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Economy Title: Michael Hudson: The Financial Road to Serfdom – How Bankers are Using the Debt Crisis to Roll Back the Progressive Era Financial strategists do not intend to let todays debt crisis go to waste. Foreclosure time has arrived. That means revolution or more accurately, a counter-revolution to roll back the 20th centurys gains made by social democracy: pensions and social security, public health care and other infrastructure providing essential services at subsidized prices or for free. The basic model follows the former Soviet Unions post-1991 neoliberal reforms: privatization of public enterprises, a high flat tax on labor but only nominal taxes on real estate and finance, and deregulation of the economys prices, working conditions and credit terms. snip From the bankers perspective, the economic surplus is what they themselves end up with. Rising consumption standards and even public investment in infrastructure are seen as deadweight. Bankers and bondholders aim to increase the surplus not so much by tangible capital investment increasing the overall surplus, but by more predatory means, headed by rolling back labors gains and stiffening working conditions while gaining public subsidy. Banks create wealth by providing more credit (that is, debt leverage) to bid up asset prices for real estate and enterprises already in place assets that either are being foreclosed on or sold off under debt pressure by private owners or governments. One commentator recently characterized the latter strategy of privatization as tantamount to selling the family silver only to have to rent it back in order to eat dinner. Fought in the name of free markets, this counter-revolution rejects the classical ideal of markets free of unearned income paid to special interests. The financial objective is to squeeze out a surplus by maximizing the margin of prices over costs. Opposing government enterprise and infrastructure as the road to serfdom, high finance is seeking to turn public infrastructure into rent-extracting tollbooths to extract economic rent (the free lunch economy), while replacing labor unions with non-union labor so as to work it more intensively. Post Comment Private Reply Ignore Thread |
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