at the stores.

Everybody’s noticing the prices are rising and the packages are getting more and more empty. You’ll get a box of cornflakes and a lot of it is air now.

RADHIKA DESAI: It’s called shrinkflation. Prices go up and what they sell you, the quantities go down.

MICHAEL HUDSON: That’s right. Exactly.

Housing is also basically up. When housing prices are up, you also get homelessness up.

Taking the subway in New York, you’ll see a very crowded subway car, and then all of a sudden, you’ll see cars with hardly anyone in it, and that’ll be a homeless person that maybe hasn’t had a chance to take a bath for quite a few days. You’re seeing that already.

RADHIKA DESAI: If I may just interject, this is the percentage of households who spend more than 30% of their income on housing.


Overall, 30% of all US households are spending more of their housing, but among renters, this ratio goes up to 50%, while among owners, it is 21%. You can see that those who are wealthy and relatively better off who own their own homes are penalized less than those who are relatively worse off.

You see here, again, another really shocking statistic. This chart goes back to 1960.


You can see that the ratio of house prices to the median household income went down after the 60s and remained low right into the 1980s, but from about 2000 onwards, basically coinciding with the easy money policy of the Federal Reserve, house prices as a proportion of median income has risen, and although they again fell after the 2008 housing bubble burst, they began rising again, and today they are even higher than they were in 2008.

MICHAEL HUDSON: The situation is actually much worse than that chart says, because not only have housing prices gone up, but the mortgage rates have gone up. They’ve doubled from about 3% to almost 7%.

Now, if you have a mortgage, you want to buy a house, you don’t want to be a renter, you want to escape from being a renter, you buy a house, and your mortgage has to be 7%.

That means the entire price of the house, the mortgage that you’re paying, doubles in 10 years, and if it’s a 30-year mortgage, it doubles again and it quadruples in 20 years and multiplies eight times by the end of the 30-year mortgage, so that the bank will get eight times as much for the house you buy as the person who sells the house to you.

The mortgage rate and the debt attached to the house is expanding even more rapidly than the housing prices.

That’s what debt deflation is, and that’s part of why the economy is being malstructured.

So what voters are seeing is not simply the economy’s getting worse, but the whole way in which it’s structuring and the direction it’s going in, financialization and the whole neoliberal plan makes them want to throw the rascals out of office.

RADHIKA DESAI: Indeed, the approval ratings figures are showing exactly that.

MICHAEL HUDSON: Yes, what they’re disapproving of is the economy above all, and people say, oh, it’s just because Mr. Biden’s getting senile. Well, it’s not that he’s getting senile, it’s that he’s a nasty, bad person running a nasty, bad economy. That’s really the key.

We haven’t even mentioned the medical costs going up for people who have lost their jobs or they have to stay home because of COVID. There’s a whole COVID effect of the economy. Long COVID is a problem that isn’t being counted. A lot of people are having to take part-time jobs.

So what you’re seeing is a kind of crapification of the economy. You mentioned that about the prices that we’re seeing. A whole new vocabulary is being developed to describe what’s happening in the economy, and shitification, the whole bit.

So let’s look at what hasn’t increased. Maybe there’s a bright spot there: well, lifespans have not increased, and health generally has gone way down.

You have a reversal in the whole post-war rise of lifespans. They’ve gone down. They’ve gone down especially for people who earn less than $50,000 a year. For non-white people, they’re turning down. Wages have been turning down.

The Financial Times last week had a story that wages are growing more slowly for employers working at home because employers want to see them in the office.

And yet what they’ve found in your country now, England, is that workers from home, the productivity is going up even faster than workers who actually have to go to the office and sit on the long transportation train to get in, whether it’s London or New York.

So the Financial Times said this is a success story. Employers gain in both ways. The workers get to stay home, and they’re more productive, but you’re paying them less for the right to stay home.

RADHIKA DESAI: And you’re not paying for all those offices. We’ll come back to that as well. But shall we go into our discussion of the various topics now?


RADHIKA DESAI: So the first topic we wanted to discuss was employment. So on the employment front, recently, as many of you will have seen, the Biden administration is making much of a report of the Bureau of Labor Statistics, which reports that 350,000 new jobs were created in the previous month. However, there are huge problems with that.

First of all, let me just show you the story, the official story that the Biden administration would like to emphasize. So this is the official unemployment rate that is shown on the Federal Reserve website:


And you can see this chart also goes back to 1950. And you can see that there have been various peaks in unemployment in the 1980s and again after 2008. And then unemployment went down.

And then, of course, this huge narrow spike is the COVID pandemic, when, of course, it hit nearly 15%, officially, at least. And since then, it has declined.

And so President Biden feels that he can pat himself on the back for bringing down the unemployment rate.

However, there are many, many other elements to this story, which are not being talked about. First of all, as opposed to the Bureau of Labor Statistics, coming up with this number of 353,000 new jobs, a private payroll company, which essentially gathers, you know, basically, it knows who is paying whom, how much in wages, etc., what is the payroll of different companies, reported that only 107,000 private sector jobs were created, which is a very small amount.

And even if to this, you add the public sector jobs that are created, which will have expanded, because of Biden administration initiatives, nevertheless, it, you know, this would mean that if 353,000 new jobs were created, then job creation is being led by the government.

But at the same time, let’s also see something else, full time employment has fallen. That means, and this is, of course, been historically the issue, the United States always claims that it is such a wonderful job-creating economy. But few people point out that the bulk of the jobs that are created are part time jobs, they may even be zero hours contracts, and so on.

So, the actual quality, and of course, the kind of jobs there are, the benefits are low, the wages are low, etc. So, you essentially have an epidemic of McJobs rather than good-paying jobs.

Furthermore, this unemployment rate that I showed you is, unemployment rate is always calculated as the number of people who have failed to find work out of a total number, which includes those who are, those who are either working or actively seeking work. But it does not include those who have stopped actively seeking work.

And that number has actually … been going up for a long time, but it has particularly spiked in recent years.

So, in reality, the actual number of American people who are employed as a proportion of the labor force is going [down] … I want to show you the chart:


The labor force participation rate was fairly low, just below about 60% in the 50s, because of course, at that time, most women did not work. But beginning in the 1960s, as women began entering the labor force, the labor force participation rate began to go up, and it rose steadily through all those decades, up to about 2000, when you see this final little peak here. And since then, it has been in decline.

So, essentially, what workers are saying is that as neoliberalism has matured, as labor legislation, which decreased the onus on employers and essentially allowed employers to offer workers worse and worse jobs for worse and worse conditions and pay and so on, people who could choose to leave the labor force have been leaving the labor force, of course, we’re not even counting those who become disabled, particularly after COVID and so on.

But it has been declining, it declined massively during COVID. Since then, it has recovered, but it still remains short of the point it was at when COVID struck.

So, you can see that this is a relatively favorable story that the administration is trying to, is able to tell entirely because of this matter of labor force participation rates.

And finally, a couple of final points. Wage growth has been down for a year, particularly, as Michael was saying, for work-at-home employees. But the productivity is higher, so employers are gaining.

Workers’ insecurity is very high, and it is high precisely because they don’t have stable, permanent jobs. They have jobs that don’t last very long, that are part-time, that they hold at the whim of the employer. So, the traumatized worker syndrome still remains.

Back in the late 1990s, when Alan Greenspan was asked why, if the economy was running so, you know, the economy was running so hot, essentially, it was running so well, how come there was not more inflation? And he said it’s because of the traumatized worker. Workers are unwilling to demand higher wages, even though, according to him, the labor force, you know, the employment rate was very high.

But the simple reason was the workers were getting bad jobs, that they were getting insecure jobs. So, they were traumatized and insecure. They were unable to complain.

So, and finally, the quitting rate is very high, partly for medical reasons, but also because hospital workers, teachers, etc., do not feel medically protected at their job.

So, and according to the Biden administration, of course, COVID is over. So, these are some of the problems with this idea that somehow the Biden administration has given Americans a low unemployment rate.

MICHAEL HUDSON: Well, you’ve made all the points that I would have made, so I don’t have to make them.

I would like to see a chart for statistics they don’t collect: The employment by U.S. multinational corporations worldwide. Their employment in the U.S. may have gone down, but their employment abroad, especially in Asia, the maquiladoras along the Mexican border, their employment has gone up, but just not employment for their workers in the United States because it’s not really economic to employ American labor, given the rise in housing costs that we’ve just discussed, medical costs, and all the other costs that are going up.

America has priced labor out of the market, except for monopolies, especially artificial intelligence monopolies and military-industrial complexes. These are not competitive, so America doesn’t really have to do anything there.

You pointed to the structural shift in labor. It’s dangerous to go back to the office if they don’t have clean air and if you’re exposed to COVID, and the COVID rates continue to go up, and there’s nothing being done to encourage air purifiers or even the use of masks. You’ve made the points that I would have made.

RADHIKA DESAI: Okay. There’s another couple of points, though, and Michael, I think you wanted to talk about pensions as well, but let me make one point here further, which is that there’s a very odd discrepancy in U.S. growth figures that is increasingly being talked about.

And that is that there are two measures of GDP. One is GDP, gross domestic product, and the other is GNI, gross national income, and very often these two are basically supposed to match. I mean, there were maybe some statistical discrepancies, but the first, GDP, which measures essentially how much value was made out of the production of goods and services, and the GNI, gross national income, which measures how much people earned out of that process, this discrepancy is essentially being put down to the fact that workers are not buying, workers essentially are not, you know, they’re not getting high wages, they’re not buying enough goods, and a lot of their income is actually replaced by debt.

And the second thing is that, in fact, a lot of the things that are actually being produced are not, in fact, being sold. So, both of these things are also problems

Michael, you wanted to talk about pensions on the employment.

MICHAEL HUDSON: Yes, that’s the problem. Not only are the workers’ conditions getting poor, but pensions are no longer defined-benefit pensions, and many of the pension plans in the United States are actually broke.

Again, there was a Financial Times article last week that said that, Brooks Masters wrote, that the typical Generation X household has just $40,000 saved for retirement, and 40 percent of their 401k pension plans are zero. So, this is the result of not having a pay-as-you-go pension policy like Germany has and Europe has. Pensions have been financialized. In other words, instead of just paying out of the current economic surplus that you’re producing, workers and companies have to pay, save up money in advance instead of investing.

The post office, for instance, post office rates, postage prices in America are soaring because the attempt by Congress to privatize the post office means you have to include the pension plans for the next 75 years all in the price of your postage by saving it in advance, not hiring more labor, not improving the mail delivery, but just the turnover to the stock and bond markets to invest so you can pay pensions if there are any postal employees left.

Of course, the whole objective in increasing the public pension plans is to say, oh, I’m sorry, the post office and other public agencies are broke. We’ve got to privatize them. You privatize them, and what happens is what happened in England under Margaret Thatcher. You wipe out all of the pensions because there’s no company to pay them anymore.

Now, Peter Drucker called this pension-fund socialism before, because he said this is wonderful, workers and companies are going to pay for stocks, and that’s going to create financial wealth that’s going to be spent on new factories and new employment, and workers will be capitalists in miniature. Through the pension plans, they’ll be stockholders.

But the effect is simply to divert wage income into the financial markets, into the stock market. The pension system is a bonanza for the stock market and for bondholders because it’s financializing the economy, but it’s an awful noose for the workers who have to pay their own pensions instead of making pensions a public right like it is in socialist economies.

RADHIKA DESAI: Exactly, and if I may add a few points to this, this idea that the Peter Drucker idea that somehow you will get a kind of pension-plan socialism.

There’s a very interesting real-life example of this. In the 1970s in Sweden, thanks to a very high level of coordination between trade unions, governments, and employers, what had happened is that they had managed to create a fairly high-wage economy, a fairly prosperous working class, a very, very generous welfare state providing a whole range of services.

So then the question was, how would workers, whose wages will continue to increase thanks to rising productivity, what would be now done with the rising wages? What would they do? So they decided that they would create a wage earner fund, and the wage earner fund would slowly start buying up the stock of existing corporations for which they work, and slowly they would eventually become the owners of these companies, and that was the general idea. It was called the Rehn-Meidner plan.

And this plan was much discussed. Everybody thought it was great, but what immediately followed, beginning in the 1980s, was a major capitalist counter-offensive, an attack on the unions, which essentially meant that this wage earner fund plan was watered down to an extent that it became meaningless. And of course, today, in many ways, people would say that Sweden has gone from a Valhalla of socialism or social democracy to being a Valhalla of neoliberalism. So I did want to say that.

MICHAEL HUDSON: I want to add a technical twist, and that already occurred in the 1970s in Chile under the University of Chicago guidance. You’ll have the Chilean companies found out how to do pension plans the neoliberal way. You do have the workers buy the stock in the company, but the company owner will also have a whole array of companies. They’ll have a holding company for the industrial company, they’ll have an offshore bank account to hold the stock in the company, and the company will continue to make basically loans to its holding company and be loaded down with more and more debt. It’ll borrow, borrow, and then the holding company, the actual industrial employer, will be left to go bankrupt. It’s a corporate shell, and all the money will have been taken by the holding company.

And so very quickly, Sam Zell, the real estate owner, did this with the Chicago Tribune. The Chicago Tribune had exactly what you’re saying. We’re going to be part owners, we reporters and news people. And so Zell bought the Tribune, then he took all the money in the pension plan, lent it to himself and the holding company, and then said, oh, it’s broke, and wiped out all of the stockholders. I discuss that in my book, Killing the Host. That’s the pension plan finance capitalism.

RADHIKA DESAI: Exactly. And this is exactly the reason why, as this is particularly true in the United States, one reads every few months, one reads that some or the other pension plan has essentially lost its money. And that means the workers who had put in their money, their hard-earned money into these financialized pension plans, essentially are getting nothing in return.

But there’s a couple more points to be made. First of all, when you financialize pension plans, workers are encouraged to think that somehow they are also becoming capitalists, that they have a stake in the stock market, et cetera.

Now, what really happens when our pension money goes into, essentially becomes privatized and is now being managed by some or the other private financial institution, is that our pension money just becomes so much throw weight that they can use in order to move markets in their favor. Remember, when you are speculating, if you are speculating with a few hundred or a few thousand dollars, you are a price taker, a market taker. But when you are speculating with millions of dollars and maybe even billions of dollars worth of money, you are a market maker, you are a price maker, which means that you essentially get to rig the system.

So, our money is used by these fund managers and so on as throw weight in their speculative activities. So, this actually increases speculation, it inflates asset bubbles, and it makes financial crisis, from which we all suffer as working people, more regular, more frequent, and so on.

MICHAEL HUDSON: The situation actually gets worse than fund managers. Because the pension plans are in deficit, the pension managers are desperate. How are they going to get more money? They turn the money over to private capital. And private capital is much worse than the pension fund managers. Private capital makes its money by buying a corporation and driving it bankrupt.

Private capital does to the U.S. economy what it’s done to Sears Roebuck, to Toys R Us. The company will borrow a lot of money from a bank. It’ll pay a special dividend to the private capital owners. The owners will immediately say, we’ve got the increased earnings, we’re going to cut back productivity. When workers leave, we’re not going to replace them. We’re going to work them harder. We’re going to give the traumatized workers syndrome with emphasis. And so, by workers thinking, I’m going to be a capitalist, just like the rich people, and my pension fund is going to make money for me as a capitalist. But making money as a finance capitalist means hurting their identity as a wage earner. What are they going to think of themselves as?

RADHIKA DESAI: Well, exactly. And so, definitely. And the other thing as well is that, of course, the companies that are brought into the control of private capital, these CEOs, etc., they borrow money in order to also, like Michael said, they certainly borrow money in order to pay huge dividends, but they also borrow money in order to engage in share buybacks, which increases the value of the shares. And all of this is being done on the backs of existing employees.

And of course, in doing so, they very often misuse and misapply pension funds so that they can go bust as well.

But my second and third point are equally important, which is that workers who think that they are participating in the stock market and therefore rising stock markets are good for them, etc., should always remember two things.

Number one, when markets go up, they may benefit, but they always benefit much less than the people who are controlling these markets, the big financial institutions and so on. They are very low on the pecking order of benefit from financial speculation.

And number two, when there is a loss, they lose much more than those who are controlling these pension funds, etc., who have their golden parachutes and so on.

So that’s about the employment situation. Now, let us look at the next point, which is what is happening with investment.

So here again, you know, we are being told that parts of the US economy are finally doing much better because investment rates are somehow better and so on. But let’s look at what’s really happening with investment.

So this is a chart showing gross fixed capital formation in the United States from 1970 to onwards:


And you can see that on average, if you drew a trend line in this chart, it would basically be pointing downwards. So basically throughout the neoliberal era, investment, which is in many ways the main driver of the economy, consumption is also important, but investment is essentially, you know, the more there is investment, there is the more growth there will be because investment itself creates growth and it increases productivity and growth.

So this has essentially been going down. This peak here is at the end of the 1970s. It’s going down. This is about 1990, going up again just with the tech bubble up here and then with the housing and credit bubble, but then essentially declining after 2008. Since then, it has risen, but as you can see, it remains below, in fact, even many of the low points of the previous 50 years, let alone the high points.

So and in the last couple of years of the Biden administration, these figures are only available to us for now up to 2021. But you can see that under Biden’s first year, it effectively took a downturn.

And let me also add one other thing, which is that investment is a proportion of GDP:


You know, the United States and the Biden administration make much of competing with China and so on. Let’s take a look at this graph. It only goes to 2015, but I don’t think the story has changed.

And this graph, by the way, is the work of my partner, my husband and intellectual partner, Alan Freeman.

And here you can see he has given investment as a proportion of GDP for China, which is this bold blue line, and for many other countries. But we just want to focus on China and the United States, which is the green line.

And indeed, as you can see, the green line is basically at the bottom of all these comparable countries, including Europe, Japan, other industrialized countries, and so on, and even the global south, which is here in this thin blue line.

So you can see if you’re going to compete with China in terms of growth and productivity and so on, China at its peak is spending 45 percent of its GDP on investment. By contrast, the US is spending less than 20 percent, less than half in investment. So this is the sorry state of investment in the United States.

MICHAEL HUDSON: Oh, it’s much worse than that. It doesn’t say how the composition of this investment has shifted. This re-rising of the US investment is largely military industrial. A lot of it is also real estate. That’s probably the largest element of a lot of this investment. And the real estate investment has been transforming the whole economy.

And that includes buying out existing companies. That’s counted as a new investment. If you buy a building that was at a low price before, buying it at a high price is a new investment. In London, for instance, you just had the sale of the British telephone phone tower last week to a hotel company. So it’s privatized. They’re going to essentially use that as a new investment. But it’s not building a new building. It’s just taking something over.

In the United States, you had the last few months, you had Greyhound bus terminals sold. That was an investment, sort of like Stagecoach in London. The company that bought Greyhound is a real estate company. They said, we’re going to tear down the terminals that are put in the center of the city. The reason they’re in the center of the city is so that they’ll be convenient for people who ride the bus. They can go to the terminal, have a place to sit, buy tickets. We’re going to make them go to the outskirts of the city and wait outside, regardless of the weather, because we don’t care about the users of our service. We want the real estate. So we’re going to essentially dismantle the public service investment and make a gentrified version out of this.

And in New York, you’re having the Wall Street area. All of these commercial office buildings in New York, there’s a 40% vacancy rate on commercial buildings. So companies are coming in to try to invest the company, saying, well, there’s no more industrial economy to put in these buildings. Let’s gentrify it for all the people who are getting rich on the financial sector, making money de-industrializing the economy.

Well, there’s one problem with this that they’re suddenly finding out. You can take an office building, a bank, or a publishing company, or whatever, and divide it into residential units, but where are you going to put the kitchens? These buildings are not geared to have gas and electricity and venting for kitchens. And what about bathrooms? If you look at how your employer is set up at a company, this is not the kind of bathroom that you’re going to want near a bedroom or living room for a residential person. So there’s an idea that somehow you can do to the commercial office buildings in America what President Obama did to Chicago before president when his job was tearing down black neighborhoods and getting rid of the low-income blacks and gentrifying them for his sponsor, the Pittsburghs, to make a real estate fortune there.

So fortunes are being made by real estate investment, not exactly industrial investment. Real estate is, again, part of the FIRE sector, finance, insurance, and real estate. You’re having investment in research and development. That’s called capital investment. You’re getting the picture that the investment that is taking place isn’t the kind of investment that originally helped an industrial economy. It’s a de-industrializing form of investment.

RADHIKA DESAI: And there’s also, I mean, well, gross fixed capital formation will actually measure physical investments, so that there’s definitely some physical investment taking place. But as we see, it’s much lower than China’s, it is not really recovering. And more to the point, if there has been any kind of recovery or whatever little investment is taking place, let’s put it that way, whatever little investment in actual plant and machinery is taking place under the Biden administration is happening in large part because of the sops he’s giving to industry via his Inflation Reduction Act and other such initiatives. So essentially, he is giving certain corporations money to invest in certain sectors. And this is why you are seeing it. So it’s the dynamo or the dynamic, the mojo of American capitalism is definitely not back. It is definitely very weak.

MICHAEL HUDSON: You mentioned the inflation and that act. One of the high points of it was advertised by Taiwan, taking its computer chip company, wanting, getting, I think, over vast billions of dollars to set up a computer chip system in Arizona. The people came up here and they say, oh, it’s not going to work. There are no workers. You know, you said that you were going to provide us with American labor to work in the investment plant, but there aren’t any American workers because they’re not trained as working industrially. You know, who are we supposed to hire as workers for our computer chip plant if you don’t have workers trained to work in computer chip plants or other industries?

RADHIKA DESAI: And, you know, that also reminds me, I mean, we haven’t even talked about this, but the state of public education, that is the education that most ordinary American kids get, has actually been declining to such an extent, as we know, for decades. You know, teachers will complain that they spend all their time trying to keep control of the classrooms. How are they going to teach kids anything? So if your kids are not learning what they need to learn, how are they going to become even semi-skilled workers, let alone skilled workers? So absolutely, I’m not at all surprised.

Some time ago, I remember reading somewhere that the Japanese companies that were being encouraged to invest in car plants in the so-called right-to-work states, these companies were having to produce the literature to minimally give instructions to workers using symbols rather than putting it in writing, because many of these kids were functionally illiterate.

But let’s go on, because we have quite a few things more to talk about, and we don’t want to go too much over an hour.

So very briefly, we said that we would talk about the U.S. trade deficit, and once again, vis-a-vis the trade deficit, the Biden administration is crowing about its great achievement.


You see here the U.S. trade deficit, which, of course, historically had been very [high]. That is, you know, in this graph, the higher the line is, the better the situation. So when the line dips, the deficit grows.

So you can see beginning around the 1980s and then really taking off in the 1990s, the U.S. trade deficit was quite, you know, dipped quite low. People were really worried about the so-called twin deficits and so on. And then after 2008, precisely because of the massive recession in the United States, the trade situation improved. The trade deficit actually narrowed. And this is also very interesting, you know, historically because of deindustrialization.

The United States has a tendency that when the economy grows, the trade deficit grows. Why? Because American consumers prefer buying foreign goods. So this has been the case for many decades in the United States. So obviously, with incomes shrinking, so did the trade deficit.

But once again, it resumed declining. And as you see here, in the Trump years and also in the Biden years, the trade deficit declined. You know, as you see, it reached a really, really low point already under the Trump administration. And it has recovered, but it still remains at historic high levels.

So in that sense, if there has been any improvement in the trade deficit, again, this is largely because of the sickness of the American economy, the poverty of American consumers, not because of any miracle that the Biden administration has executed or has brought off in the U.S. economy.

MICHAEL HUDSON: I think the Biden administration has vastly helped the trade deficit. You know, what is Bidenomics? It’s a slogan for a war economy, financed by a financial bubble. And the State Department official, Victoria Nuland, just gave another plea for Congress to give a few hundred, a hundred million dollars for the weapons in Ukraine and Israel. And since our show focuses on geopolitics, I want to point out how war spending is contributing to the trade balance and also to American affluence against Europe’s NATO countries that America has just conquered economically.

Nuland picked up President Biden’s point that in reminding politicians that almost all the money for the war in Ukraine is going to be spent here in the United States, employing labor in the local districts of all the congressmen on the military and national security committees. That’s why war stops are going up. And it’s the merchants of death business.

And Biden is pretending to reindustrialize the economy by emphasizing how this military industrial sector is not subject to price competitiveness. You can do it with low productivity, high cost labor, because it’s a proprietary good. It’s an economic monopoly good for the weapons. Biden said, quote, but patriot missiles for air defense batteries made in Arizona, artillery shells manufactured in 12 states across the country, in Pennsylvania, Ohio, Texas, and so much more.

Well, these are the swing states in the election. And you have Biden, Hillary Clinton, Nancy Pelosi, and the other Democrats recognize that the world economy is splitting up between the U.S. and NATO neoliberal countries called “democracies” and the global majority seeking independence. Well, it’s almost as if they’re channeling Rosa Luxemburg. She said the choices between socialism and barbarism. And Biden and Nuland agree, except what socialism is, what’s occurring in the global majority. Barbarism is what’s occurring in the American NATO militarization and the fight in Ukraine and the Near East.

But the fight in Ukraine has helped the U.S. balance of payments, the trade balance, by essentially forcing the NATO countries to impose the sanctions against Russia that we’ve talked about. The anti-Russian sanctions have broken the German industrial economy for good. And that’s why German companies, Mercedes, Porsche, BASF, are moving to the United States, because they can’t get the oil and the gas and the energy that’s needed to make industrial goods.

And what’s happening as a result? America is not buying European investments. America is replacing Russia as a supplier of gas, liquefied natural gas. That’s way up for the exports. Oil, way up. Basically, America is gaining.

And also, this $100 million, all these billions that NATO have given to Ukraine have emptied out their war stocks. And they now say, we have to buy new arms of up to 2% to 3% of our GDP. And who can make it? America can make it, because we don’t have any oil and gas to power the industry to make these stocks. This is going to be a huge, huge increase in the American trade balance while the euro goes down and down and down.

RADHIKA DESAI: If I may add, one of the things that I forgot to mention earlier is that a large part of the improvement in the US trade deficit under Biden in the last couple of years, particularly, has come precisely from the export of liquefied natural gas. So think about it. Instead of having some kind of serious industrial policy, the United States is once again an exporter of primary products like natural gas, an exporter of energy.

Two more quick points. You’re so right to emphasize that, you know, many people think that NATO exists to defend the West against all, you know, originally against communism, and then now against all these vague, you know, dictators and what have you.

In reality, the NATO exists so that the US military-industrial complex will have an export market because of NATO interoperability considerations. Essentially, when a country joins NATO, they become a captive market for the American military-industrial complex.

But there is one final point I’d like to make. You know, many, many decades ago, a couple of decades, maybe two or three decades ago, Madeleine Albright is supposed to have said, what’s the point of having such a vast and sophisticated army if you don’t get to use it? Because she was saying, you know, we should, of course, we should go to war if we want to, etc.

I’d like to paraphrase her on this. What’s the point of having a $1.5 trillion annually military-industrial complex if it actually cannot produce sophisticated weapons today? As far as technological sophistication is concerned, Russia and even China are further ahead of the United States. They can produce things like hypersonic missiles. They can produce electronic technology to fight wars that is far superior to anything the United States has.

So, this is another really interesting point, which is that the United States today can only get customers for its coddled military-industrial complex, which has become incapable of producing anything decent, when it essentially makes people join NATO and essentially convinces the governments of various countries to act against the interests of those countries. Because every country that is being brought into NATO on the premise that its security is going to increase is actually going to have its security decreased.

First, because, of course, NATO is increasing in security around the world. And second, because in reality NATO is not capable of defending these countries. It has deficient armies, it has deficient industrial and military production, and it has deficient weapons technology.

So, for all of these reasons, and the reason why the Russians and the Chinese are able to surpass the United States in terms of military technology is very simple. Yes, they have also in military industries, but their military industries and their armies are actually devoted to the defense of the country, not devoted to their own expansion for their own reasons. So, that’s another thing that I wanted to mention, that this is really in terms of the trade deficit.

But we also have three more interrelated things to discuss, which is what’s really happened on inflation, what’s really happening to the financial sector and financial stability, and what’s really happening to the budget deficit, and how are all these things interacting.

So, let’s take inflation first. What I’d like to say about inflation is the following. Throughout the last many months, the story has been that the Federal Reserve has managed to create a soft landing. We have vanquished inflation while not being in recession.

Now, Michael and I have already told you how the U.S. economy is doing far less well than you might imagine, and that if you look at the GNI statistics, the Gross National Income statistics, the U.S. economy is in recession. It has had several quarters of declining GNI.

On inflation then, the story that we are being told, the official story, is that the Federal Reserve has performed a miracle. It has achieved a soft landing, it has defeated inflation, and the U.S. economy is not in recession. But the reality of it is that if you go by the GNI figures, the Gross National Income figures, the U.S. is in recession in reality.

And the other problem is that, in fact, it’s quite possible that inflation has not been vanquished, because the fact is that while the more volatile prices, but particularly energy prices, have indeed gone down, at least they are down for the moment, core inflation remains stubbornly high, which is why the Federal Reserve, after talking for so many months about reducing interest rates in 2024, is already beginning to postpone the reduction of interest rates.

So, in that sense, inflation has not gone away as a problem, and this creates massive problems for financial stability to which the widening U.S. budget deficit is making its own contributions, and we’ll talk about that in a minute.

Let’s take a look at financial stability then. The fact of the matter is that we already saw at the beginning of this year that we had a series of failures of American banks, the Silicon Valley Bank and a few other banks failed, and they failed chiefly because of the way in which the Federal Reserve is trying to deal with the problem of inflation.

We’ve already discussed in the past that the problem of inflation cannot be really resolved by raising interest rates. Indeed, one economist, Robert Solow, had essentially referred to the raising of interest rates as a means of dealing with inflation as burning a house to roast a pig. I mean, you don’t need to do that. You are basically creating a lot of destruction.

But nevertheless, the U.S. Federal Reserve started raising interest rates, and this began affecting the financial institutions like Silicon Valley Bank and the other banks that went bust that had relied on the continuation of easy monetary policy.

So, in a certain sense, we are facing the prospect of another financial crisis, which in 2008, also the financial crisis occurred because in the mid-2000s, the Federal Reserve started raising interest rates once again because the dollar was falling too low, because commodity prices were rising, and as they brought interest rates up to about 5.25 percent, which is roughly where they are at right now, this was enough to prick the housing and credit bubbles, and you got the 2008 North Atlantic financial crisis as a result.

The new financial crisis has arguably already begun. It already began with the bank failures earlier in 2023, and now we read headlines like this, “Bad property debt exceeds reserves at the largest U.S. banks”. This is a Financial Times story: “Loan provisions have thinned even as regulators highlight risks in commercial real estate markets”.


So, they are showing us these major banks, how many lost reserves they have in relation to loans that have already become delinquent, loans on which payments have already been missed. These are the six largest banks, and except for J.P. Morgan Chase, which has a ratio higher than 1 percent, compared to 2022, in 2023, which is this light blue line, practically every bank has less than one dollar of reserve for every dollar of its exposure to bad loans in the commercial real estate market.

And these sorts of problems are, by the way, not just commercial real estate is just one, but there is also private equity. There are many other asset markets in which trouble is brewing.

And this also goes for the market in U.S. Treasurys:


Because as interest rates go up, the U.S. essentially has to pay a higher rate of interest in order to borrow money on the international market.

And what’s more, over the last many years, the treasury market has been sinking, and it has essentially not got enough buyers. As a result, the Federal Reserve has had to step in in order to prop up the treasury market.

But even then, even with all the support the Federal Reserve is going to get, is giving, you can see here this up to 2023 is the real figures. And then from here on, these are estimates. And you can see that interest costs as a percentage of GDP, the interest costs on U.S. debt are going up and they will contribute to a worsening U.S. budget deficit.

So you see here, interest costs have been just a little above 1 percent for a while, and now they will go up to 2 and 3 and 4 percent. And this is going to brew trouble.

And finally, this is an interesting story that appeared:


Even though the United States budget is in such deep doo-doo, basically, you have the United States government spending more and more money on the military-industrial complex.

We are told that it was, the official story is that it’s worth about $750 billion, three-quarters of a trillion dollars. But studies show that the actual size of military spending in the United States is about $1.5 trillion. That is a huge sum. The total amount of U.S. GDP itself is about %20 trillion. So you can imagine, it’s like about 7 odd percent of U.S. GDP.

So this is the state of the U.S. economy. And so we can expect in the near future to hear finally an official admission of the recession the U.S. is in, continuing inflation, and with continuing inflation, the possibility of the Federal Reserve increases interest rates.

So maybe even if it does not increase interest rates, the possibility of another financial crisis. So this is the sort of cauldron of troubles that is already brewing as the U.S. approaches an election year.

MICHAEL HUDSON: Well, there are a couple of things. Let me go over your charts one by one again. You sort of went very quickly.

When you showed the chart about the banks being in negative equity, this is especially the case for small community banks.


About 30 or 40 years ago, there began to be small community banks. The smaller banks, if you notice, are the ones that are in the most trouble because they’re the ones that have made loans to local businesses, local landlords.

You already have one of the big New York City community banks going broke in the last week, just like you had the Valley National Bank go broke before. What these charts show is that the U.S. financial system in general is in negative equity.

Now, just think of that. If you have a financial system that’s in negative equity, what do you need a financial system for? The whole idea of finance is people are supposed to be abstinent and save rich people and save their money. You remember Karl Marx’s quip that the Rothschilds must be the most abstinent family in Europe because they have so much money.

Well, the fact is that if banks don’t supply money to the economy, but they’re broke and they get all the money from the government, this is just what China’s doing.

Why don’t we just say, okay, money is a public utility?

RADHIKA DESAI: Nationalize the banks.

MICHAEL HUDSON: If it’s a public utility like China, then it’s not going to make this de-industrial real estate kind of property investment.

Now, let’s look at the chart again for the interest rates going up in the U.S. economy:


This has overjoyed Biden, and especially it makes Obama very, very happy. This is Obama’s dream to privatize Social Security. The government is going to say, we have to balance the budget. The Republicans are going to close down Congress, as they’re threatening to do this Friday, by the way, in order to balance the budget. Because the market, the magic of the marketplace, has raised the interest rates.

Between the higher interest rates and the military charges that you just showed, there really isn’t enough money for social spending anymore. But we can do what Margaret Thatcher did to the English economy. We can privatize Social Security. And now all the money that you had for Social Security is not going to be your money anymore. It’ll be, we put it in the hands of the banks that have already driven themselves and then the financial sector into negative equity.

Now they can take your Social Security and drive it into negative equity. That really is the grand plan, to privatize, to treat Social Security, Medicare, Medicaid like the post office. It’s all going to be privatized. That’s the neoliberal plan. And this is not an accident. This is, it’s a feature, not a bug in the economy. And that’s basically the direction we’re going in.

The privatization of finance, instead of doing the obvious thing, if finance is now broke, why not do it? The government can create the money instead of what it’s doing now.

The banks are giving the bad loans and basically they’re putting their assets with the Federal Reserve and borrowing the money to stay in business. You can be in negative equity forever as long as the Federal Reserve, which basically works for the commercial banks as their customers, is creating enough money to subsidize the negative equity for the banks and the financial sector.

What they’re not doing is subsidizing the negative equity of the wage earners, the negative equity as a result of their housing costs, their medical costs.

RADHIKA DESAI: Two things very quickly. And I think we should probably wind down because we are just about a little over an hour here. But just two quick observations that in the 2008 financial crisis, there were many people who were arguing that, yes, there should be a bailout, but not of the banks that caused the financial crisis in the first place, but of the homeowners who were not necessarily at fault. And of course, the economic benefit of bailing out the homeowners would vastly be greater for the good of the American economy than bailing out the banks.

But of course, a government that is beholden to the big financial institutions was not going to do that. And so it did what it did. It bailed out the big banks and not the poor people who lost their homes, who lost their jobs, etc.

The second thing is that, you know, I completely agree with you, Michael, that this is what neoliberal governments have done for many decades now. They essentially want to privatize everything in sight. And of course, by creating a crisis of social security and so on, that’s what they generally do. They first run down any institution, whether it’s social security or any other publicly owned asset, and then they say it’s time to privatize it because that will improve it.

But, you know, I wonder, I wonder if there are not even enough people who can buy U.S. Treasury securities, if the market for Treasury securities is not great, if the big financial institutions are already sitting on mountains of negative equity, where are they going to get the money to buy? Where is going to be the market to buy these assets that the governments are going to privatize?

Because in the history of privatization, there have been many privatizations that have had to be called off because there are not enough buyers. And we may very well be in that situation.

MICHAEL HUDSON: You pose a question, I get to answer it. The answer is they’ll get it from abroad. This is a geopolitical hour after all. Europe’s loss will be America’s gain.

What affluence is flowing in? You could say that since World War II, Europe and America have gained by keeping the prices of raw materials and the global South countries low and keeping the prices of their industrial goods very high.

What you’re seeing today from Europe is, I think, their way of solving the problem you’ve just posed. The bright spot is getting a flow of American, of European companies into the United States, relocating here because they can’t, the European economy is collapsing. You’re having a flow of labor and skilled labor from other countries into the United States. Affluence is this kind of flowing in.

If you’re not producing an economic surplus at home and you want to somehow sustain American living standards and corporate profits, it has to be done externally. It has to be done via foreign countries. And that’s the geopolitical implications of all this.

If America is turning into a deficit, parasitic economy, some other countries have to pay. And that’s why there’s all of this military spending.

RADHIKA DESAI: I would beg to differ, actually, because here’s the thing. The geopolitical economy of the North Atlantic financial crisis was roughly like this, that in the process of deregulation of European financial institutions that came along with the launching of the euro, a lot of European financial institutions ended up outside of North, the United States and Britain, becoming the main customers of the toxic securities that were being generated in the 2000s as a result of the housing and credit bubbles.

Once that bubble burst, once the crash occurred, essentially European money left and it has generally stayed away. And there, as I said, this money is not even available to buy U.S. treasury securities.

If the Europeans invest in the United States, they will be investing in creating new assets. They’re not necessarily going to buy up what the American government necessarily wants to privatize.

And what’s more, in recent decades, recent years, I should say, China and Japan have also been increasingly reluctant to buy treasury securities. So all in all, all I’m trying to say is that it is not a given that these assets, that the old tradition of essentially privatizing things at bargain basement price, even at bargain basement prices, is necessarily going to work. That’s all. I’m just wanting to raise some questions around it.

But so all in all, Michael, I think what we’ve done is we’ve painted a picture of an extremely precarious situation, an extremely dangerous situation in which people are suffering. They are unhappy. They are going to the polls. They are going, they’re being asked to choose between two candidates, both of whom have failed in signal ways. And there is not any simple way out. And so, as I say, it’s going to be a really, really rocky road to the election.

MICHAEL HUDSON: Yep. If you have a democracy, you cannot let people have a vote for the other candidate. That’s what our democratic hero in Ukraine, Zelensky, says, cancel the elections. That’s what’s happening in Israel. Netanyahu, no way of throwing him out.

And that’s what’s happening here. There can’t be a third party. You have to, as long as the Republicans and the Democrats have the same program, just with a different rhetoric, that’s the new meaning of democracy.

RADHIKA DESAI: Well, I think that you’ve said that, said it, Michael. So I think with that, we’ll say goodbye for now. And we look forward to seeing you in a couple of weeks. Thank you and goodbye.

And please remember to like our show and to share it as to other interested people and to subscribe to the channel. Thank you very much and goodbye.

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  1. Lena

    I’m not an economist, I’m a poor person. I will say the Biden years have been rough financially. I’m about to become homeless as rents are now unaffordable for me. Was life during the Trump years better for the poor ? It’s hard to say because Covid economic policies helped create a temporary safety net, an unexpected plus. That safety net is gone now, shredded. Biden did nothing to try to make those policies permanent.

    Poverty has increased, especially childhood poverty. Homelessness is at a record high. Hunger has increased. Everything is more expensive. It’s a bad time to be poor. I see no hope in sight. Biden isn’t helping and Trump is not the answer.

    When I hear people say the economy is great, I think of the Donna Summer song that says “It seems strange to her [me] that some people seem to have everything”.

      1. Lena

        Thank you, Yves. NC is the only place online where I feel I can write about being poor without being shamed for it.

        1. jonboinAR

          I’m sorry to intrude, but can I ask what kind of work you’re able to do? I ask because my area is fairly liveable in terms of living costs. I can ask around if you’d like. But I also don’t know if it’s considered proper here to get so personal. Y’all feel free to correct me if I’m out of line somehow.

    1. CA

      I will say the Biden years have been rough financially. I’m about to become homeless as rents are now unaffordable for me…

      [ I am really, really saddened.

      What I do not understand is why the issue of rent is not a prime focus of the administration or Congressional Democrats. This is not a small or narrow matter. ]

      1. Hornet

        Decades of allowing in millions of cheap labor foreigners who huddle in large numbers in and outbid American families for rentals, and now potentially giving them work permits, is why rents are high.

        Thought experiment.
        Deport all illegals. What happens to rents and wages?
        Rents go down, wages go up. Corporate profits go down.

        1. skippy

          WOW you have no clue about RE/MBS and credit cycles effect prices and then dumb down on supply and demand metrics which have no place with financial asset price metrics …

        2. skippy

          E.g, goat traders from antiquity should not opine about stuff way over their heads with ego ….

      2. digi_owl

        Perhaps because they are rentiers?

        Thus doing anything about it would directly impact their income?

    2. chris

      I’m so sorry to hear that. I hope we can do something to help everyone with the cost of living soon.

    3. ilsm

      US can throw an over and above $100 billion on war 6000 miles away in 3 directions, over the near $900 billion casually passed on each year.

      While we have homeless and delayed shoddy medical care….

      God forbid any US war!

  2. GlassHammer

    The first view an American takes of the economy is that of a consumer. All other views (i.e. that of a worker, a member of a class, an investor, etc…) are secondary and on their mind far less.

    And it makes perfect sense because consumption of basic necessities is the most pressing issue on any given day.

    Any politician foolish enough to ignore or downplay consumer sentiment will appear utterly out of touch and will see their support steadily slip away. (“I know it’s bad and I know they are ignoring it.” is a phenomenal campaign message for anyone to use against an incumbent.)

    1. Kimmy

      That’s exactly why one can show their support for president Biden by rushing out and going into debt to buy a new car. /sarcasm.

      The easiest way to show continual non-support for Biden, actually the people controlling him, for their old and new wars, the Potemkin economy, the threat of vaporization in nuclear war, is to just go on a spending diet until next year.

      It occurred to me when trapped in a doctor’s office under the ever present monitors, having to listen to commercials that we never allow in our home.
      I remembered Shrub’s plea to go shopping after 9-11 to save his presidency and “democracy” in the prelude to Syraquistan.

      Such an easy way to give the middle finger to the Bideneconomy. The Consumption Fast immediately saves you money, uses up the expiring clutter in cupboards, and includes everything down to expendables. Best of all, it can help others and one can eat better food with the savings.

      The twins down the street were proudly splashing around in their new yellow rainboots yesterday. They don’t know that our kids wore them years ago. Their parents who work 3 jobs are most appreciative and will pass them on when they outgrow them. Meanwhile Target sells less Chinese crap and fewer sales taxes are collected. These numbers are obvious in the collective.

      What a wonderful, informative article. Naked Capitalism is like a morning condensed college class that everyone can learn from. Our teenagers even like it.

      1. spud

        this is bare minimum for capitalism to even have a ghost of a chance to work. the deplorable must make enough money to service their debt, save, consume, and have a little free time to enjoy the fruits of their labor.

        if even one of these is not met, the economy starts to suffer. so whats needed is at least, a new deal/fair deal, with all of the regulations and protections against free trade capitalism, a smoot-hawley, or at least a Gatt.

        today all four requirements have been gutted.

        so bubbles can be a self licking ice cream cone for a while, as long as the four requirements are being met.

        once those requirements have been gutted, the bubbles pop, because debts can’t be serviced, savings are not increased, consumption starts to collapse, and desperation replaces free time.

        so the slightest change like interest rates returning to their historical norm, and the whole thing starts to deflate.

        this is a very very incorrect statement,

        “The United States has a tendency that when the economy grows, the trade deficit grows. Why? Because American consumers prefer buying foreign goods. So this has been the case for many decades in the United States. So obviously, with incomes shrinking, so did the trade deficit.”

        the free trade fundamentalists, corrupt and indoctrinated politicians, their idiot and corrupt economic advisors, and the clever rich using well know propaganda techniques, pushed free trade onto us.

        and its also why a guaranteed universal income will not work. all it will do is increase the demand for more free trade. the oligarchs will not satisfy demand with internal production, because this article is quite correct. so the demand will be met with offshore production, further destroying the environment, putting more pressure on fossil fuel consumption, and driving down wages in america even more.

        today when i go shopping for what i need, i see stores that have almost 2/3rd’s empty parking lots. when cashier lanes just a few months ago were plenty enough, today just one lone cashier. self service lines have no real lines of waiters.

        shelves almost bare, or bare of what we need to have every week, just to have a minimum standard of living.

        shelves well stocked with stuff that’s not needed on a regular basis, and only sporadically purchased.

        any gutting of the social safety net now, will end neo-liberalism.

  3. Neutrino

    Fat cats have been voting with their wallets. See Rothschild, Bezos and others cashing in some big piles of chips. Think of them as the early warning signs followed by the bleeding edge of the coming carnage. There have been enough of those signals over the past 40 years to point to looming problems. Now that the bank issues are getting wider press, prepare for chaos.

    They were aided by some bone-headed or malevolent economists and politicians. Will future historians speak of the Greenspan Oops Destruction Unit, or the Albright Half-Million Excuse or maybe the Obama Neighborhood Uniform Sanitizing? Next, how did they get people to go along with their insanity? By bribes, misdirection, secrecy, blackmail or what?

    Thanks for the discussion. If only you had a Sunday Morning Show to help publicize the issues to a wider audience.

  4. jefemt

    It’s interesting the headline is not active, present tense. We are in March, 9 months to go, and the Headline uses past tense. Was Biden.
    Biden, Congress- foregone conclusion ain’ nothin’ gowannna happin’.

    Perhaps that is a blessing- lord knows that the powers that be have, as my dad used to say,
    upgefucked everything to a fare thee well— what , at least since Reagan? Remember, there were 1/2 as many people on the face of the earth when Reagan came into power. Might be even beyond the powers of a benign St. Ronald and his Friedman acolytes.

    Cogent answers, and agreement on a better path ahead, are neither being offered, much less agreed upon, by our ‘representatives’ .

    I don’t want to see the pain and suffering of the collapse and the new world order as things get re-arranged- there will be much suffering and gnashing of teeth.
    But, it seems like the whole thing slowly collapsing and getting rearranged is baked in, humans being what we are.

    Be careful, be kind, and help each other. Do little, with less. Probably are other simpe little guiding principals .

    1. steppenwolf fetchit

      Food will get you through times of no money better than money will get you through times of no food.

  5. jefemt

    R I P Nancy Griffith. I miss you and John Prine ! From her work, “Flyer” Must-listen/must own CD/Album

    It’s an inconvenient time
    It’s an inconvenient time
    It’s an inconvenient time
    It’s an inconvenient time

    We’re living in a time of inconvenience
    Compassion fails me with this meaness in the air
    City streets are filled with violence
    So we close our doors to the city
    And pretend that it’s not there
    Here I go again
    Back out on these mean streets
    The evil seems to cling to the soles of my feet

    Because I’m living in a time of inconvenience
    At an inconvenient time

    We’re living in the age of communication
    Where the only voices heard have money in their hands
    Where greed has become a sophistication
    And if you ain’t got money
    You ain’t got nothin’ in this land
    But, here I am one lonely woman
    On these mean streets
    Where the right to life man has become my enemy
    Cuz I’m living in his time of inconvenience
    At an inconvenient time

    And I’ve turned my cheek
    As my history fades
    While the clock ticks away
    Any progress we’ve made
    I never thought
    I’d be ashamed to be human
    Afraid to say
    My time has seen its day
    Because I’m living in a time of inconvenience
    Living in a time of inconvenience
    Living in a time of inconvenience
    In an inconvenient time

    This is a time of greed and power
    Where everyone needs to have someone to shove around
    Our children come to us for answers
    Listening for freedom but they don’t know the sound
    And there they are, our children
    Dumped out in these mean streets
    The evil sweeps them up
    And brings them to their knees
    Because they’re living in our time of inconvenience
    They’re living in the age of communication
    This is a time of greed and power
    This is a time that I wish was not mine
    Because it’s an inconvenient time
    It’s an inconvenient time
    It’s an inconvenient time
    It’s an inconvenient time
    It’s an inconvenient time
    It’s an inconvenient time
    It’s an inconvenient time

    Songwriters: Nanci Griffith. For non-commercial use only. 1994!!!!????

    1. JG

      Love me some Nancy🩷🐴🧲 I feel those songs in my bones. Grad School era, my living was relatively easy, then. No sot much now. Stones throw away from the “trailer park”; as it is the next step, down, from my condo. The SS, defined benefit pension, and 403b…barely keeping head above water. Now, music is classical, something that is soothing as to not jar my predisposition to…”nerves”. Carry on.

  6. ISL

    The bleak situation painted by Desai and Hudson is actually worse, as in their discussion (I love reading it first and then watching), they focus on just the US-European economy, neglecting the loss of economic connectivity to the global south – loss of cheap energy and labor and resources – Ben Norton (their producer) talks about this in his latest video and the effect on the EU:

  7. junez

    Some employment data on multinationals are available:
    “Worldwide employment by U.S. multinational enterprises (MNEs) increased 1.1 percent to 43.3 million workers in 2021 (preliminary) from 42.9 million workers in 2020 (revised), according to statistics released today by the U.S. Bureau of Economic Analysis (BEA) on the operations and finances of U.S. parent companies and their foreign affiliates.”
    “U.S. parents accounted for 23.1 percent of total private industry employment in the United States in 2021, down from 23.5 percent in 2020….”

  8. Rip Van Winkle

    I like that Dollar Milkshake financial guy. I mean, I’d like to buy a milkshake for $1.

  9. CA

    Radihka Desai:

    You know, the United States and the Biden administration make much of competing with China and so on. Let’s take a look at this graph. It only goes to 2015, but I don’t think the story has changed.

    And this graph, by the way, is the work of my partner, my husband and intellectual partner, Alan Freeman.

    And here you can see he has given investment as a proportion of GDP for China, which is this bold blue line, and for many other countries. But we just want to focus on China and the United States, which is the green line.

    And indeed, as you can see, the green line is basically at the bottom of all these comparable countries, including Europe, Japan, other industrialized countries, and so on, and even the global south, which is here in this thin blue line.

    So you can see if you’re going to compete with China in terms of growth and productivity and so on, China at its peak is spending 45 percent of its GDP on investment. By contrast, the US is spending less than 20 percent, less than half in investment. So this is the sorry state of investment in the United States…

    [ This is especially important as I have explained. The relationships between investment and GDP for China and the US do extend past 2015 right to 2023 and the relationship actually extend from 1980 on. China has been investing heavily since 1980, when such data begins, and Chinese investment has increasingly led to products from Electric Vehicles and advanced solar panels to hybrid rice seed and just now anti-fatigue 3D-printed titanium alloy. ]

    1. CA

      Radihka Desai: The investment story has indeed not changed since 2015, and the result is now over 4 million international patents originating in China of which about 40% are classed as high-value and another 1 million Chinese domestic patents…,924,132,134,534,536,158,186,112,111,&s=NID_NGDP,NGSD_NGDP,&sy=1980&ey=2023&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1

      October 15, 2023

      Total Investment & Gross National Savings as a percent of GDP for Brazil, China, France, Germany, India, Indonesia, Japan, Turkey, United Kingdom and United States, 1980-2023


      Total Investment ( 40.3)
      Gross National Savings ( 46.1)



      Total Investment ( 40.4)
      Gross National Savings ( 50.4)


      Total Investment ( 47.0)
      Gross National Savings ( 50.9)


      Total Investment ( 43.0)
      Gross National Savings ( 45.7)



      Total Investment ( 43.2)
      Gross National Savings ( 44.7)


      Total Investment ( 42.9)
      Gross National Savings ( 44.5)


      Total Investment ( 42.5)
      Gross National Savings ( 44.0)

  10. Ernie

    I am puzzled by this article. Clearly the economy is in the toilet, BUT it far was worse during Trump’s reign. The most important thing in the upcoming election is whether we will try to retain a form of government, based at least to the degree that we had prior to Trump, on the will of the people (democracy) or whether we will cave to authoritarianism (such a temperate name for such a horror).

    Biden is far from perfect, and the economy is failing the majority of the people. But when the legislative branch has been taken over by tools of the billionaire/millionaire class, so that we cannot possible get even a hearing on how the “greed is good” – “the primary purpose of the corporation is to enhance shareholder value” necessary to start to get to an economy that is for those who are not going to ever get a share of the enhanced shareholder value, then there is no possibility of getting a good economy no matter how good a person the president may or may not be.

    Slamming Biden at this point in time is only going to result in confusing voters, and since we are condemned to only two non-optimal choices as a practical matter, confused voters are likely to make the choice that requires the least thinking and the most emoting, i.e. Trump. And voila, dictatorship.

    Instead of nibbling around the edges of the problem by bad-mouthing Biden, how about doing something about our completely backwards approach to capitalism. There’s lots of hand-wringing about inequality and all the money going to the top. That’s the primary problem that has to be solved before anything else can make significant progress.

    1. tegnost

      So just to get this straight, trump gets into office and declares himself dictator, then it’s done?
      If that’s all it takes why doesn’t biden just declare himself dictator, I mean his base is the top ten percent who are the natural managers anyway so who else would you want to be the boss? And there’s no one on the dem bench who can be as right wing as biden, but still ride the coattails of the civil rights movement and get black/poor votes.

      Instead of nibbling around the edges of the problem by bad-mouthing Biden, how about doing something about our completely backwards approach to capitalism.
      Do somethng like what, I voted for the hopey change and it did nothing. Biden was part of hopey changey administration, and he did nothing but throw fuel on the fire of the backwards approach to crapitalism, biden, remember, sponsored the bill to make student loans a lifetime burden. His nickname is the senator from MBNA for flips sake. He’s president of wall st and the globalists who’ve spent years telling working class americans that their standard of living is going to fall. learn to code. Be rich, Subscribe to rich dad/poor dad and get a grip on your bow tie, those work boots ain’t gonna get you nowhere.
      And FFS vote dem because. Just because.
      Trump axed the TPP and the insurance mandate on day one, and sent out checks to people in need during the pandemic (still ongoing but officially denied by vaxenrelax biden).
      Can you name three comparable things biden has done as president?

    2. Mary F

      Facts about the state of our economy ‘puzzle’ you? I don’t understand.
      Perhaps you just don’t like the facts putting someone you clearly plan to vote for in a very very bad light and the cognitive dissonance from that is painful.
      I of course agree Trump would be little better but denying facts and putting on a ‘but but but the other guy…’ defense is in no measure fixing the problem.
      You seem to imply there workable implementable solutions on the horizon – share them. I see no desire in either candidate to solve any of those problems .
      Voting for more of the same seems unlikely to make any positive changes

    3. Pat

      But when the legislative branch has been taken over by tools of the billionaire/millionaire class,

      I just want to point out that Biden was a key player in passing the policies that allowed for legal take over of the legislative branch. That he was one of the bad apples that ruined the barrel. That in his position on the Judiciary Committee he helped not only helped further inure the ownership class from facing restraints and prosecution of their ongoing corruption of the government but helped advanced their agenda of corporate primacy by helping judges who think corporations are both persons and better than people advance through the system. Once again, he is not divorced from the legislative branch take over, he was a key player. Senator MBNA was bought and known to be bought before it was the norm.

      Ignoring the evidence that Biden is and was a significant factor in problems you acknowledge in order to convince yourself that he was and is better than the alternative is just illlogical. About the only case to be made that Biden is better is that the Republicans, who do opposition far better than the Democrats, will block some of his worst ideas. Oh and Lina Khan. Unfortunately too much of the worst get through to even make that work.

      A reminder that some of the policies passed to support people during Covid raised more children out of poverty in decades, yeah Trump. Continuing just those policies would have cost the government much less than the first tranch of money set on fire for the deadly farce in Ukraine. Instead Biden and the Dems happily allowed them to lapse or shut them down, causing the largest leap of children living in poverty in history. And yes that is on him. Because what is he still yelling about, “fighting for” and demanding to keep the government open – even more money to waste in Ukraine. Tell me again he is better.

    4. Big River Bandido

      You have my sympathies. It must be terrible to watch “your democracy”, your party, and your precious nasty President turning into a heap of smoking rubble.

      For myself, it all provides great schadenfreude after what the Democrats have done to their base.

    5. Dr. John Carpenter

      I’ll tell you what’s confusing this voter. You’re telling me the president is less powerful than the “billionaire/millionaire class” who have taken over the legislative branch but, at the same time, is powerful enough to establish a dictatorship. I don’t understand how both statements could possible be true. If Biden’s hands are tied to do anything about, well, anything, then there’s no way Trump could do anything to change anything either, including change our form of government. On the other hand, if there’s so much power in the office that the occupant could literally declare themselves leader for life (I’m assuming this is what you mean here), then Biden has the power to tell that “billionaire/millionaire class” you think are solely responsible for things being as bad as they are to take a hike and fix things, but he has chosen not to and deserves all the scorn he receives.

      So, which is it? Either we have to lay off Biden because his hands are tied or we have to worry about Trump declaring himself dictator. Both can’t be true.

      1. Ernie

        Any president’s primary job is to execute the policies and laws passed by Congress. Any president can talk all they want about what needs to be done, but if there is no law existing to take care of what needs to be done, or if Congress does not take his suggestions as to what steps to take and create a law for him to sign and execute, then any president’s hands are tied. Biden has had to work with a Congress that has passed fewer bills than all but one prior Congress in history. The 2 recent attempts to make a stab at the immigration mess are a good examples of how a president, in this case, Biden, can be hamstrung despite his efforts. Without laws, no president can act.

        As to the conflict between a president having power to take actions to solve problems and being a dictator, there is no conflict. A powerful president does not become a dictator unless he violates the laws governing the office of the president, specifically speaking the Constitution. If a president does not choose to be a dictator, all he has to do is the job as it is described in the Constitution. And of course, if a president believes in the citizens’ right to self-government (through our representative democracy as described in the Constitution) then that president will not choose to become a dictator in the first place. On the other hand, a president who does choose to become a dictator need only disregard the Constitution, which can be done both as a practical matter by simply ignoring the Constitution and governing as such a president unilaterally chooses, and by declaring the Constitution “terminated” as Donald Trump declared he wanted to do at one point during his last regime.

        Of course, no dictator is without his sycophants and operatives, and Trump has them in the millions. He also has one of the two mainstream political parties in his hands.And he has openly declared he will be a dictator (at least) on day one of a second regime. And once he has broken the promises of the Constitution by establishing even just a one day dictatorship (which has never before in history existed) he has broken government by the will of the people. And before you say that his election to a dictatorship is the will of the people, keep in mind that will be the last election that will be the will of the people, and the last election during which the Constitution was the law governing how the country is governed and guaranteeing the citizens’ rights.

    6. chris

      What metric are you referring to when you say the economy was worse during the Trump administration?

      And by what metric are you asserting that Biden is not currently a dictator? We’re involved with two foreign wars that do not have majority support in the populace and have not been approved by Congress. We’re not allowed to question official positions on killing women and children in Palestine. We’re not allowed to question why we’re supporting Ukraine. We’re jailing journalists. We’re trying to extradite and essentially murder political dissidents from other countries who offend us. The DNC quashed any primary challenges. The CIA is spying on American citizens. National Guard Reservists have been killed serving in another country, that doesn’t want us there. We have no security at the southern border. We refuse to enforce anti-trust regulations or banking controls that would help our citizens. We’re told to ignore obvious signs of old age and mental decline in many of our elected leaders, including the president. The current President is corrupt and has benefited from bribes… the list could go on. So tell us why you think Trump is some kind of existential crisis for this country? Tell us why discussing how bad the situation under Biden is, somehow confuses voters?

      1. Ernie

        “So tell us why you think Trump is some kind of existential crisis for this country? Tell us why discussing how bad the situation under Biden is, somehow confuses voters?”

        First: Most of the problems you cite are real, and I agree with you that they are severe problems. You and I are on the same page as far as all that goes. I doubt you would disagree that all of them are manifestations of hostility toward crucial values such as equality, fairness, care for others, affirmation of life after birth, and more. However, ALL of those problems have existed for a long time, some of them are derived or descended from circumstances and attitudes from colonial times. Dealing with those problems are what many of us strive to do constantly and are shaped by the effort.

        Biden did not create those problems. Even Trump didn’t create most of them (although he takes advantage of them). They have been created by the worst impulses of some people, probably a minority, over a long time, and they have evolved. You cited lack of anti-trust prosecution. One of my own personal peccadilloes. My analysis, briefly is that anti-trust is an anathema to the avaricious minority at the economic top of society. To satisfy those who hold corrupt beliefs and attitudes that promote the notions of the primacy of property ownership over the that of life-affirming beliefs and human rights, resulting in, for instance, case law that deems corporations persons deserving of constitutional protections, and privileged treatment of certain corporations as systemically important thereby allowing them to influence society and government instead of the other way around, we end up with a society where the people are starved of every basic right and need. We get a society where people are engaged in involuntary servitude masquerading as “employment”. We get a government that cannot afford to protect health, well-being or education of its people, but it can spend lavishly on war and war products to the disgrace of those same American people. And we get a tiny minority who own, control, and influence the government for their own gain, twisting laws that would prevent such ownership, control and influence to their own benefit.

        These problems seem intransigent because they are moving targets. As soon as one well-meaning group or individual gets a handle on them, the opposition moves the goalposts, or in the case of Mike Johnson, just shuts the game down.

        If, as you say, Biden is a dictator, then he is a reluctant one. And as dictator, he has managed to bring some tiny amount of equality and fairness back to our society. Yes, it is not much, but there is terrible much momentum away from equality and fairness, and any improvement has to be welcomed. My observation is that as a reluctant dictator, if he is one at all, Biden is not particularly committed to the repression of the ordinary people of the US, or elsewhere. I think he is hamstrung by an immobilized Congress and an ossified Supreme Court.

        On the other hand, Trump, the other person who has a chance at being President, has declared his intent to be a dictator for at least a day and most likely much longer. He is in love with other dictators in the world, most of whom have control of nuclear weapons and who at least make noises about using them. He also has said he wants to terminate the Constitution, because it gets in his way. And he has actually taken steps to have case law establish that the President in immune to prosecution for any crime he commits as President, thereby giving the President carte blanche to take ANY action he chooses while he is President, including murder. Doesn’t this remind you of a least one other person in the world, a person who Trump not only admires, but is willing to help in the effort to rebuild the former Soviet Union into a new Russian Empire, which will, if Trump is elected, walk through Ukraine, take all the former parts of the old USSR back as part of the new empire, and then start in on Eastern Europe. He will do this because Trump will let him if not outright enable him to do it.

        So, yes, Trump is an existential crisis, worse than any except maybe the South during the Civil War. He threatens what is left of our right to self-govern. He threatens to allow nuclear war to become a reality. He is a stupid narcissist, possibly a psychopath, who is completely capable of getting us all killed or enslaved. His only interest in the voting process is if he can manipulate to his own benefit. He is an enemy of the democratic process, which however flawed it may be, is still better that anything else that has yet existed for allowing the people of a large society to have some say in how they are governed and how they will live.

      1. Ernie

        “There never was. Lesser evil was always still evil.”

        So let’s think about that statement logically, shall we?

        If thing no. 1 is evil and the quality evil is quantified by x amount (x being a positive integer greater than 0), and if thing no. 2 is evil and the quality evil is quantified by the amount x-y (y being a positive integer greater than 0), then we have a logical statement that shows thing no. 1 is NOT the same as thing no. 2 because thing no. 2 has a smaller quantity of the quality called evil. This is a silly way of explaining it, but saying that one thing is evil and another that is not as evil is still the same is silly.

        The fact is that all people or actions or even things possess the ability to be good and/or evil, and that some are able to have more of one quality over the other, but all possess some of both.

        Choosing the lesser of 2 evils is a necessity of life.

    1. John Wright

      In the past, some on Naked Capitalism have suggested the “less effective evil” criterion is an improvement on the “lesser evil” voting guidance.

      Even if one believes Trump is a greater evil than Biden, voting for Trump might still be a better choice as he could be a less effective evil than Biden.

      Electing Trump, countered by a Democratic Senate, may be the better choice under the bleak circumstances.

      1. Pat

        The thing is that what the Democrats feel is important enough to actually do the hard work opposing is not what they tell us they are “fighting for”. They are all talk and fold at the first opportunity.
        Other than the endless joke impeachments, did the Democrats actually do anything that opposed Trump, even when they had power during his administration? They were fine with all the traditional Republican agenda items he put forth. That those things were exactly the things their base wanted blocked meant nothing. Even blocking the wall was all for show.
        It might be different this time, but only if Trump is as p*$$ed off at the Beltway as most of us are. Because this time he might really want to tear it down. Think of it this way, that really is their worst nightmare. Not as they say -that he is coming for “Our Democracy” – but that he is coming for their rice bowls.
        That said, in this case pretty much every incumbent and past incumbent is just evil. None of them are lesser or less effective. Just don’t.

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