Mar 182017
 
 March 18, 2017  Posted by at 9:04 am Finance Tagged with: , , , , , , , , ,
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Andreas Feininger Production B-17 heavy bomber at Boeing plant, Seattle 1942

 

How Bankers Became The Top Exploiters Of The Economy (Michael Hudson)
World Out Of Whack: What’s Next For Global Real Estate? (CE)
Make Big Banks Put 20% Down—Just Like Home Buyers Do (Kashkari)
Deepening EU Banking Crisis Meets Euro-TARP on Angel Dust (DQ)
The Paranoid Attempts To Tie Trump To Russia (Qz)
Clinton Ally Says Smoke, But No Fire: No Russia-Trump Collusion (NBC)
Justice Dept. Delivers Documents On Wiretap Claim To Congress (R.)
Secret Service Says Laptop Stolen From Agent’s Car In New York (R.)
A Bad Week and Getting Badder Bigly Fast (Jim Kunstler)
Athens Sees Turk Effort To Dispute Greek Sovereignty In Aegean (K.)
Turkey Threatens To Send Europe ‘15,000 Refugees A Month’ (AFP)
Over 10,000 Refugees Relocated, IOM Says (K.)

 

 

Absolutely brilliant interview with Michael Hudson. Read the whole thing. It’ll give you so much insight.

How Bankers Became The Top Exploiters Of The Economy (Michael Hudson)

There are two ways of thinking about the economy. The school textbooks only talk about was producing goods and services for wages and profits. They don’t talk about rent or unearned income. That’s what I mean by “unreal” – not grounded in production. And they don’t talk about interest either, or the framework of debt and property rights. There’s a lot of talk about what seems to be the circular flow between producers and consumers. That circular flow is called Say’s law. For example, Henry Ford said he paid his workers $5 a day so that they could afford to buy the cars that they produced. Workers are depicted as paying their wages to buy what they make. All that seemed to make sense, but the economy of production is different from financial and property wealth. Who owns the assets, and who owes debts to whom?

If you look at the economic framework in terms of assets and debt, you find that the 1% makes its money by holding the 99% in debt. Or at least, you could say that the 5% make its money by holding the 95% in debt. The trick is to get other people in debt. How do you do that? You make them think that they can gain. They’re willing to borrow to buy a home, because they think that since 1945, the way that most American families have gotten rich – indeed, the way the middle class was created throughout most western countries – was by the increasing price of real estate they bought on credit. What they didn’t realize was that the price of real estate was being bid up in two ways. Number 1: By more bank lending, on easier terms. Number 2: By public infrastructure spending. Cities, states and federal governments built parks, museums, roads, railroads, water and sewer systems, and electric utilities. But this began to come to an end with Reagan and Thatcher in 1980.

You have had a privatization of public infrastructure – goods that the public sector provided for free, saving people from having to pay monopoly prices. Instead of financing public investment by progressive taxation, it was financed by borrowing. Banks got more and more aggressive and reckless in creating new credit, because they felt they were guaranteed against loss. That was the essence of financialization. Financial engineering replaced industrial engineering. What people thought was wealth turned out to be a rentier overhead. This confusion between real tangible wealth and financial overhead claims on the economy was recognized already over 100 years ago by somebody who won a Nobel Prize: Frederick Soddy. But he won the Nobel Prize in chemistry. He wrote many books saying what people think of wealth— stocks and bonds, bank loans and property rights —are virtual wealth. They are financial claims on real wealth.

A stock or bond is a claim on the income that real wealth can make. So it’s on the opposite side of the balance sheet from assets. It’s on the liabilities side. Economists used to talk about land as a factor of production. But land rights are really a property claim, like a monopoly claim. It’s as if you’d say Walt Disney’s patents on Mickey Mouse or movies that Walt Disney makes are a factor of production. They’re really a property right to charge a monopoly price. The right to charge a monopoly price for a cable service isn’t really a factor of production. It’s extractive. It’s what economists call a zero-sum activity. So classical economics has a different idea of what national income is from today’s idea. A monopoly right is not an addition to national wealth or income just because monopolists make more. It’s a subtraction from the economy’s circular flow.

Read more …

Painful.

World Out Of Whack: What’s Next For Global Real Estate? (CE)

Ever since anyone can remember, global real estate prices have been going up. Pretty much doesn’t matter which country you’re from (unless, of course, it’s Syria, or Iraq… or Fuhggedistan): if you bought something in the last 2 to 3 decades, it’s like the ceilings were insulated with helium. Even when the 2008 crisis hit and we had Captain Clever ensuring the world that things were just peachy: “At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.” – Ben Bernanke, March 28, 2007 Even with that setback real estate has marched upward. The US, of course, took a decent breather and is only today back to where it was pre the GFC. But the US isn’t the world, so let’s look at what everyone else has been up to. Take a look at this:

In truth, it hasn’t just been Mr. and Mrs. Smith in their tweed coats buying up UK properties, just as it hasn’t been Sheila and Bruce in Sydney, or even Maple and Hudson in Canada. A significant amount of buying power in these markets has come from offshore buyers, largely frightened Chinese money being parked. It’s pretty extraordinary, really.Prices alone don’t provide us with the entire picture or provide us with context. I mean, real estate prices in Harare went through the roof, too, in the 2008-09 period (in ZWD) but the currency went through the floor and real purchasing power collapsed. Context, therefore, is important.Also, clearly a swanky penthouse in Manhattan overlooking the Hudson river shouldn’t be priced the same as a swanky penthouse in Vientiane overlooking the Mekong. The main difference? Incomes. So let’s take a look at prices relative to incomes for a better understanding.

Buying a house in the US actually makes a lot more sense. Certainly relative to its international peers the US is cheap. In fact, if you factor in the ability to fix debt for a ridiculously long time in a currency that’s ultimately going to get hammered, and if you need to find somewhere to live then you’ve found a way to essentially be synthetically short the bond market (provided you fix your rates). I’m not advocating this as a strategy but merely pointing out the mechanics of the trade. As investors we’re interested in viewing real estate as we would any investment or asset, and as such understanding the cashflows is important. Naturally, incomes relative to asset prices tell us what the owner’s cashflows are relative to the asset they’ve buying… and the same analysis can be conducted against student loans, car loans – any credit instrument, really. Here’s rents (cashflows) relative to asset prices:

Read more …

Kashkari makes sense. Lots of it. But will he push it through? Put his career on the line for it?

Make Big Banks Put 20% Down—Just Like Home Buyers Do (Kashkari)

There’s a straightforward way to help prevent the next financial crisis, fix the too-big-to-fail problem, and still relax regulations on community lenders: increase capital requirements for the largest banks. In November, the Federal Reserve Bank of Minneapolis, which I lead, announced a draft proposal to do precisely that. Our plan would increase capital requirements on the biggest banks—those with assets over $250 billion—to at least 23.5%. It would reduce the risk of a taxpayer bailout to less than 10% over the next century. Alarmingly, there has been recent public discussion of moving in the opposite direction. Several large-bank CEOs have suggested that their capital requirements are already too high and are holding back lending.

[..] Bank of America CEO Brian Moynihan recently asked, “Do we have [to hold] an extra $20 billion in capital? Which doesn’t sound like a lot, but that’s $200 billion in loans we could make.” It is true that some regulations implemented after the 2008 financial crisis are imposing undue burdens, especially on small banks, without actually making the financial system safer. But the assertion that capital requirements are holding back lending is demonstrably false. How can I prove it? Simple: Borrowing costs for homeowners and businesses are near record lows. If loans were scarce, borrowers would be competing for them, driving up costs. That isn’t happening. Nor do other indicators suggest a lack of loans. Bank credit has grown 23% over the past three years, about twice as much as nominal GDP.

Only 4% of small businesses surveyed by the National Federation of Independent Business report not having their credit needs met. If capital standards are relaxed, banks will almost certainly use the newly freed money to buy back their stock and increase dividends. The goal for large banks won’t be to increase lending, but to boost their stock prices. Let’s not forget: That’s the job of a bank CEO. It isn’t to protect taxpayers. [..] There is a simple and fair solution to the too-big-to-fail problem. Banks ask us to put 20% down when buying our homes to protect them in case we run into trouble. Similarly, taxpayers should make large banks put 20% down in the form of equity to prevent bailouts in case the financial system runs into trouble. Higher capital for large banks and streamlined regulation for small banks would minimize frustration for borrowers. If 20% down is reasonable to ask of us, it is reasonable to ask of the banks.

Read more …

This is why we get the calls for Eurobonds again, and the world’s biggest bad bank.

Deepening EU Banking Crisis Meets Euro-TARP on Angel Dust (DQ)

The total stock of non-performing loans (NPL) in the EU is estimated at over €1 trillion, or 5.4% of total loans, a ratio three times higher than in other major regions of the world. On a country-by-country basis, things take look even scarier. Currently 10 (out of 28) EU countries have an NPL ratio above 10% (orders of magnitude higher than what is generally considered safe). And among Eurozone countries, where the ECB’s monetary policies have direct impact, there are these NPL stalwarts: Ireland: 15.8%; Italy: 16.6%; Portugal: 19.2%; Slovenia: 19.7%; Greece: 46.6%; Cyprus: 49%. That bears repeating: in Greece and Cyprus, two of the Eurozone’s most bailed out economies, virtually half of all the bank loans are toxic. Then there’s Italy, whose €350 billion of NPLs account for roughly a third of Europe’s entire bad debt stock.

Italy’s government and financial sector have spent the last year and a half failing spectacularly to come up with a solution to the problem. The two “bad bank” funds they created to help clean up the banks’ toxic balance sheets, Atlante I and Atlante II, are the financial equivalent of bringing a butter knife to a machete fight. So underfunded are they, they even strugggled to hold aloft smaller, regional Italian banks like Veneto Banca and Popolare di Vicenza, which are now pleading for a bailout from Rome, which in turn is pleading for clemency from Brussels. What little funds Atlante I and Atlante II have left are hemorrhaging value as the “assets” they’ve been used to buy up, invariably at prices that were way too high (often at over 40 cents on the euro), continue to deteriorate. The recent decision of Italy’s two biggest banks, Unicredit and Intesa Sao Paolo, to significantly write down their investment in Atlante is almost certain to discourage the private sector from pumping fresh funds into bailing out weaker banks.

Which means someone else must step in, and soon. And that someone is almost certain to be the European taxpayer. In February ECB Vice President Vitor Constancio called for the creation of a whole new class of government-backed “bad banks” to help buy some of the €1 trillion of bad loans putrefying on bank balance sheets. Constancio’s idea bore a striking resemblance to a formal proposal put forward by the European Banking Authority (EBA) for the creation of a massive EU-wide bad bank that, in the words of EBA president Andrea Enria, would “make it much easier to achieve critical mass and to create a well functioning market for (impaired) assets.” Here’s how it would work, according to Enria’s words:

“The banks would sell their non-performing loans to the asset management company at a price reflecting the real economic value of the loans, which is likely to be below the book value, but above the market price currently prevailing in illiquid markets. So the banks will likely have to take additional losses. The asset manager would then have three years to sell those assets to private investors. There would be a guarantee from the member state of each bank transferring assets to the asset management company, underpinned by warrants on each bank’s equity. This would protect the asset management company from future losses if the final sale price is below the initial transfer price.”

Read more …

The Democrats are self-imploding over this. They need leadership, fast. And untainted.

The Paranoid Attempts To Tie Trump To Russia (Qz)

In the months following Donald Trump’s surprise victory in the US presidential election, it has become increasingly clear that the Democratic party is unwilling—and perhaps unable—to come to terms with the country’s post-election reality. The party’s inability to accept defeat has since manifested itself through an increasingly hysterical campaign to blame Hillary Clinton’s defeat on alleged Russian interference. The charge that Russia, in the words of respected Russia expert and longtime Clinton associate Strobe Talbott, breached “the firewall of American democracy” has been repeated so often and by so many that it has taken on the patina of fact. It has become an article of faith, among disappointed Clinton partisans, mainstream political commentators, Democrats on Capitol Hill and Republicans like senator Lindsey Graham, that the election was tainted and that Trump’s legitimacy as president is questionable, at best.

The tendency to blame domestic disappointments on foreign bogeymen is not new and is perhaps better understood as a wave that periodically surfaces, then temporarily subsumes American politics. Indeed, this current reliance on conspiracy theories and accusations of unpatriotic disloyalty has been a feature, not a bug, of discourse regarding Russia since the onset of the crisis in Ukraine in early 2014. Yet this paranoia is, so far, little more than a distraction. By blaming Clinton’s loss on Russia, the political establishment is able to largely ignore the way economic, trade, and foreign policies failed large numbers of Americans. And, by elevating Vladimir Putin to supervillain status, this neo-McCarthyism is hindering debate and undermining legitimate attempts to deescalate tensions with our Russian colleagues.

MSNBC’s house intellectual Rachel Maddow has been among the most vociferous and, at times, most incisive critics of president Trump. Yet she also recently questioned whether Trump is actually under the control of the Kremlin. During her broadcast on March 9, Maddow told viewers that what she finds “particularly unsettling” is that “we are also starting to see what may be signs of continuing [Russian] influence in our country. Not just during the campaign but during the administration. Basically, signs of what could be a continuing operation.” That Maddow, a popular and respected liberal voice, would indulge in rhetoric of this sort is a worrying sign given the lack of hard evidence it is based on.

While many have convinced themselves that Russia tipped the scale of the election toward Trump, the more sinister allegations of Putin infiltrating the White House have not been born out. Even the former Director of National Intelligence James Clapper admitted in an interview with NBC’s Chuck Todd in early March that he has “no knowledge” and “no evidence” of “collusion” between Russia and the Trump campaign. Yet Maddow’s charge recalls some of the worst excesses of the early 1950’s, when our political life was marred by the Red Scare and a climate of paranoia prevailed. Unsubstantiated allegations, not dissimilar to the kind Maddow just levied, were characteristic of that era.

Read more …

Steele was paying his ‘sources’ through third parties.

Clinton Ally Says Smoke, But No Fire: No Russia-Trump Collusion (NBC)

Former Acting CIA Director Michael Morell, who endorsed Hillary Clinton and called Donald Trump a dupe of Russia, cast doubt Wednesday night on allegations that members of the Trump campaign colluded with Russia. Morell, who was in line to become CIA director if Clinton won, said he had seen no evidence that Trump associates cooperated with Russians. He also raised questions about the dossier written by a former British intelligence officer, which alleged a conspiracy between the Trump campaign and Russia. His comments were in sharp contrast to those of many Clinton partisans — such as former communications director Jennifer Palmieri — who have stated publicly they believe the Trump campaign cooperated with Russia’s efforts to interfere in the election against Clinton. Morell said he had learned that the former officer, Christopher Steele, paid his key Russian sources, and interviewed them through intermediaries.

“On the question of the Trump campaign conspiring with the Russians here, there is smoke, but there is no fire, at all,” Morell said at an event sponsored by the Cipher Brief, an intelligence web site. “There’s no little campfire, there’s no little candle, there’s no spark. And there’s a lot of people looking for it.” Morell pointed out that former Director of National Intelligence James Clapper said on Meet the Press on March 5 that he had seen no evidence of a conspiracy when he left office January 20. “That’s a pretty strong statement by General Clapper,” Morell said. About the dossier, Morell said, “Unless you know the sources, and unless you know how a particular source acquired a particular piece of information, you can’t judge the information — you just can’t.” The dossier “doesn’t take you anywhere, I don’t think,” he said.

Read more …

No proof on this side of the fence either. Everybody’s just making stuff up.

Justice Dept. Delivers Documents On Wiretap Claim To Congress (R.)

The U.S. Justice Department on Friday said it delivered documents to congressional committees responding to their request for information that could shed light on President Donald Trump’s claims that former President Barack Obama ordered U.S. agencies to spy on him. The information was sent to the House and Senate intelligence and judiciary committees, said Sarah Isgur Flores, a Justice Department spokeswoman. The chairman of the House Intelligence Committee, Republican Devin Nunes, said in a statement late on Friday that the Justice Department had “fully complied” with the panel’s request.

A government source, who requested anonymity when discussing sensitive information, said an initial examination of the material turned over by the Justice Department indicates that it contains no evidence to confirm Trump’s claims that the Obama administration had wiretapped him or the Trump Tower in New York. The House Intelligence Committee will hold a hearing on Monday on allegations of Russian meddling in the U.S. election. Federal Bureau of Investigation Director James Comey and National Security Agency Director Mike Rogers will testify and are expected to field questions on Trump’s wiretap claim. Leaders of both the House and Senate intelligence committees, including from Trump’s Republican Party, have said they have found no evidence to substantiate Trump’s claims that Obama ordered U.S. agencies to spy on Trump or his entourage. The White House has publicly offered no proof of the allegation.

Read more …

What an insane story this is. How did the media get all their info?

Secret Service Says Laptop Stolen From Agent’s Car In New York (R.)

The U.S. Secret Service said on Friday a laptop was stolen from an agent’s car in New York City but that such agency-issued computers contain multiple layers of security and are not permitted to contain classified information. The agency said in a statement that it was withholding additional comment while an investigation continues. ABC News, citing law enforcement sources, said the laptop contained floor plans for Trump Tower, details on the criminal investigation of Hillary Clinton’s use of a private email server and other national security information. The New York Daily News, citing police sources, said authorities had been searching for the laptop since it was stolen on Thursday morning from the agent’s vehicle in the New York City borough of Brooklyn.

Some items stolen with the laptop, including coins and a black bag with the Secret Service insignia on it, were later recovered, the newspaper reported. CBS News, also citing law enforcement sources, said that some of the documents on the computer included important files on Pope Francis. The agent also told investigators that while nothing about the White House or foreign leaders is stored on the laptop, the information there could compromise national security, the Daily News reported. “There’s data on there that’s highly sensitive,” a police source told the newspaper, adding: “They’re scrambling like mad.”

Read more …

Jim was interviewed by Tucker Carlson about this, hope the video shows below (embedding Fox doesn’t always work). Really, Jim, Fox? I know, who else is left?

A Bad Week and Getting Badder Bigly Fast (Jim Kunstler)

[..] it also looks a bit as though the Golden Golem of Re-Greatification has wandered into a political minefield so dense with booby traps that he’s already out of moves. First there’s the debt ceiling problem — which has so far received almost no attention from the Kardashianized collective news media. As David Stockman has pointed out on his blog, the US Treasury amassed a “war chest” of nearly half a trillion dollars last fall (via various book-keeping shenanigans) in expectation that President Hillary would need it to ride out some fiscal bad weather early in her reign. Then, the truly inconceivable happened and Hillary won bigly in the wrong states and not bigly enough in the right ones, and, well….

Immediately, with Trump ascendant, the Treasury and its handmaidens at the Federal Reserve engineered a rapid burn-through of the war chest at a rate of about $90-billion a month since November, so that now there remains only about a month’s worth of walking-around money to run the US Government. With the old debt ceiling truce expired, congress would have to resolve to raise it, to legally enable the Treasury to resume its massive borrowing operations, or else the government won’t be able to pay invoices or issue pension checks or meet any obligations. It could even default on its “no risk” bonds. Those dangers are theoretical for the moment, especially since there is always more accounting fraud to resort to when all else fails. But the longer a debt ceiling stalemate goes on in congress, the more trapped President Trump will be.

The cherry on top is the Federal Reserve’s move to raise interest rates the same day the debt ceiling truce expired. That will thunder through the system, making many loans more expensive to repay, dampening the real estate markets (at a time when commercial real estate is already tanking), and draining all kinds of other mojo (however falsely engineered) from the Potemkin economy. As if being trapped in a political minefield isn’t bad enough, the remaining safe patch Trump is stranded on turns out to be the LaBrea Tar Pit of health care reform. At this point, the crusade is doing worse than going nowhere — it’s getting sucked into the primordial bitumen where the mastodons and camelops sleep.

Read more …

Watch out, Merkel, Trump, NATO. You’re playing with fire.

Athens Sees Turk Effort To Dispute Greek Sovereignty In Aegean (K.)

In what is seen in Athens as an effort by Ankara to push through its message that Greece has limited sovereignty in the area of the Eastern Mediterranean surrounding the island of Kastelorizo, Turkish forces have in recent days maintained a steady presence in the region, either through military exercises or with the dispatch of research vessels. According to a navigational telex (navtex) issued by Turkey, the Piri Reis oceanographic vessel will remain in the area south of Kastelorizo until Monday. Furthermore, according to another two navigational telexes, Turkey is planning to conduct exercises with live ammunition in areas west and east of Kastelorizo (within Turkish territorial waters).

Moreover, Ankara has already announced that it will conduct hydrocarbon explorations in the Eastern Mediterranean next month. It remains to be seen exactly what part of the Eastern Mediterranean Turkey plans to explore. In Athens, Turkey’s moves are seen to be clearly linked to the decision by Cyprus to move ahead, in spite of Ankara’s objections, with the extraction of natural gas from drilling block 11 in its exclusive economic zone (EEZ). In an interview with CNN Greece, which will be broadcast Friday, Cyprus President Nicos Anastasiades again expressed his concerns over the tensions that may be further fueled in the period stretching “from now until the Turkish referendum (on April 16),” and by the ongoing effort to create “an atmosphere of fanaticism within Turkish society.”

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The Erdogan referendum is one month from now. Much more important to him till then than international relations.

Turkey Threatens To Send Europe ‘15,000 Refugees A Month’ (AFP)

Turkey’s Interior Minister Suleyman Soylu has threatened to “blow the mind” of Europe by sending 15,000 refugees a month to EU territory, in an intensifying dispute with the bloc. Ankara and Brussels almost a year ago on March 18 signed a landmark deal that has substantially lessened the flow of migrants from Turkey to Europe. But the accord is now hanging in the balance due to the diplomatic crisis over the blocking of Turkish ministers from holding rallies in Europe. “If you want, we could open the way for 15,000 refugees that we don’t send each month and blow the mind” of Europe, Soylu said in a speech late Thursday, quoted by the Anadolu news agency. Foreign Minister Mevlut Cavusoglu has already indicated that Turkey could rip up the deal and said Turkey was no longer readmitting migrants who crossed into Greece.

The crisis was sparked when the Netherlands and Germany refused to allow Turkish ministers to campaign in a April 16 referendum on expanding President Recep Tayyip Erdogan’s powers, prompting the Turkish strongman to compare them with Nazi Germany. Soylu, a hardliner considered close to Erdogan, accused The Hague and Berlin of involvement in June 2013 anti-Erdogan protests, October 2014 pro-Kurdish riots and the July 15, 2016 failed coup attempt. “They are trying to complete the work that they did not finish. Who is doing this work? It’s the Netherlands and Germany,” Soylu said. He accused Europe of failing to help Turkey enter the bloc and of not helping with its fight against terror. “Europe, do you have that kind of courage…? Let us remind you that you cannot play games in this region and ignore Turkey,” he added.

Read more …

There were supposed to be 160,000. And this is less than one month of what Turkey threatens to send over.

Over 10,000 Refugees Relocated, IOM Says (K.)

More than 10,000 asylum seekers from Syria, Iraq and Eritrea have been relocated from Greece to other European Union states since the launch of the bloc’s relocation program in 2015, according to the International Organization for Migration, which is implementing the scheme. Since the beginning of March, 367 people have left Greece for Belgium, Estonia, Germany, Malta, Portugal, Slovenia and Spain, bringing the total number of people relocated from Greece to 10,004, IOM said on Friday. Over the same period, another 475 people were relocated from Italy. The total number of people relocated from Greece and Italy since the program was launched in October 2015 now stands at 14,439, the organization said.

“We have seen a steady increase of pledges and acceptance from participating EU countries in the past few months. At this rate, there will be a further 15,000 to 18,000 relocations from Greece by the end of the program,” said Eugenio Ambrosi, director of IOM’s Regional Office for the EU, Norway and Switzerland. The numbers are short of the original target as 66,400 places had been allocated for relocation from Greece and 39,600 from Italy. “We cannot rest at ease because the overall numbers are too low given the needs in Greece and the commitments that were made. We continue to encourage EU member-states to follow through fully on their commitments,” Ambrosi said.

Read more …

Home Forums Debt Rattle March 18 2017

This topic contains 11 replies, has 8 voices, and was last updated by  Will F. 4 months, 4 weeks ago.

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  • #33186

    Andreas Feininger Production B-17 heavy bomber at Boeing plant, Seattle 1942   • How Bankers Became The Top Exploiters Of The Economy (Michael Hu
    [See the full post at: Debt Rattle March 18 2017]

    #33187

    Will F.
    Participant

    I sure hope that the majority of the Automatic Earth contributors and founders do not believe the same way that Mr. Hudson espouses.

    He talks about landlords as though we are all part of the 1% who should be taxed of all our income for the greater public good. He seems to believe that the landlord does not contribute to society or the general welfare of a society since they do not “work” for their money from the rental. He seems to believe that the “State” is the only justified landowner / landlord. I guess he doesn’t want those who read his works and are too gullible to ask hard questions to know about the failures of the Communist societies that provided housing based upon your willingness to bribe public officials and live among the rats and raw sewage in state owned buildings. Buildings often built by the contractors who would pay the biggest kickbacks to the Government stooges or connected to the halls of the Government officials who were appointed by a Dictator, not elected by the citizens.

    He claims that the rent paid to landlords is “wasted” from society and is not reflected in GDP or other methods of measuring output and productivity. What about all the work that it took to get the money to buy the rental? Not everyone inherits a rental from their family, many are bought as first homes then rented out after the financial ability of the buyer improves. What about the goods and services bought with the money the landlord “earns” from his or her rental? Does he think they squirrel it away under a rock? I imagine most of it is turned back into circulation to buy things such as education for their children or goods for their households. Even the uber-rich buy things and employ people. They don’t live in a tent in the park and bury their money in coffee cans.

    What about the money that went into the tax coffers when the property was bought? The real estate agents and brokers that complete the documents, the Title company that checks to be sure the property can be legally sold? The property inspectors, the government inspections and recordings? The contractors who come in and renovate a run down property back from the brink of demolition so a family can live in it safely? What about the property management companies that assist absentee owners properly manage and maintain the property and collect the rents, which are often overdue?

    All of these things cost money and create jobs. Money that is paid for by the owner of the property, often at a loss for the first several years while the debts from fixing up the property which is often ready to be condemned, are paid. These things all add jobs to the community, pay taxes that provide for public infrastructure and public jobs like school teachers, police and firefighters. They also give money to public universities where many of the “Commie” academia enjoy lives of ease with paychecks that put them very near the top 2-5% of the population.

    He talks about bankers as though they are responsible for all of society’s problems. This is definitely a two-way street. Bankers only exist because people want to buy things they cannot afford. Buyers make the choice of financing things. They don’t have to spend money on new cars, fancy clothes, new appliances or vacations. These are often choices they make to feel good, or have luxuries not to survive.

    People can choose to live frugally and pay cash. That’s how things were once. I can agree with him that real estate values are ridiculous based upon cheap financing and the gullible people that buy more than they will ever be able to pay back on the hope that they will get rich but that is the way our system works. If you don’t like it, you don’t have to participate in many of the debts that society piles up and you don’t have to live where real estate prices are ridiculously high.

    I can agree that the Capitalist society we live in where the Government has been meddling in the free market and screwing things up is bad but one look only as far as the purges of citizens into mass graves under Stalin and Mao to understand our system, no matter its flaws is far superior to the one where the State gets to decide if you live or die at the end of a machine gun.

    I sure hope more people wake up to the truth about Socialism and Communism because there are enough of us out here that will not allow it to happen here that blood will run in the streets if they try to pull the same thing here that Mao did in his country. That is why our Founders established the 1st and 2nd amendments to our Constitution. They believed strongly that the power of the citizens to choose their own destiny should never be hindered by a Government that would take away the basic human rights based upon the whims of unelected despots.

    #33189

    V. Arnold
    Participant

    Will F.

    You are so lost in the weeds of propaganda and corrupted history; it would be impossible to know where to start to answer your ignorance.

    #33190

    John Day
    Participant

    Yes, the Michael Hudson interview is very, very good. I’m sharing it around.
    Thanks, Ilargi.

    #33191

    seychelles
    Participant

    Thanks to Ilargi for including the Hudson interview. He is certainly one of the top coherent commentators on the political economic scene today, one who I am sure most AE readers agree with and respect.

    #33192

    V. Arnold
    Participant

    seychelles

    Indeed; Hudson, Keene, and Bill Black rock, when it comes to economic policies.
    U.S. style capitalism is akin to the mafia controlled enterprise…

    #33193

    Boogaloo
    Participant

    Will F, Private property is a good thing, but it needs to be accompanied by tax policy to prevent overconcentration of wealth. Tax policy makes it extremely difficult to accumulate $1 Million because it taxes the hell our of wages, but makes it a lot easier to accumulate the second million, and then the third, and so forth. That’s because once you get over the hump you can live on the labor of others. That’s what needs to change.

    #33205

    Will F.
    Participant

    I would agree with regulation of the real estate ownership situation that would limit or prevent overseas investors from purchasing anything related to residential real estate and limit the holdings of large investment funds or banks from buying residential real estate but I absolutely do not support any ownership of residential housing by the “State.” I also adamantly oppose instituting a total taxation of rental income for the better good to redistribute that wealth to the poor or to make land ownership for rentals so onerous and costly that nobody wants to do it anymore.

    Although I have not read any of the books mentioned int he article, I would agree if they support regulation to prevent monopolization. Competition breeds efficiency and innovation but it cannot be government subsidized competition since that relies upon the money of the citizens to attack the rights those same citizens are entitled to.

    If V. Arnold wants to educate me, then feel free. There is no propaganda in my thinking, it is all born of hard work and making good decisions. I don’t subscribe to the theories of the rich trickling money down when it comes to many aspects of society but I also realize that Communism and the other ism’s all espouse destroying personal freedoms and inalienable rights for the greater good of the “Party” meaning those who control the Police and the Military, if there is even a distinction between them in most totalitarian nations.

    The history of Russia and China are very good teachers when it comes to the success you get when the State takes over the markets. You get rationing, in some cases mass starvation, occasionally genocide, and in the case of Russia and China, the totally unnecessary destruction of the environment.

    I have lived through enough and studied enough to know that Communism doesn’t work. It is based upon the false premise that only the Government can be perfect. I have family and friends that have lived under a military state rule and know all to well how that works out for people who don’t live on the right end of the machine gun.

    Rather than have a nation of hard working entrepreneurs who reach for the limits of their potential, you get a population of mediocrity and equal poverty among all where hard work and knowledge are often punished. Have you all forgotten the burning and outlawing of books and speech that does not conform to the Party line that come with totalitarianism? What about the Gulag’s and the death camps? The bread lines? Are they o.k. because they would be applied only to those in America that you do not like? The “unwashed masses” who still believe in personal freedom and those who cannot afford to attend your University?

    As far as the “intelligent” ones that are part of academia, do you really believe the Universities will be allowed to continue under Communism? I believe history has some pretty good stories of the purges of intellectuals that various Governments held once they took over and the takeover of learning institutions that became subservient to the various government personnel who oversaw them.

    I will be glad to listen to your responses, I always welcome a differing point of view, right up until you try to force me at the end of a rope or gun to accept your viewpoint.

    #33206

    oxymoron
    Participant

    Will F. Okay if the financial aspects of Mr Hudsons ideas don’t resonate could you explain to me how capitalism is nurturing the environment. All costs are externalities for poor assholes to wear like the Somali’s and their rich fishing grounds being a e-waste dump to name just one of many many arguments. Also if people do not have access to their own land and rent it – where do they get their food from? They get it from Monsanto serfs who also smash the land and soil to pieces to pay their fucking rents until they can’t and then they get aggregated into giant biosphere destroying farming entities. There are just so many arguments against the financial rentier vampire squid that I can’t begin.
    You worked hard and made good decisions but I think we are talking about an order of magnitude here.
    Having said that I respect your point of view.

    #33214

    V. Arnold
    Participant

    oxymoron
    Yes, it is indeed an order of magnitude; and that is what Will F doesn’t understand. It may also explain his defensive-ness about being a landlord.
    Will F; below is an article by Michael Hudson which I would recommend you read;
    http://www.truthdig.com/arts_culture/item/how_the_rentier_class_cannibalizes_the_economy_20130111
    He goes into great detail about the rentier class; and I seriously doubt you are a part of those rentiers’.

    Will F; “They also give money to public universities where many of the “Commie” academia enjoy lives of ease with paychecks that put them very near the top 2-5% of the population.”
    That is factually wrong by a wide margin. And, you do not know that for a fact (“Commie” academia); you just read it somewhere and it jived with your preconceived beliefs. You have many other “gleaming generalities” that make constructive criticism extremely difficult and if you are really “open to” other POV’s; then start by reading alternative news sources instead of the U.S. MSM.

    #33217

    Dr. Diablo
    Participant

    What a fascinating idea! You know, you’re right: those who don’t do actual work shouldn’t get paid, and we should implement this immediately.

    No more Idiot Trust Fund Kids. No more subsidized industries. No more Capital gains. No more inherited wealth. No more annuities. No more pension funds.

    No more Social Security. Stop it today! No more State retirement funds. No more Medicare. No prescriptions, no free health care. No more free food and housing.

    I mean, if it’s unjust to receive money for doing the work of capital accumulation and investing to fund new projects and ideas, then certainly it must be unjust to receive money for doing nothing whatsoever.

    Unless you mean that we should still give all those things for doing no work, and should not give any money to those who ARE doing work. In which case, who do you think is going to do all the work you’re giving away? Me? I don’t think so, and history has proven this out 1,000 times.

    Will F won’t be renting to you, and I won’t build your house. Neither will you build it yourself as the hammer salesman won’t sell you nails, since that requires someone to own a nail-making machine and someone to own an iron-digging and iron-transport machines which are paid back at capital depreciation. But hey, if you want take down trees with the burn-and-scrape method and use a deer hip-bone you killed yourself to hoe your garden in the woods, you’re welcome to. Because that’s all you’ll have. You may think 5% interest on a borrowed axe cheap then, but I doubt it. If Venezuela’s taught us anything, it’s that people will die by the millions before they change their minds.

    #33218

    Will F.
    Participant

    I called him Commie Academia because the article is about a Communist academic and in my experience, there are a lot of them out there. I have friends and family in the College system in California and in parts east. California, especially Berkely is so far left that I begin to wonder if Stalin would be greeted as a hero, or if they would condemn him for being a sellout.

    I will read your link. I like to learn new things and perspectives, often finding that I agree with the message but not the methodology to get there, nor do I agree with the politics they want to push. I don’t know about the Somali’s and their hardships but I do believe they live under a variation of a fuedal system where the warlord with the most guns and the most drugged up soldiers gets to make the rules; unless I am mistaken.

    I do try to read news that is outside of the U.S. media arena but some of the best are in languages that I do not read and the interpretation often leaves something to be desired.

    I generalize because those are my life experiences. If you want to talk about professors starving, they are not where I live. The University up the road from me pays such ridiculous sums that they have priced themselves out of the reach of many in the working classes and they are considered affordable.

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