Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Cross posted from New Economic Perspectives.
To know the Washington Consensus as a regular citizen is to hate the Consensus. The Washington Consensus, as the name implies, was an “inside the beltway” series of neo-liberal policies embraced by the IMF, the World Bank, and the U.S. government. It called for a minimal State and an all-powerful private sector. The private sector and de facto private central banks would discipline the State by insisting on balanced budgets – perpetual austerity. Democracy was unreliable, indeed dangerous, so the central banks had to be “independent” of the democratic process (and wholly dependent on the largest banks). Only the private sector had the proper incentives that could be relied upon to create vibrant growth and a self-correcting economy. The Consensus was developed in the context of the policies that should be imposed on Latin America and Latin Americans were the guinea pigs of Consensus. (This metaphor was particularly troubling for Latin Americans who knew that their ancestors raised guinea pigs as a reliable source of meat.)
The Consensus led to weak growth, high unemployment, and repeated privatization scandals. It enraged ordinary citizens in much of Latin America, which is why there has been a landslide of national leaders elected because of their promises to oppose the Consensus and their open disdain for Washington’s neo-colonial diktats. There is nothing unusual about the Latin American reaction to the Consensus. What is startling is that at the same time that Latin America was rising up to reject the Consensus the dominant neo-liberal politicians and economists in Europe were passionately worshiping its failed dogma with the zeal of the convert. They created the Berlin Consensus, and it rested on austerity today, austerity tomorrow, austerity always.
Overall, European nations showed significant budgetary restraints in the decade leading up to the Great Recession. Most of the periphery did so – Greece is a special case. The Cato Institute, for example, praised Iceland and Ireland as models of restraint. Spain also received praise. The claim that the periphery was “profligate” through large budgetary deficits in the run up to the crisis reverses the facts.
Austerity during a serious recession is economically insane. It is a pro-cyclical policy that makes the recession more severe. A more severe recession is a mass destroyer of wealth and quality of life. It is pure waste. It is the primary cause of dramatic increases in public deficits and debt. Unemployment reduces tax payments and increases demands for public spending. One cannot decide to end a budgetary deficit during a recession by adopting austerity. Austerity (some combination of cutting government spending and increasing taxes) reduces private and public sector demand. This means that imposing austerity is likely to deepen the recession and can make the national deficit and debt larger. It is analogous to the medical insanity of bleeding patients to cure them of disease – and then bleeding them more because the prior bleeding make them sicker. Europeans of the periphery are having austerity imposed on them by German demands – and they are subjected to repeated insults from German and Dutch leaders for failing to balance their budgets because the austerity imposed by Germany deepened their recession and slashed their tax revenues. Germany’s demands for austerity have thrown the euro zone back into recession – but it has forced the periphery into Great Depression levels of unemployment. German-imposed austerity, the Berlin Consensus, is even more draconian than the Washington Consensus in Latin America. Germany and the ECB are open that they are not simply demanding austerity and massive privatization – they are also demanding dramatic reductions in working class wages throughout the EU. The German’s and the ECB are not demanding any sacrifices from European elites. They explicitly target the working class and government workers’ wages and oppose any increased taxation of the wealthy. The Berlin Consensus is a road map to ever greater inequality.
The reaction among Europe’s citizens has been overwhelmingly negative. Every nation that has agreed to austerity has suffered economically and every ruling party that agreed to austerity in return for EU aid has fallen. Austerity is the leading cause of disintegrating EU unity. The nice thing about democracy is that the people are often less wedded to failed economic dogma than are the academic devotees of the cult of austerity.
The New York Times has a very good economist, a Nobel laureate, working for it as a regular columnist. His name is Paul Krugman and among his areas of primary study is how to recover from a severe recession. Regular readers of the paper will know that recovery is the most common subject Krugman’s columns discuss. Sunday’s elections in France, Greece, Germany, and the UK have spawned a spate of articles in the New York Times that have focused on finance and recovery from the Great Recession in Europe. The reporters’ collective take on the elections demonstrates that they are in the grip of dogmas that are so powerful that they have come to believe in anti-facts and to rely on “economic” theories that are rarely believed by economists and have been continuously falsified by reality.
It is now apparent that the paper’s journalists that cover the EU do not read or do not understand Krugman. Here is how they began a story on the French election and the import of Hollande’s victory.
Mr. Hollande’s campaign promised a kinder, gentler, more inclusive France, but his victory over President Nicolas Sarkozy will also be seen as a challenge to the German-dominated policy of economic austerity in the euro zone, which is suffering from recession and record unemployment.
Notice the logical disconnect? There is “austerity” and there is “suffering from recession and record unemployment.” The two are presented as if they are not connected. Austerity during a weak recovery from a Great Recession will cause intense “suffering from recession and record unemployment.” That is a fact as we have taught it in economics for over a half-century. It has strong theoretical and empirical support. Indeed, Mr. Draghi, the head of the European Central Bank (ECB) has conceded that austerity deepens recessions and unemployment. He claims that eventually this turns around and austerity aids recovery. When and how austerity turns around and eventually aids a recovery has neither theoretical nor empirical support (hence Krugman’s derisive allusion to the stealth “confidence fairy”). Note also that the interrelationship of the German-imposed austerity and the resultant return to recession in France is precisely why Hollande won the election and is therefore critical to the article.
The article’s economic analysis descends from that failed start. The next sentence reads: “French voters may not like the belt-tightening, but both Mr. Hollande and Mr. Sarkozy had promised to balance the budget in the next five years.” This sentence contains two false implications. First, it implies that a nation suffering from recession can simply decide to “balance the budget.” As I explained, and as the EU’s tragic experience under German austerity confirms, trying to balance the budget not only makes recessions and unemployment worse, but can make the deficit grow. Severe recessions are the great cause of rapidly expanding budget deficits. Second, no patient likes being bled by quacks (whether their doctorate is in medicine or economics). The implication of the article is that austerity in a Great Recession or a depression (which is what the periphery is suffering) is some kind of unpleasant medicine or form of virtuous self-discipline (“belt tightening” is an absurd metaphor for German-imposed austerity). The journalists portray the French as refusing to continue to drink the vital but bad tasting medicine that the wise Germans stoically took a decade ago. No, the French object to further bleeding by German and French quacks whose answer to everything is austerity (Sparmaßnahmen).
The journalists continue the theme of the selfless German economic doctors attempting to convince the frivolous French to take the ill tasting cure for their economic ills.
The presidential election in France and the parliamentary vote in Greece on Sunday have been closely watched in European capitals, particularly in Berlin, where Chancellor Angela Merkel has led the drive to cure the debt and banking crisis in the euro zone with deep budget cuts and caps on spending.
The Berlin consensus has not and cannot “cure” the debt and banking crisis – it has made it vastly worse. We are all able to observe the German snake oil “cure” forcing the euro zone back into a gratuitous recession.
The journalists soon slip into TINA (there is no alternative) and implicitly embrace the bond vigilantes (aka, the banks whose frauds and abuses drove the financial crisis that caused the Great Recession) as the appropriate arbiters of public policy.
While crowds in Paris cheered Mr. Hollande’s victory, investors were more cautious in their reactions.
They are concerned that Mr. Hollande might choose to spend more money to jump-start the economy rather than move ahead with labor and business reforms that economists say France sorely needs to improve its competitiveness to prevent it from getting caught in the euro zone crisis.
‘Markets will not attack France right away,’ said Jacob Funk Kirkegaard, a research fellow at the Peterson Institute for International Economics in Washington. ‘But there is a risk that if Mr. Hollande does not act early on, France will become the next sick man of Europe.’
Where to start? First, the bond vigilantes have been attacking Italy and Spain’s sovereign bonds for weeks even though both nations are slavish in their devotion to the Berlin consensus. Italy and Spain make good targets because they have adopted austerity and forced their economies back into recession, which meant that the promises to reduce the budget deficit to meet Berlin’s destructive targets were impossible to meet. The journalists’ implication is that imposing austerity during a recession improves an economy. We have run many real world tests of this dogma and it does the opposite.
Second, the journalists imply that TINA rules – there is no alternative to austerity because the bond vigilantes will crush any alternative. It that were true, then it would be all the more reason for the citizens of Europe to rise up and restore their national sovereignty that they have ceded to Berlin and the largest banks who caused the financial crises that drove the Great Recession. The largest banks are the principal bond vigilantes. If the only alternative available to Europe under the euro and the Berlin Consensus is to force the euro zone into recession, the periphery into depression, and slash working class wages then the euro and the Berlin Consensus have to go because they are destroying the Europeans, their economies, and the EU project. The Berlin Consensus invokes the same “logic” that became infamous in one American unit’s response to the Tet offensive – “it became necessary to destroy the village in order to save it.” Berlin is happily destroying the periphery in order to save it – and is distressed that not enough inferior Europeans praise Berlin for imposing discipline on the ungrateful periphery.
Third, consider the multiple fictions posing as indisputable facts in this sentence taken from the passage quoted above: “[Investors] are concerned that Mr. Hollande might choose to spend more money to jump-start the economy rather than move ahead with labor and business reforms that economists say France sorely needs to improve its competitiveness to prevent it from getting caught in the euro zone crisis.” I will start with the metaphor. When your car battery dies your car will not start. Your car may have other flaws that make it less than ideal, but if you need to get to work tomorrow do you (1) jump start the car or (2) spend the day ordering racing tires and then wait two weeks for them to arrive and be installed before jump starting the car? Jump starting cars works. We have sound empirical and experiential bases for knowing that it works. Running an international competition among nations based on a race to the bottom on working class wages does not work for the world or the working class. It is a wonderful way to make the one percent even wealthier.
Who are the “economists” who say that France “sorely needs” as its priority to cut working class wages? If international “competiveness” on working class wages determines which nations are “caught in the euro zone crisis” then this is another form of dogma that relies on TINA. Again, assume for the purpose of discussion that the economic world we live in has become a negative sum war against the working class. This is what we call the “Road to Bangladesh” strategy. The only way to win a race to the bottom is to refuse to play the game – and create a new system in which we race to the top. It is bizarre that the Berlin Consensus fundamental policy – slashing working class wages – is a straight steal from Marx’s critique of capitalism. The Berlin Consensus’ labor policy is premised on the inherent downward pressure on working class wages imposed by the global “reserve army of the unemployed.” The Berlin Consensus’ further problem is that the enhanced global competitiveness that other EU nations are supposed to obtain by sharp cuts in working class wages are supposed to turn EU nations into massive net exporters like Germany. This is a classic example of the fallacy of composition. We cannot all be net exporters. Indeed, Germany’s large net trade surplus makes it far harder for other EU nations to become net exporters. The Berlin Consensus cannot “succeed” even under its own terms for the EU, much less the global economy.
Fourth, who is the only “expert” cited to support the proposition that France has no alternative, it must balance its budget during a recession in order to avoid becoming “the next sick man of Europe”? That would be a representative of the Peterson Institute’s international program. The original Peterson Institute was established for the purpose of lobbying for balanced budgets. The Peterson Institute researcher continues the medical metaphor under which austerity is the essential but bad tasting medicine that the wise Germans took and cured their economy and are prescribing for the frivolous French. The Peterson Institute loves the Berlin Consensus. The Peterson Institute is one of the groups claiming that U.S. is minutes away from hyper-inflation and that only slashing Social Security, Medicaid, and Medicare can save the nation. Meanwhile, we continue to borrow at historic low interest rates. Their predictions about hyper-inflation and high U.S. interest rates have consistently proven false. Krugman’s (and UMKC’s) predictions about interest rates and hyper-inflation have proven correct.
I don’t mind the journalists quoting Jacob Funk Kirkegaard of the Peterson Institute. I object to his statements being treated as indisputable fact. Reading recent columns he has posted on the Peterson web site demonstrate (1) that he reads Krugman, (2) he admits former ECB President Trichet’s claims that austerity produced more rapid and successful economic recovery are false, (3) he admits that austerity produces deeper recessions and has forced the periphery into depression, (4) he discloses that his priority for the EU is to break its unions, particularly in Spain, so that working class pay can be reduced substantially and employment expanded, and (5) he argues that the reason he supports austerity for Europe is that it is a political act required to convince Germany to support a revised, more stable euro. He has an interesting background as an ex-intelligence officer for the Danish army.
The dogmatic austerity devotees who consistently get it wrong are treated as undisputed authority while the New York Time’s own expert who has consistently gotten it right, and has a Nobel Prize in economics, is ignored. (Krugman was formerly more of a deficit hawk. He now takes into account how different sovereign monetary systems, e.g., the U.S. and Japan, are from currencies like the euro and is more of a dove. UMKC economics consists of deficit “owls.”)
A related New York Times story about investor reactions to Hollande’s victory buys into austerity and the assault on working class wages even more wholeheartedly.
It cites no contrary views by economists. It does not even mention austerity throwing the euro zone back into recession and periphery into depression. It embraces TINA and the Road to Bangladesh strategy. It sees no irony in this, warning that unless France makes deep cuts to working class wages: “‘France runs the risk of becoming more of a periphery country than remaining in core,” Mr. Kirkegaard of the Peterson Institute said.” So the only way for France to avoid becoming like the periphery is to force cuts in working class wages to levels where France can outcompete China – and Germany and Bangladesh. And what does Kirkegaard think the Spanish will be forced to do under this strategy? They’ll have to make deeper cuts than the French. And what will the French do in response to the Spanish working class wage cuts? And what will Vietnam and Bangladesh do if the EU nations cut their working class wages to levels that allow them to “win” the race to the bottom? Won’t they be forced to react by further cuts in their working class wages? Who is going to buy Germany’s VWs under this strategy? To sum it up: in order to avoid becoming a part of Europe’s periphery France’s working class must become part of the third world.
I will close by using the medical metaphor. Bleeding patients, or nations, to cure them is quackery that harms the patient and the nation. Economists pushing the Berlin Consensus violate the first principle of the Hippocratic Oath – do no harm. Paul Krugman needs to run a teach-in at the New York Times for its international business reporters. They are helping the economic quacks who prescribe the snake oil of austerity and have as their real objectives (1) gutting Social Security, (2) destroying unions, (3) slashing working class wages, and (4) making the one percent ever richer and more politically dominant.
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WELL … Krugman had it right … at first … He called for the Swedish Plan way back when all this started. The Swedish Plan, used by Sweden in the early 1990’s, to fix their debt bubble was to nationalize the banks and write off all that bad debt. They recovered in 3 years. Same can be said of Iceland today … close the banks write off the debt, recover.
BUT … Krugman fell in line with Bernanke and watched while the banks were bailed and the economy failed. Must be the Princeton buddy system, He and Bernanke. Krugman then embraced the Japanese solution, budget deficits don’t matter, but ignored Japan’s 20 year dance with deflation. Japan strongly urged the FED and its acolytes like Krugman to clean the banks up.
So … Krugman touts deficit spending, while the banks suck capital out of the system. The real answer is to nationalize the banks, write off the bad debt, like Sweden circa 1992 or Iceland circa now, and then move to a sovereign money system whereby we print our own money, spend it right into the system and let the banks worry about where they are going to get their next buck.
Now … Paul Krugman who described our 2008 head on collision with depression, he now calls it a “lesser depression”, as “magneto trouble” is having “magneto trouble” of his own prescribing more inflation as a solution to our “lesser deppression”. With real wages falling and no leverage for raises only more wage and benefit cuts, food prices, health care and fuel surging in price the Nobel prize winner thinks inflation will do the trick … Krugman has gone off the rails …
Bill has spoken of a type of ‘austerity’, a type the banksters truly do not want.
Has Krugman ?
You’ll have to be more specific … I do not follow either religiously … they are both married to the private bank fractional reserve system credit and currency monopoly as far as I can tell …
We don’t need bank reform … we need a banking revolution, the revolution our forefathers fought for … sovereign currency … until we regain that right we are forever indebted to the bankster class.
Bill Black has spoken of the need for bankster prosecutions, a ‘short duration austerity’, if you will. The banksters do not want that.
Has Krug ever called for prosecutions ?
Apparently not.
If Krugman were to read Bill Black, then we might be on to something.
Sure, the austerity crowd needs to get it that taking money out of the system is not a problem solver.
Krugman needs to get it that filling up a broken system with inflation is not a problem solver either. Until the system has been purged of its criminality no stimulus will fix it.
http://www.nakedcapitalism.com/2012/05/bill-black-new-york-times-reporters-need-to-read-krugmans-columns.html#comment-709504
I’ll finish with this, mmckinl,
If Krugman poses with Eammon Fingleton of Forbes, each with a neon ‘I am a shapeshifter.’ sign hanging from their necks, and then Bill Black pens a post praising the wisdom of each, then I’ll know the script has been lost.
:)
Earth to Krugman, Earth to Krugman! We are in a less-than-heavenly situation here on Earth where real wages are falling with no leverages in sight to boost them back up — thanks mostly to globalization, which has resulted in offshoring of jobs to low-wage countries and an influx of illegal immigrants seeking jobs here.
How in the world could Krugman possibly think that inflation can get us out of this “lesser depression” we have found ourselves in — thanks to the financial masters of the Universe — when wages and benefits are going down coupled with food, fuel, and healthcare surging in price! The man who was once the conscience of a worldly thinking liberal now has the conscience of a spaced-out spider from Mars.
Ziggy played guitar, jammin’ good with Weird and Gilly,
The spiders from Mars, he played it left hand
But made it too far…
http://www.youtube.com/watch?v=FpvWZOvzums
Yes, Cynthia, yes ! Your Ziggy may be the key to this unexpected praising of Krug !
Hmmm …
lol
wrong, cynthia…
thanks to a U.S. financial sector who in 2001 controlled 19% of US economic system, but by 2007, 41%…follow the $$$$:
http://www.unelected.org/audit-of-the-federal-reserve-reveals-16-trillion-in-secret-bailouts
why do you suppose taxpayers are bailing out Wall $treet and foreign banks, documented…?
I suggest we prosecute the fraud after converting the banks to utilities and writing off the debt.
+1000
ditto
Actually, as I remember it, Krugman was in favor of a financial industry bailout, but he was also suggesting that the taxpayers deserved something for doing this, and was essentially saying that “nationalization” was not out-of-line.
He’s also been consistently complaining that the central problem has not been fixed, and that the financial industry needs to be re-regulated.
He does, however, make the point that the financial industry *is* paying back the money from the bailout: it was not just a straight giveaway… and I agree with him that it’s remarkable that the Obama administration can’t manage to articulate that, but maybe they figure they’re better off just letting people forget about it.
Incidently, he’s consistantly pointed to Iceland as a contrary example to the TINA austerity crowd.
Both this article and Krugman suffer from excess verbiage. If it Takes this many words to describe a problem,then the wrong problem is being described or the write has no real idea of the problem and solution.
Austerity might be good for writers!
http://dominiczinn.files.wordpress.com/2011/08/applause.gif
No. We need debut repudiation. We need a debt jubilee.
Krugman is just trying to hide the process through inflation.
Well then…EVERYONE should just stop paying, complying and conforming. Stop using the microchip, cut up the credit and debit and go off the grid. People are afraid to buck the system. They don’t want to give up their compliance to a system that threw them overboard 100 years ago. They like creature comforts more than freedom or, they have a false sense of security in their jobs. They don’t realize the system is out to destroy them. I J.F.K. warned of our enemies both foreign and domestic. He warned that we must have citizen militias at the ready at all times. He was a very brave and patriotic man.
what are you talking about?
What is so difficult to understand?
You, when you haven’t been taking your medication.
Anonymous coward…you trolls need some new material. People are waking up.
Sing it chitown2020! You’ve got it right, and as someone who has repudiated the system, I can tell you that I feel freer than I ever have.
You will NOT find sympathy on these boards, unfortunately. Yves talks a good game, and she knows how to work the righteous anger, but she’s in bed with the thieves along with almost everyone else.
They’re smart folks, but they’re pretty broken. Likely raised by government prison “schools”, they know no other solution than the violence of the state.
It’s quite sad, really… you and I know that freedom will never be given by a state, but must begin in the minds of men. Participating in an evil banking system while decrying it daily is the definition of hypocrisy.
Piano Racer. It is true that once you check the facts you realize that we were all brainwashed into believing lies. A great mind is a terrible thing to waste. Three cheers to those who get it.
Dear Yves, I just want to say thank you for allowing us to have a forum that allows free speech on your website. You are a true American patriot and you rock.
@ Piano Racer
Sincere question for you. According to you, who ISN’T in bed with the thieves?
(I am not only curious, I am an outsider trying to make sense of it all… which sometimes makes me a bit paranoid due to the enormous scale of all the swindles :-)
That is the sick thing about this. Wall Street has created multiple conflict of interest issues because so many are invested in these fraudulent instruments. That is the root of this cover up. Judges annuities are invested in this fraud, peoples pension plans…it is really awful what these psychopaths did. They sold alot of people an interest in a gamble and that is what they really sold. When the bubble burst so did the gambles.
I don’t know about piano racer, but you do know that Yves makes a living as a Wall Street consultant?
Inflation should work. It hurts older bondholders while rewarding newer ones. As for wage earners, the bottom end of wages will rise with inflation. Everyone else may see a lower standard of living.
This is similar to what would happen with debt repudiation… the difference is inflation is not targeted and hits everyone.
We need to get off this ZIRP if we want stablity. QE is a less effective way to manage monetary policy. Inflation is the only cure.
Inflation can’t work in Europe b/c
(i) Germans were EXPLICITY promised that the ECB would never monetize/inflate the EZ out of a crisis. Doesn’t that LEGAL promise matter, or is the German voter too “ignorant” to realize what’s good for him?
You want inflation in the Eurozone? Let’s have a referendum in Germany asking the voter if e approves of ECB monetization.
(ii) Homeownership rate in Germany is. The rate in Italy is 84%. Who’s going to get hit by inflation?
(iii) Why can’t Krugman you come out and say the obvious. That the Eurozone was a flawed construct from the beginning and that it should be immediately dissolved? The only way the Eurozone can work is via a United Staets of Europe. And in order for a US of Europe to even be discussed, the peripheral countries would have to make huge concessions, such as granting Germans command of their armed forces. Is Spain ready to do so? Of course not.
So let’s dissolve the Eurozone and move forward.
Bonds of Steel…My wallet and millions more say inflation does not work. FED monetary policy is bankrupting the people. I grew up in the 70’s during inflation and this is not inflation…this is a manufactured depression. Make the criminals pay.
Nice work in describing the symptoms, but although you come very close to one of them, you avoid directly mentioning the actual diseases: the two most effective weapons used to depress working class wages — globalization and mass immigration — and Paul Krugman’s enthusiastic support for both of these policies.
So indeed there is an alternative and it has nothing to do with esoteric economic theory. Europe (and the US) need to repudiate both globalization and mass immigration by imposing immediate tariffs on all products coming from non-First world countries and by checking the reserve army of cheap labor at their borders and severely punishing anyone who employs illegal labor. Very quickly there would be a boom as companies, hungry for access to First World markets, would start re-shoring factories back to Europe and the US. With the supply of labor limited, unemployment would quickly drop and eventually, for the first time since the late 70’s (which was when the current round of globalization and mass immigration were implemented), working class wages would start rising. Only when inflation became a real danger should limited immigration (along the lines of Australia and Canada) or limited off-shoring be tolerated again.
But as long as Krugman and most other “progressive” economists refuse to confront the two-headed beast of globalization and mass immigration then there really is no other alternative to austerity.
Sir;
Nice description of the symptoms indeed. However, the cure will have to take into account the method with which the ‘physicians’ make their decisions. The European nations now having elections seem to be demonstrating the superiority of their political processes by somewhat more accurately responding to the legitimate needs of their electorates than does the US system. Getting the corrupting influence of concentrated wealth out of the US political system should be a primary goal of the Progressive forces here. Indeed, the malogn influences of Wealth are international. A return of the Wobblies is in order.
“superiority of their political processes”???!!!!
Viceroy-Run Greece just held an election in which 66% of the voters opted for politicians who want to renegotiate the pact with Eurozone. Yet, apparently, 66% isn’t high enough. So they’ll vote again.
I don’t think you thought this through.
The US has an edge over countries like Russia because of trade policies. If immigration was the issue than Europe would be flourishing.
Of course some of the stupid tax insentive policies are fault.
I suggest focusing on the fiat currency which promotes fraud, allows people to survive via the increased use of credit, no higher income, as the root of the issue.
You block free trade and you will sink us further.
Here’s a comment that I found over at Zero Hedge yesterday, which pretty much sums up my take on Paul Krugman and serves nicely as a supplement to Kevin de Bruxelles’ comment:
Krugman has always acted on behalf of the banksters, the ultimate agent of Wall Street.
Which is why Krugman, that “free market” evangelist, has always embraced looney tunes Milton Friedman economics, while subscribing to Keynesian remedies — note the obvious contradiction?
Conscience of a Schizoid: the Paul Krugman Farce
Krugman draws parallels to the 1930s — while ignoring all the jobs offshoring — all the technology offshoring — all the R&D offshoring — all the investment offshoring!
As long as Krugman chooses to ignore this — and what constitutes the economic engine of the USA — he makes no sense?
(True, there was offshoring of investment back in the 1930s with the investment in German munitions by Brown Brothers Harriman and JP Morgan invested, or financed, Mussolini’s invasion into oil-rich Libya, but nothing on today’s order.)
With the financial sector making up far too much of the GDP — when Krugman, or anyone else, suggests further stimulus (and I heartily agree more stimulus is required) — but then suggests ONLY putting it in the public sector (teachers, police, etc.) — how in creation is that not short-sighted?
Again, Krugman ignores the dismantling of the economy with the offshoring of jobs, technology and investment and with the financialization of the economy — which essentially only profits the banksters.
Krugman, of course, has long been a “free market” evangelist — which is his ultimate blind spot (or fraudulent behavior) of self-denial and why he chooses to ignore all the variables.
With Krugman’s latest pronouncements (the crisis being more about household debt ? ? ?) he sounds like a member of the Sarah Palin School of Economics, and a close read of Krugman’s most important opinions indicates that he falls 93% of the time in the neocon camp (which is nearly the same as the neolib camp, IMO) but — and this is the clincher — 100% on the side of the banksters and Wall Street whenever massive financial speculation is involved.
H/T: Sgt Doom
Is Hedge where the bond vigilantes work?
This is not my experience after having read Krugman for more than a decade.
I think some people are too deep into “internet reality” and mistake Krugman for someone who is actually in charge of something; the ad hominems and conspiracy mongering are going way beyond reasonable speculation and into Lizard People territory lately.
It’s not like there isn’t a giant body of Krugman’s work out there on the net, publicly available, and he has documented how his opinions have changed and why. All the people piling on have nothing similar, just a lot of speculation from uninformed to unverifiable and rehashed and rebranded anti- (pick a group) propaganda themes.
That’s how the bad guys win over and over-Black Propaganda.
Zero Hedge does a good job at painting the corners and not revealing to much.
Unfortunately, I see no sign that the global elite cares about working class wages. But there is another issue, and that is job loss due to technology… with no sign that any of the new technologies will be needing a lot of workers.
Charles Hugh Smith addresses the loss of jobs due to technology in these posts…
Global Reality: Surplus of Labor, Scarcity of Paid Work http://www.oftwominds.com/blogmay12/labor-paid-work5-12.html
Why the Job Market Will Continue Shrinking http://www.oftwominds.com/blogmay12/costs-labor5-12.html
On a more positive note… here’s a great Joe Klein article on the much needed revival of vocational education…
Learning That Works http://www.time.com/time/magazine/article/0,9171,2113794,00.html
If we go down, so do they. If we aren’t buying what their corps are selling they will perish.
Their ancestors? I have eaten guinea pig in a restaurant in Ecuador. It is still considered a delicacy.
Amazing sums it up.
The article suggests that if you loose your job, just go out and burrow much more to improve your situation. Does it sounds like a bad move that will not only not resolve the situation, it will make it worst. And the worst is, when you do get a job, your debt level will be so high you would be a slave for ever. Well yes, and that is exactly the suggestion.
They will tell you that a sovereign is above all this, and that it can create its own money. No they can’t, they can increase the number of currency units, counterfeit, but cannot create wealth.
Dear Defiant;
Sorry, but you are falling into a logical fallacy here. Households and nations are not even remotely similar in their economic processes. But, to turn your arguement on its head, do you advocate the elimination of all mortgages and auto loans? If so, you have just destroyed the ‘Modern’ Capitalist System.
Would you give me your wages?
If you answer that, I will answer the mortgage question.
Ambrit….this is not Free Market Capitalism, this is a Global Pyramid scheme. Capitalism has been monopolized and hijacked by the self elected Imperialists. Those who have hijacked and stolen all of the worlds wealth and placed themselves at the top of the Pyramid scheme. Their ideology flies in the face of the Gods plan for mankind which is that everyone be free and independent. They believe that they have some freakish right to own and control everything and that we should be their indentured servants for life. Their power is in what they can make the masses believe. They pulled off this robbery via lies about money lending….a global credit scam. They never lent anyone any money. They are a small, centralized cabal of liars scammers, fraudsters and thieves whose tentacles reach into everything. Their control is achieved by brainwashing, spying, secrets, lying, deceit, fraud,robbery and causing chaos in order to steal everything. They are a giant fraud who have became massively wealthy under many guises like unnecessary wars and global usury fraud…Collecting interest on money
they never lent, sneaky socialist programs,FED monetary policy and
taxation are some of their tactics. They have used the lies of Globalization, taxation, color of law
and usury fraud to rob us of all of our wealth.
and usury fraud
Let’s make its agents eat the corrupt part; Knowingly loan into high risk, and the lender eats it, all. We’ll hang on to the legitimate and fair part, thank you.
SubjectivObject…I agree. Time to put an end to the fraudclosures and the robbery of the American people. We pay for and fund everything at the Origination. That is the ORIGINATION FRAUD. Bloomberg reported a few months ago that the FED collects trillions of dollars per month in mortgage money. So the FED are collecting usury on money they never lent and pocketing it. Their owners are laughing all the way to their overseas bank accounts while wiping out our remaining wealth collecting interest on $1.2 quadrillion (a quadrillion is a hundred times a trillion) dollars in derivatives fraud debt that can never be repaid..So they are simply pocketing what they can until they fraudulently declare America Broke after they steal it all by secrets, lies and deceit to commit the biggest fraud in history and their phony collapse of the economy. The people need to wake up and tell the crooks to pay for their own debt fraud and don’t send them another dime. They never lent us any money…the crooks.
Just want to add…all of their debt fraud is hidden in their shadow bank and their black pools of massive unsustainable debt.. How much money has the FED collected so far and we are still paying…? That is the question. If their books were opened up and audited by some honest people it would be revealed that they have no physical assets just paper backed by overselling interests in credit which is massive unsustainable debt. I think I just heard CNBC say BOFA is offering debt forgiveness and giving homes away….WOW..
Looks like principle reductions may be coming across the board…You have to be underwater and behind on the mortgage to qualify..Maybe because BOFA can’t fraudclose because they got caught. God Bless America..!
CNBC reporting that their viewers are crying foul on BOFA’s debt forgiveness plan. There is a prediction that this move by BOFA could cause rampant moral hazard. All I can say to that is what goes around comes around. Besides…these homes were never really worth the bubble price. The bubble was caused by fraud. They couldn’t get their greedy hands on enough signatures to gamble with. Greed is a killer.
There you go, austerity for bankers who make bad loans, and this ‘crisis’ would be a non-issue. This can be accomplished quite easily by abolishing the government sanctioned counterfeiting operation (fractional reserve lending).
People can still loan their own money, but it’s not in any way associated with the nation’s currency. I suspect people would be a LOT more careful about what they loaned their money for.
R. Foreman…right on
They will tell you that a sovereign is above all this, and that it can create its own money. No they can’t, they can increase the number of currency units, counterfeit, but cannot create wealth. Defiant
Then gold-mining should be banned under a gold standard? Or we should have no money supply at all because ALL money creation is bad?
@Defiant:
Nobody is asking the government to create wealth, just money. The current recession is caused by too few dollars chasing too many goods, mostly because the fiat cash has all been concentrated in too few hands, and because aggregate private debt has exceeded the current ability of debtors to service it. Money then goes not to purchasing, but to debt service, which artificially depresses demand. Wealth was not destroyed in this recession, only the accounting and apportionment of it. But money and accounting are just agreements by citizens, and they are fluid and negotiable.
WW2 destroyed wealth in real terms, killing real men and women, destroying factories, farms, and livestock, devastating public and private institutions alike, and obliterating infrastructure.
Today, factories sit idle, houses sit empty, food goes to waste, labor is unemployed, vital services go undone, infrastructure rots and rusts. These things comprise actual productive and support capacity, and they are still there. Nobody has blown them up or murdered them.
At the same time, people are putting off major needed purchases, homelessness is on the rise, food insecurity is increasing, people are going without healthcare and education is deteriorating.
Why? The recession has taken purchasing power from the 99% who generally spend it. Restore that purchasing power, and the factories would reopen, the houses could be filled, the people employed, etc.
Sovereign nations do not create wealth with the power of the printing press (although they can create wealth through institutional investment), but they enable demand. Once that demand is enabled, existing productive capacity works again and the PEOPLE are free to create wealth through innovations, etc.
So you do believe in supply and demand….
Do you not believe that if you produce it, it would sell?
Do you believe that counterfeit is moral?
Defiant…supply and demand only works if you are actually supplying something of value. We are all being supplied with a steaming hot platter of unsustainable bankster debt and we are all choking on it.
Do you believe that counterfeit is moral? Defiant
Do you believe taxation is moral? The Bible says it is in Romans 13:1-7.
Money creation by the government is at worse an inflation tax on the last receivers of the new money. Depending on the rate the new money is issued, prices might not even rise since growth in supply might outstrip the money creation rate.
Well said!
You should read the that comment carefully, Defiant. You might learn something.
Very accurate comment Sleep. Please pay attention Defiant.
This would have been a really good post if Black had just stayed clear of Krugman. Krugman does embrace classical Keynesian stimulus but is otherwise largely neoclassical in his outlook. The truth is we need something more focused than simply a generic increase in aggregate demand. Moreover, it is as mmckinl said in the first comment. As things are currently arranged (in what I call kleptocracy) whatever stimulus goes into the system simply gets sucked out of it by the banksters and the kleptocrats.
The money going into the system is going straight to the kleptocrats, no sucking necessary. The Fed is focused on life support. It is giving the banks the money to keep trading going, to keep the stock market from crashing – which it should already have done. The Fed will not do anything inflationary when it is focused on deflation. It will stop this life support for the banks and the stock market when it is finished wringing inflation out of the system. They seem to know it will take until late 2014. And we are not there yet. It is our own form of austerity. Hence the argument between Krugman and Bernanke is a red herring. Bernanke doesn’t have the tools to inflate the economy. So it’s just a pointless discussion. Only Congress can inflate us out of this crisis.
Agreed.
Black should just state his opinions, which I regard much more highly than Krugman’s, and let others make what comparisons there may be. Because Krugman is too limited in his views and would love another war to solve the economic problems, reading the entirety of his opinions and taking them as collectively wise, is uh, not wise. Plus Krugman takes all the official inflation and employment stats at face value giving the impression that he is no where near as deep a thinker as Black is.
If anything Krugman , and the other NYT writers, should read Bill Black. That’s a concept I could support.
As long as Krugman remains a virulent Democratic partisan I will remain skeptical of his wisdom. Obama loves Pete Peterson and we can all expect a big push for the remedies put forth by the so-called Catfood Commission, which Obama established of his own volition and which will further devastate the social safety net. If that’s not “austerity” than I don’t know what is (however different it might seem to the issues in Europe)… and now Nancy Pelosi has actively signed on to push it in Congress.
Krugman would like us to believe he is a “New Keynesian” (whatever that means) but as long as he remains in the Democrat’s camp he will be supporting the neoliberal privatization schemes and remedies that support the 1% at the expense of the working classes and poor.
It is impossible to believe that any mainstream economist has ever even glanced at Keynes’ General Theory. Apparently, we are now doomed to repeat the Thirties, this time as farce.
Mr. Chase;
“Doomed to repeat the Thirties. This time as farce.”
Absent a New FDR, I expect such Thirties experiences as the Epic Battle, and the Bonus Marchers to be ongoing phenomena. In Europe, those stimuli led to the Facist Parties gaining power in various nations. We all know that that play ended up as Tragedy, not Farce.
It is true that , as jake chase states, the 2nd time around it is a farce. Black did not have to mention Krugman to have a great posting. May I suggest a read? More relevant to USA environment that confronts Americans–the debt cliff and “medicated”stock markets.
David Stockman: The Emperor is Naked. 07 May 2012
Google Stockman and Gold Report.
Is there really a need for rampant racism in the article to make a non essential point? “Latin Americans knew their ancestors raised guinea pigs for food! IRONY!”
Dennis;
At least he didn’t make jokes about the Taco Bell Chiuahuah.
Krugman pans austerity because his politics dictate a strong desire for expansionist government policies at home. Arguing for stimulus in Europe ignores that in Europe countries belonging to the Euro do not print their own currency and can only deficit spend like states such as Ohio or California, or Illinois. Krugman also argues that Spain has been good with its budgets, but ignores that much of the debt is at the regional level and that debt already is a high level of GDP. France has had substandard growht for years despite high levels of gov’t spending and high personal tax rates.
It is true that austerity won’t create any near term jobs and will cost a few, but only a responsible budget at the State level in Europe will the countries get back on track os that in the future an environment conducive to job growth can be created. If European states go broke and can’t borrow nothing gets solved short term or long term.
Baloney. They need to get rid of the Euro and return to their respective currencies.
Bill Black’s strenght is in fraud, accounting , prevention and prosecution. I’m a big fan, but in the case of austerity vs stimulus he’s veered off course and has strayed from his core competancy.
Steve Keen proposes a universal and equal bailout of the entire population PLUS leverage restrictions to prevent further bubbles. Government money but private spending.
What’s not to like?
your policy prescriptions are as likely or as credible as saying lets do the
loaves and fishes again.
When the alternative is possibly WW III, I’d say that doing the right thing is a lot more probable.
The Jews in Jerimiah 34:6-22 hit upon the brilliant solution of freeing their illegally held Jewish debt slaves in order to appease the Lord who had the Babylonian Army ready outside ready to destroy Jerusalem. It worked! The Lord sent the Babylonians away!
The Jews then turned around and reneged on their pledge and re-enslaved those they had released. Oops! The Lord was not at all amused.
The orders to carry out the crucifixion came from Rome. Both parties as guilty as the other. Kind of like the Manson case. The one who gave the orders was found to be as guilty as the murderers. No different than what is occurring today with their financial weapons of mass destruction called derivatives. There is a difference between lies being instituted as fact and rule of law and being in a constant drug induced stupor like the Manson followers were. But they sure tried.
But it is all entangled because the big fraudster banks are also the big bond vigilantes of austerity. And they are also insolvent because they either didn’t know when or how to get out in time. So entangled they couldn’t get out. And in order to save themselves they are willing to kill off their very foundations. Bill Black clearly tells us that the system cannot be removed from fraudulent practices because the system is in fact based on fraud. So we will be prosecuting fraud for eternity, and in the meantime we are going to have to have some kind of functioning economy and that won’t happen under austerity.
But it is all entangled because the big fraudster banks are also the big bond vigilantes of austerity. Susan the other
Exactly! Hypocrisy much?
People,
Let’s stop kidding ourselves. If you loose your job, you buckle down on spending period. You save every dime you can save and get rid of your debt ASAP. If you can pay down the debt you pay it, if you cannot you default on it.
This will put you on a much better ssiituation. Getting more debt which will be spent on useless projects will make you worst off and Japan is prove.
There is a lot of noise around Spain pulling an Iceland. I hope the Spanish leadership pulls it for its own good. Iceland is prove that defaulting now makes more sense than kicking the can down the road only to default anyway.
What is so hard about the word “lose”? I really don’t get it.
PGeorge: I think it’s phonetics. Loose looks like it should be pronounced as lose; and lose looks like it should be pronounced lows.
It is a false analogy to compare sovereign countries that can print their own currency, like Japan and the U.S., to a household and how they handle their budget. Sovereign countries can not default.
How much lost revenue has current unemployment and fallen wages cost the government? Not just in lost revenue but in benefits required to be paid out? Our deficit during the recession has grown by $5 trillion, less than $1 trillion was spent in stimulus spending. Don’t you think that most of it is a direct result of the GFC/recession? The government has laid off 280,000 workers since Jan 2011, mostly at the state and local levels, as a result of stimulus money running out. 1% of our current unemployment is due to loss of government jobs. Now politicians are targeting federal workers.
While much of the stimulus spending was wasteful, some money spent can generate more returns in the long run. The U.S. government, for example, invested money in military research and grants to academic institutions to develop what is now the Internet. How much money do you think that has generated? Or the GI bill after WWII that gave us the educated workforce in the world? Or the building of the interstate highway system? We have deteriorating infrastructure. What if we had a jobs training program for those who are unemployed? Instead of paying people subsistence level unemployment benefits we pay them living wages and in return they rebuild our infrastructure, our roads and bridges, utility network, public transportation facilities, etc. Companies are ready to reshore, shouldn’t we ensure we have a labor force with the skills to meet their needs? Not spending the money to train a worker to become a welder if it gets his family of four off public assistance is a net loss situation. If cutting the school lunch program causes a child to go hungry, not learn, and thus not graduate from high school, what is the ultimate cost to our society? Besides demonstrating a lack of compassion for those who are less fortunate, austerity measures tend to be a case of being penny wise and pound foolish.
Well said.
“Sovereign countries can not default. ”
Really? I wasn’t aware that re-writing history was so easily achieved but there we have it.
A monetary sovereign cannot default on debt owed in its own currency (since it can create it at will) UNLESS it chooses to default.
To put it in gold-bug terms, it is like having an endless supply of gold.
But, State and local governments and millions of people are defaulting. You can only rob Peter to pay Paul for so long. We don’t have access to the FED money printing machine or we would not be defaulting. The FED is collecting untold trillions of usury and tax money per month and printing worthless money to hand us in return while dictating a fascist monetary policy on the people. Put simply….they are fraudulently bankrupting us by robbing us and they are not paying their debts that they have created. The FED and the Goverment are siphoning off our wealth through fraud and pocketing the profits.
Webster Tarpley suggests forcing the Fed to finance 50 (100?) year, 0% interest loans to the States for infrastructure spending. I would add that existing loans to the States and local communities could also be refinanced at 0% for long periods of time.
I prefer a bottom-up bailout of the entire population with new fiat (Greenbacks) but I suppose both could be done since arguably the counterfeiting cartel has cheated State and local governments too. Also, I much prefer grants than loans.
F. Beard…..We really need our own currency backed by something other than our labor. I suggest natural gas and electric revenues. Even profit sharing would be enough revenue to back U.S. BANK NOTES. All of the money the FED and the States are collecting from us they are claiming is interest money owed. That is why we are economically stagnant.
Fiat is already fully backed – by force, the taxation authority and power of government. Backing it further is thus impossible. It would thus not be natural gas backing fiat but the authority and power of government backing the value of natural gas.
Private monies (coexisting with fiat) WOULD have to be backed with something of value since force is not an option in the private sector. But fiat CANNOT be backed with anything else since it is already fully backed.
I heard on Thom Hartmans radio show a couple of weeks ago that some nations are funded by their own natural resource revenues. I think that Lybia was under Gadaffi. It may be time to declare our National Sovereignty and institute a new monetary policy.
A country’s money is also informally backed by what that money can buy. In the case of State owned resources, a subset of the backing by force is the requirement that those resources can ONLY be purchased with the State’s money.
F. Beard…sounds like a trap that needs to be removed.
Except the US doesn’t issue its own currency, only coin. The US is not a monetary sovereign in the classic sense of the word. It works thru a private banking cartel which has interests other than the health of the US, it gets paid regardless of what happens. The govt borrows its money it issues. Its taxing power is far below what it actually spends, mostly due to military and economic coercion and reservse currency status. It can default though and do so very very quickly, the whole mess is a house of cards with fraud as its foundation. It doesn’t even have to go as far as any real serious devaulation of the currency either, people and nations simlpy stop doing business with you and accepting your currency as worth trading goods for and its game over.
It doesn’t even have to go as far as any real serious devaulation of the currency either, people and nations simlpy stop doing business with you and accepting your currency as worth trading goods for and its game over.
Except the US dollar is needed to buy US goods. The last I heard people need to eat and the US produces a lot of food if nothing else.
The U.S. CONSTITUTION gave the power to CONgress to coin the currency……What did we use as currency before the FED hijacked the Monetary system and the country….?
Beard,
You know better than that. Lying to make a point is lame. A sovereign’s fiat is like a never ending supply of gold?
Last time I checked Zimbabwe was a monetary sovereign. So what happened there?
Beard,
Can the US buy more goods if we doubled our currency?
A sovereign’s fiat is like a never ending supply of gold? Defiant
What? You think supply and demand doesn’t apply to gold but does applies to fiat?
Can the US buy more goods if we doubled our currency? Defiant
Eventually yes, if the doubling occurred at a rate less than or equal to the real growth rate of the economy once all existing capital is utilized.
But even if the doubling occurred instantly, it is possible that the new amount of money might buy more than the old amount.
With money, real growth and the money supply leap-frog each other. A growth in the money supply allows more employment which allows more real growth which allows more growth in the money supply. Ideally prices should remain constant but there is bound to be some overshoot of either real growth or the money supply.
You like to play games Beard.
You know full well that production creates wealth, and wealth is transferred using currency. Therefore wealth/savings is infinite, but currency is not. Issuing more currency is criminal. Of course if you give time more wealth will be created, but it has zero to do with issuing more paper and all to do with swaeting your balls off. Why are you Marxists so afraid of work? And don’t say no because the only group happy with government deficits are you. With regards to helping a fellow citizen, that is my damn choice and not the government.
You propose the government rapes those people by devaluing their savings so that they can send you a check for sitting in your couch and looking pretty. You are no different than the corrupt bankers.
You know full well that production creates wealth, and wealth is transferred using currency. Defiant
Yes, currency creation does transfer wealth. For example, if new common stock was issued and used to pay a new employee then wealth would be transfered from all existing stock holders to that employee via stock dilution. However, if the new employee is productive then the stock will eventually recover from the dilution plus some.
Therefore wealth/savings is infinite, but currency is not. Issuing more currency is criminal. Defiant
That depends. The common stock example above is perfectly ethical. As for government, it has the authority to create new government money. And government has the authority to tax too, even my inflation
Of course if you give time more wealth will be created, but it has zero to do with issuing more paper and all to do with swaeting your balls off. Defiant
Wrong. The employee in the common stock example was paid via a “dilution tax” from all the existing stockholders. Presumably the employee will create more wealth and cause the share price to recover. As for government, it might tax by inflation to build new roads or power plants.
Why are you Marxists so afraid of work? Defiant
In fact, those against money creation are the lazy ones. They want their money hoards to gain value risk-free by free riding on the risk-taking of others. cf. The Parable of the Talents ( Matthew 25:14-30 ).
And don’t say no because the only group happy with government deficits are you. Defiant
Not at all. The financial markets crave a risk-free return from government. It is welfare for the rich.
With regards to helping a fellow citizen, that is my damn choice and not the government. Defiant
Well, it’s a sad truth that the government enables the rich to steal from the poor. It’s not unfair that the poor get something back via government.
You propose the government rapes those people by devaluing their savings so that they can send you a check for sitting in your couch and looking pretty. You are no different than the corrupt bankers. Defiant
I take it you concede the debate.
You’re welcome for the free lesson in monetary theory.
How can anyone win you on a debate if for you possibilities are endless but my are bound by reality?
For you, its ok for unions to steal but not bankers. This even though it is a fact unions steal from tax payers and sleep with politicians.
It is immoral for banks to issue currency because they are counterfeiting and charging interest. But it is ok for governments to counterfeit and take from savers and give to the non-savers. Stop being cute about the savers trying to make interest and tell me how taking their hard earned wealt (charging 0 interest is a crime, but taking it from the to hand over to others is not.
This is not about who wins the debate. Originally, I thought our disagreement were due to differing methodologie, but if you read the points above, it is clear what your intent is. Anyway, your we Americans know that all you Marxists do is paint a pig with lipstick. You know full well it is a pig, but you stand to benefit.
You will have to one day explainwhy you dare use the words of the lord to promote this garbage preach. These stupid run around games might work with me, but it wont work with him.
You will have to one day explainwhy you dare use the words of the lord to promote this garbage preach. Defiant
My ideas on money come from the Bible to a very large extent. I dare not plagiarize.
I suggest you read it too. Proverbs in an excellent place to start.
Lucy,
I don’t mean insult, but do you know what currency is? Do you know what makes a Buck worth a Buck?
Do you know that a chicken is a chicken whether its cut in one piece, ten pieces, a million pieces?
Do you know that for a government to run a deficit, it has to burrow from bond holders or issue more currency, which dilutes existing currency and not resolving an iota of the issue?
This is all common sense 101 people. Basic math. 2 + 2 math.
This is all common sense 101 people. Defiant
No it is corn-ball economics.
Increases in the money supply are an inflation tax that can be used to build more chicken ranches and thus increase the number of chickens available such that chicken prices drop BELOW what they were. So the “tax” is repaid with lower costs. It’s called investment.
So yes, an increase in the money supply can cause an increase in real wealth.
The question is not are money increases good but how can money supples be increased ethically.
or issue more currency, which dilutes existing currency and not resolving an iota of the issue? Defiant
You assume that the new money is distributed at a single moment. It isn’t. The first receivers of the new money get to buy at old prices. The last recipients pay the highest prices.
So again the question is how money shall be created ethically.
Defiant, you need to learn how the modern monetary system works. You’re way off base. I recommend reading Bill Mitchell’s blog.
Bravo, should be required reading not only for NYT econ reporters but anyone with a working brain. I may pass out copies at the next OWS rally.
*ahem* Excuse the snark, but:
>very good
>economist
>Paul Krugman
Pick one.
What “German-imposed austerity” are you fantasizing about? The other eurozone nations can of course spend as much as they want, and thus increase their debt levels even further. Which is what they actually do, BTW. No “German imposed austerity” whatsoever.
“destroying unions” –
Not necessarily a bad thing.
If the bankers’ union, the counterfeiting cartel, was destroyed then the need for all other unions should diminish. Why? Because the distinction between capital and labor would diminish over time as business was forced to share equity with workers.
It all goes back to the banks.
Well said, F. Beard. The only reason why labor needs to unionize is to act as a counterbalance against the unionization of capital.
So, you oppose democracy and support capital’s attempt to annihilate labor, do you? You yearn for a neo-fuedal system where all surplus by producers is confiscated by rentiers, do you? Justice and freedom are anathema to you, right?
And tellingly, Gil Gamesh, that model is most similar to the military.
An endless supply of ‘Annihilates’ to trawl the internet to front upon you what has been/will be done to them.
Wonderful, the Clarity, isn’t it ?
“Justice and freedom are anathema to you, right?” –
/chuckle
Nice try, but no, LM-2 filings are all I need to see for union hypocrisy, and then cross refernce with my State Legislator Campaign donation list.
http://kcerds.dol-esa.gov/query/getOrgQry.do
http://www.efs.cpf.state.ma.us/SearchContributions.aspx
I used AFL-CIO, and I find it ironic and amusing when I see organized labor complain about the 1%, when it’s clear that some of these cronies are the 1% themselves. All the while piling their member paying dues money to their crony friends on Beacon Hill for labor friendly Legislation.
If you want to union cheerlead, that’s your right, seeing them destroyed is mine. Wall Street or “Organized Labor”, they are both thuggish, and I hope to see both of them, and their political enablers burn and die.
I have no love for unions or union bosses, but I’d much rather work union hours for union pay and benefits than be a part-time independent contractor with long hours for crap pay and no benefits. That’s what’s happening as most union jobs are disappearing.
Yep, I think the posts above sayit all. I really like Black’s take on fraud, but he seems to miss the essential point, at least in my mind, that much of the spend, spend, spend, advocated by Krugman seems to be siphoned off by the very fraudsters that Black bangs on about.
I seem to remember Krugman calling for a housing bubble to get spending going and we all know how that one turned out.
Sorry Bill, but stick to the fraud agenda. It is what you do best.
Bill Black is carrying his basic argument to a higher level. In this article he looks at the idiocy of a sovereign population not having a sovereign currency and therefore not having control over their national deficit. The European quandary. And I’ve been thinkin for a long time that our private banks and Federal Reserve function as emperor, leaving our nation and our states without political recourse. This might even be OK if they weren’t such big fat fraudsters. But they are.
In order to control fraud, which has now gone critical, i.e. global, we have to do more than prosecute fraud. We have to take control of our own finances just to protect ourselves until these problems are solved. Because one thing is certain, every country will do some cheating with their accounting. Bill Black probably knows that better than anyone. We have to do our fiscal housekeeping. We have to push for regulation to prevent fraud on this kind of scale again.
Ann Pettifor laid it out pretty clearly. Control capital flows so devaluation and currency wars are not profitable to currency traders and international corporations. Control private bankers’ creation of credit at public expense. Keep interest rates very low and stable to encourage a level, secure playing field. And forgive debt when necessary. Much like Steve Keen’s proposed solution to maintain an equitable balance in an inherently unstable system.
Keep interest rates very low and stable to encourage a level, secure playing field. Susan the other
How? Unless everyone has EQUAL access to credit REGARDLESS of ability to repay then credit is a means by which some are allowed to steal purchasing power from others.
What is it about the “competitiveness” ruse in the public psyche that makes it so effective at wealth inequality? I am dumbfounded that in this age of Internet news access and the increasingly connected global village, somehow the masses are still swallowing the bitter “competiveness” pill.
The “competitiveness” argument implies that there is someone “out there” that is “winning” the economic profits over ‘us’. If there is one unifying condition across the nations of the world now, it’s financial hardship. The suffering is everywhere. Am I missing something? WHO is winning, exactly? And please don’t point to some third world jewel where wages have quadrupled from two dollars to eight dollars a day, or some new highly levered oasis where the 0.1% have built a sky scrapers and casinos to sell rolexes and maseratis.
Somehow, simultaneously across the globe, people have bought into the the thesis that the only way to survive is to work and give more, for much less. We are told that the way of life that generations of our ancestors have built is no longer realistically deserved. Labor must get used to working more hours, for less pay, less medical insurance, delayed or denied retirement, and less safe conditions in order to “keep up” with some increasingly fictitious ‘competitor’ that is outperforming us. Further, while we are out competing away, we watch our roads and schools disintegrate, and our local governments consider reducing garbage pickup.
We are not being outcompeted, we are being levered into a panicked race to the bottom. The greater the disparity of wealth, the easier it becomes to lever the masses into a slavery spiral until wages can no longer sustain. History has demonstrated this over and over again – often with horrific consequences. The longer we wait to confront the economics truths of our condition, the more dangerous tomorrow comes. However, disaster need not be inevitable. I second the motion – (Everyone) Read more Paul Krugman!
WHO is winning, exactly?
The 0.1% are doing quite well, thank you very much.
And may I emphatically add: Read more Yves Smith too!
Nice breakdown of “competition.” There should be much more competition to see how best to accomplish social goals, instead of dismantling them altogether. I think it might be even better to read Steve Keen. He’s the only economist who takes a clear look at debt and it’s long term effects. Since we all acknowledge we have just suffered a huge debt bubble. Due mostly to 40 years of deregulation.
See the reporting today on the Greek elections. Not a mention of the brutal effects on the populace. Just deep concern for the banksters. Including this bit:
“Although Germany is still the strongest economy in the euro zone, a handful of influential hedge funds, including one run by the Wall Street investor John A. Paulson, have started to bet against Germany and the ‘core’ of strong wealthy northern countries in the euro zone, with the view that the crisis will become more serious and spread further.”
Confidence demons?
Of course hunter-gatherers didn’t need money to motivate each other to get the necessary tasks of life accomplished. In their small groups other means of motivation sufficed.
But’s its funny to think about the parallel.
What if instead of those personal relationships and need for survival that drove their actions… they used little bright green rocks?
Then imagine a time when they had plenty of huts and plenty of food… but all the rocks ended up in one hut because their ‘rock system’ was screwed-up.
And the guy in the hut wasn’t using his rocks cause he was just fine.
But everyone else had no ‘rocks’ to get them to do things (remember in our weird tribe they only use rocks to motivate themselves to produce anything).
So they have plenty of food… and plenty of huts… and they even have plenty of rocks!
But they starve.
Cause nobody could figure out to either get the rocks from the greedy bastard hoarding them in the hut…
Or say… “to hell with these green rocks” let’s start using these blue ones… we’ve got plenty.
You’re trapped by your belief that ‘rocks’ are the economy… and even worse… by your dependence on a very self-interested and corrupt ‘rock-creation’ system.
Personally, I don’t think any self-respecting hunter-gatherer would ever let things get so out-of-hand and disconnected from reality.
And if I was the guy in the hut with all the rocks under those circumstances I’d be very, very nervous.
P.S. the user-owned ‘virtual cash card’ system enabling meaningful citizen lobbying…(and other commons-related functions) no matter what currency its operating in… because of the nature of the network created… acts as a root structure for establishment of an eventual ‘private data market’ under a commonly held structure.
While I can understand opposition to citizen lobbying (via the addition of another avenue for money into politics) the potential can’t be denied. And the lack of attention to that potential is frankly surprising.
When you can click a link in an email and with that click securely and easily contribute as little as 25 cents in a lobbying effort…
You’ll be a lobbyist.
Join the game or lose it. Because they’ll play it whether you’re there or not.
Unbelievable to me that after 5 years not one inquiry from media about this potential.
Or one kind person to tell me what I must be missing to explain this constant silence.
How A Private Data Market Could Ruin Facebook
When you can click a link in an email and with that click securely and easily contribute as little as 25 cents in a lobbying effort…
You’ll be a lobbyist. Tom Crowl
Splendid idea!
Details?
Bill Black wrote: “Democracy was unreliable, indeed dangerous, so the central banks had to be “independent” of the democratic process (and wholly dependent on the largest banks).”
Our central bank has been set up to be at least partially part of the democratic process, having seven of the 12 FOMC members appointed by the President and approved by the Senate. The other five are members of the banks. Currently two of the seven appointed positions remain unfilled. These seven positions traditionally have come primarily from leaders in economic studies, to balance out (and override) the interests of the banking industry. Having seven votes vs. five, the appointed positions would have more weight in votes, which especially now is critical when regulation the industry opposes is attempting to be introduced, e.g. the Volcker Rule.
Our democratic process however has been subverted by the current political gridlock. While there may have been legitimate objections to the appointment of Diamond, Obama’s latest two nominees are either a Republican or have served under a Republican president and should be shoe-ins. Yet their appointment appears to have been blocked by Sen. Vitter’s motion, now requiring a super-majority. Thus the positions will go unfilled for another year, until after the election, which is the intent, in hopes of Romney winning. It is no longer sufficient for an appointee to be a moderate conservative, they must be ultra-conservative, i.e. hawkish on the mandate to target inflation to the point of ignoring any mandate to target unemployment. There will continue to be votes to postpone implementation of any reforms on banking (first the bankers demand all kinds of exceptions and loopholes, then claim the rules are too complex to implement), as the industry continues to hold undue influence in Fed votes.
Black is correct in pointing out the democratic process is more intact in Europe. The voting public here in the US remains generally apathetic and uninformed. While they are beginning to vote down austerity measures, whether Obama or Romney wins the election, we appear poised to head further down that road. Our elected representatives are debating whether they should impose cuts to our massive defense budget or make cuts to what little safety net we have in place, and even Democrats are talking about the need to slash social spending. Any subsidies for the working class/poor must be paid for, such as student loan subsidies, must be “paid for”, by other cuts to the working class/poor (preventive health care). WTF? We are loaning them money we currently borrow at 2.5% and they repay at 3.4%, not to mention its an investment in our future. Yet there is never mention of needing to “pay for” such things as subsidies that benefit the elite, e.g. oil industry. We won’t take any lessons from Europe’s experience with austerity measures, as always thinking we are the special case. Come November, expect the current policies to be expanded in the U.S.
CNBC just said the economy is stalling. Let’s cut the crap and be honest here, the FED is robbing and bankrupting the American people and the Politicians are allowing it. The latest rumor is the economy is going to collapse in the Fall and things are going to be so bad that there is not going to be a Presidential election in 2012. Sounds like a dictatorship, a big idea, a New World Order.
Nothing like a good race to the bottom to excite the media and the ruling class.
Bill,
Glad to see you on best form again – although Krugman really does not get modern banking if we base this upon his dialogue – or lack thereof – with Prof. Steve Keen recently.
Lovely .. you cant wait to see this.. http://www.youtube.com/watch?v=nBfDwieYRrM&feature=youtu.be
Simple explanation of economics and politics. Imagine a man sitting on a pile of food surrounded by a crowd of people. If their bellies are full they will shake their heads and wonder why he has so much more than he can possibly can eat. But if they are starving he must be willing to share or they will take it from him by any means possible.
YS – Well done! All your acolites are bashing Krugman in response to a -Gasp!- pro-Krugman article in NC. The training is complete. The dogs remain seated on command in the face of on-rushing traffic.
Have you realized yet the author was baiting us for his lols ?
So that would make the dog .. you !
You might at least spell acolytes correctly.
And, the acolytes always bash Krugman regardless of the overlying article since Krugman is almost always insidiously wrong.
Class war. Capitalism is destroying itself, right before our eyes. The end of the end of history, and one hopes, the resumption of progress (liberty, equality, fraternity) for the most of us.
It is the 5 corporate monopoly that has hijacked Capitalism that is holding it hostage. That is the problem when corrupt, and greedy traitor politicians allow our foreign enemies who hate freedom take control of our currency.
This all seems to go back to the failure of most individuals to understand money as a catalyst between resources and labor.
Neo-Liberals are big on de-regulating and letting the financial sector create as much money as possible for producing private sector goods and services and completely missing the point this ability can be abused through blowing inflationary asset bubbles that impose debilitating costs on the real economy.
On the other hand they pretend government should be severely restricted in being able to do the same to create public sector goods and services on the basis that they’ll always abuse the money creation power and impose debilitating costs on the real economy.
This is all nonsense. There’s just one money and better ways of regulating it’s creation and apportioning its use have to be found to reduce this punishing regime of increasingly frequent recessions.
There’s just one money Schofield
That’s a big part of the problem, imo. The banks screw us with inflation and deflation in that money and we can’t escape it. Likewise if the government mismanages that money.
The solution is coexisting government and private money supplies with government money only legal tender for government debts and private monies only acceptable for private debts.
Government could still tax because every private money of consequence would have a free market exchange rate with fiat.
But the above is a long term, optimum solution. Right now we need to ban any further credit creation and bailout the entire population equally from all debt to the counterfeiting cartel, the banks.
And it is clear that separate private treasuries are feasible via the internet, maybe with just a low-budget kiosk on the corner as a “registered place of business”. In order for a current “bank” to get a charter they have to commit to all sorts of fiduciary responsibilities. (Which we now know are never enforced, but they could be.) The model is already in place, just have to remove the conflict created by this quasi-private system. In fact, all the “banks” we now have could just scoot over to the new system, stripped of guarantees by us taxpayers, and carry on. If they dare to do so.
“Austerity (some combination of cutting government spending and increasing taxes) reduces private and public sector demand.”
Do you have any evidence of spending cuts?
Spending cuts at the Pentagon/Security State? Nope. Insane comparisons of F22s to food stamps and basic survival needs? Yeah.
We long-since turned around and came back across the Rubicon. Realizing that old concepts of killing our “enemies” was, in the long run, a losing battle at best and mutual annihilation most likely. So what is this last strange military campaign in the Middle East? And our silly posturing in the Pacific? It is a move by carbon-energy purveyors to secure a position of control until they can achieve a new one in clean-energy. I wish they would just come clean. Clean being the operative word. A clean planet. And use the awesome power of our military industrial complex to go to work. Real, constructive work. Like fix Fukushima NOW for starters. It’s a long list.
I no longer read the drivel in the NYT – For news I go to the Guardian, FT and NC of course
You know who owns the Guardian don’t you?
Bill Black opened my eyes as far as control fraud. He was bang on in his synopsis. But, in this article he says:
“Austerity during a weak recovery from a Great Recession will cause intense ‘suffering from recession and record unemployment.’ That is a fact as we have taught it in economics for over a half-century. It has strong theoretical and empirical support.”
In the past, when a patient had a very high temperature, the practice was to wrap them up in blankets, increase their body temperature, in order to force the disease out. This practice proved disastrous. In time, with research, they discovered that the key was to LOWER the body temperature.
Whenever there is a forest fire, the practice has been to suppress it, put it out. Scientists are now discovering that fires are a good thing, that it is nature’s way of getting rid of deadwood on the forest floor, ridding the forest of parasites, and adding much-needed nutrients.
Mr. Black, we have a forest overrun with parasites (the sociopathic bankers), we have deadwood (people who took on debt they could not pay back), and the forest is starved of nutrients (trust, savings, independence).
The government is trying to suppress the fire, keeping asset prices up – in essence, doing everything it can to stop the fire. And look at what has happened because of this: the parasites STILL have a firm hold.
Parasites thrive in diseased conditions. They suck the life out of the environment. I say let the fire rage. The responsible people will start the process over again.
Bill Black stated this morning: “To know the Washington consensus as a regular citizen is to hate the consensus….It called for a minimal state and an all-powerful private sector.”
Yesterday morning Glen Greenwald in his article “The American Character” quoted Fareed Zakharia stating:”The rise of the national security state has entailed a vast expansion in the government’s power that now track every aspect of American life, even when seemingly unrelated to terrorism. Some 30,000 people, for example, are now employed exclusively to listen in on our conversations and other communications in the U.S.”
What erroneous ideological assumptions have allowed Bill Black not to be able to see the collusion of powerful private financial interests with powerful public institutions (like the Treasury, Federal Reserve, Homeland Security and the Police/ Military services) to create a new political system which is now intent on monopolizing the economic surplus and destroying the rule of law?
The erroneous assumption is something along the lines of “If only the right people were in charge.”
Nevermind that these people do not exist.
I hope that the line about the Washington consensus pushing for a minimal state was intended as comedic relief, Bill.
The Dual State: A Contribution To The Theory Of Dictatorship
http://books.google.com/books?id=1Mkwe5DY4kYC&printsec=frontcover&source=gbs_ViewAPI#v=onepage&q&f=false
Originally published: New York: Oxford University Press, 1941. xvi, 248 pp. This classic study is one of the standard works on constitutional law, jurisprudence and judicial administration in Nazi Germany. Also considered one of the finest analyses of totalitarianism, it was written in Germany in the late 1930s and completed in the United States in 1940, where Fraenkel [1898-1975] lived after fleeing the Nazis in 1938. The title derives from Fraenkel’s thesis that National Socialism divided the law into two co-existing areas. The first of these, The Normative State, protects the legal order as expressed in statutes, decisions of courts and the activities of administrative agencies. Its counterpart is the Prerogative State, which is governed by the party. It exercised “unlimited arbitrariness and violence unchecked by any legal guarantees” (xiii).
When a process break downs, and fails to maintain its structure, in our case, global capitalism, there is a bifurcation. What the global system is doing during this period of discontinuity is hard to analyze because its shape is being shaken apart by its inability to sustain itself anymore with debt. The global system has exceeded its debt service capacity and will not grant a recirculation of money back into the system via taxes or wages to pay the debt. And since debt is the structural feature of political control, to forgo debt is to willingly lose power. FDR had a solution which is now being totally rejected but there is not any new system being built, just the old one completely being dismantled with no particular direction we are heading toward but the unknown unknowns.
The New Deal was not just for the USA, but for the entire world with the dismantling of the British Empire and European colonial system and replacing it with a United Nations intra state system. The World Bank and the IMF were the economic and finance components to the new political arrangement. None of that works any more because of sustained attacks by the markets.
The so called rule of law exists except when the global system attempts to reorder institutions under market control. The clearest point of conflict between the nation state and the markets is the MERS system. For the most part, there is a rule of law, except where it is deemed, arbitrarily so, to be functionally obsolete in lieu of internet platforms to increase the velocity of capital throughput. It is not seen as looting, or stealing or avoiding the rule of law, in the dual state, it is the new rule of law emerging, breaking away from the old one.
You have to pick a side. You will either plan or planned for. You have to vote. You have to insinuate yourself, perhaps into both states simultaneously in order to influence the outcome. Sometimes you are a wave, sometimes you are a particle, but in this dynamic, you still have to decide where you want things to go, no matter the mode you take to ride.
Thanks for the link to this vitally important book. Would you say that “The Dual State” began in America, in earnest, under Nixon-Kissinger? Under Bushbama, “The Dual State” for Totalitarian rule–through the simultaneous destruction of the Law and construction of the New Nazi “judicial administration” of the Overlords of organized crime–has reached its apogee as the Fourth Reich in America and the world. Total destruction of our laws has been strategic.
The book might be the blueprint for GHW Bush’s criminal “NOBILITY” NWO. The Axis Powers: City of London (finance), D.C. (war/police), Vatican City (religion).
This book is not a blueprint but a history. It is an empirical study of one society in crisis, but a society that did not last that long. However, it does provide a heuristic to scale up to the perspective to begin to try to make sense out social change within a modern major European power.
If you want to see something less theoretical, here is a link that will begin to explain the demarcation, more or less of the transition period. The Nixon post Bretton-Woods period is a signpost, in that it shows a critical departure due to the unsustainable nature of the post WWII arrangement. The markets begin to attack the international system. It coincides with the Powell Memo and the fall of the liberal consensus which brokered the welfare state as a safety valve against socio-politcal agitation for structural change. Widespread prosperity, social programs, including the private sector promotion of homeowner ship blunted the need for organizing to redress grievances. With social security and increasing wages and opportunities via the government, why join a union when you just had to vote in pols who would defend or maybe even expand the higher quality of life and status in the middle class. Of course, the Reagan Revolution reversed and began the formal dismantling we see unto this day.
http://www.sagepub.com/dicken6/Sage%20articles/Chap%203/chap%203%20-%20Carroll.pdf
Abstract
This article presents a network analysis of elite interlocks among the world’s 500 largest corporations and a purposive sample of transnational policy-planning boards. The analysis compares the situation in 1996 with 2006 and reveals a process of transnational capitalist class formation that is regionally uneven. Network analysis points to a process of structural consolidation through which policy boards have become more integrative nodes, brokering elite relations between firms from different regions, especially Europe and North America. As national corporate networks have thinned, the global corporate-policy network’s centre of gravity has shifted towards Europe, both at the level of individuals and organizations. Although this study finds a modest increase in participation of corporate elites from the Global South, a North Atlantic ruling class remains at the centre of the process of transnational capitalist class formation.
PT, I said “blueprint,” because the book’s Introduction looks like the playbook for what has happened to us since Nixon-Kissinger, entailing what I now believe was a strategic, purposeful destruction of the Law, and the supplanting of the Law by what might be called “StateCrime.” This is plan that Hitler fronted for Reich III, and since the same banker DNA profiteering is involved, I can only conclude that this has been the plan since Nixon-Kissinger’s brazen crimes set the stage for Hitler’s ultraconservative authoritarian NWO to be brought into Reich IV, by the Way of “legalized organized crime” through the “Rentier” class and their Agents in war industry, banking and government.
The Introduction to the book shows the plan, an effective blueprint in words, meant to destroy the centuries-old canon of Western Law and to construct its antithesis, in order to establish a totalitarian dictatorship by “Extraction Capitalist” .01% Nobility and their .99% Agents in the Third Reich, and carried through to the Fourth Reich, which is what we have now.
This book is the KEY to understanding the purpose of the total destruction of our system of Law, simultaneous with the installation of government by the global organized crime syndicate as CorporateM-IFinanceMonopolyState for the sole profit of the .01% “Nobility” DNA and their .99% Agency.
Are we determined to be BLIND to what is actually going on, as in 1933?
The imperialists at the top of the pyramid scheme are the masters of deception. Like the gold standard and the land Nixon gave to the U.N. in fee simple in exchange for credit….Who said…..? They didn’t call him Tricky Dicky for nothing. The only thing that trumps their Farris escheat or eminant domain or an Alloidal title… What a scam…they get you to buy the land then they charge you rent called property tax forever. Now they are trying to do this scam with our homes and businesses..etc..and the crooks never lent a dime.
I meant to say escheat, eminent domain or Alloidal title trumps fee simple deed. Adverse Possession can be used to retake your property as well. I have no know idea how that word Farris got in there!
Hey Paul,
I would argue that the “progressive” community has yet to come to terms with the reality of the market/state as a new political regime, Somehow their transcendent state was to be the agent of our collective liberation and instead it has become the handmaiden of the market.
It is my guess that most advocates of some type of social democracy continue to ignore the reality of the similarity and linkages between the centralized planning of “liquid” capital and the increasing centralized planning of the Federal Reserve and the Treasury in conjunction with the expanding surveillance of executive power and the military,
Paradoxically, as trust begins to break down on a massive scale, the market increases the power of the state, whose jiggered laws are now required to secure formal contracts among the chosen crony private firms and to enforce marketization within the public sector.
More and more state intervention (of whatever kind) protects big capital from the social protests to which its own excesses originally gave rise and therefore helps to sustain the existence of this new regime (the market-state) while preventing the emerging of any serious alternative.
From my perspective, as this financial/economic/political/cultural crisis intensifies, progressives will more and more be seen as apologists for the status quo.
William K. Black, Michael Hudson, and Steve Keen, have shown how the so-called “Market State” is a fraud. What we have is a Crime State, Q.E.D.
“It reminds us of that old rule formulated so eloquently by Fernand Braudel: capitalism is not the market economy; it is the market economy plus the state. And we know very well how the universalization of capitalism through the extension of free trade in the 19th century was carried out at gunpoint. It was of course the military force of England that imposed free trade on a range of countries and even continents. So yes, I think we should rediscover this obvious self-evidence so well articulated by Fernand Braudel, this dialectical relationship between market and state.”
http://www.theory-talks.org/
This statement lifted from a brief interview with sociologist:Jean-François Bayart on Globalization, Subjectification, and the Historicity of State Formation
Hidden from site are profoundly significant scholars, who are not from the field of economics but have an absolute clear understanding of that discipline, but not as mathematical modeling computation actors. The problems discussed here beyond the everyday policy pushing and shoving matches over banks, finance and markets and economic policy choices, have long been study, but again not by MBAs for the most part who have really good vo-tech training for Wall St and other cadre positions of the liberal world system. It is a struggle to get the money minds to meet with and understand the social and power researchers, but to understand well, if not in a deep academic manner, all three mindsets must meet and practice together the fine art of social science. Plan or be planned for.
“the market increases the power of the state, whose jiggered laws are now required to secure formal contracts among the chosen crony private firms and to enforce marketization within the public sector.”
Can we even really call it marketization if there isn’t an open bidding process but instead, as you say, the outright handing off of state properties and contracts to a small handful of chosen beneficiaries?
A more recent historical comparative for descriptive purposes (at least for this particular dynamic) might be what happened in Russia–and with some of the very same actors involved.
Maybe who runs Goldman Sachs or who gets tenure at the Harvard Business School, and the management of both these nominally “private” organizations (among others), has become a matter of national (and global) public interest.
I also agree about US progressives, who continually avail themselves of the legacy of FDR (albeit largely reduced to public welfare spending) but who have no concept of anti-monopoly and trust busting–the efforts of the Other Roosevelt– of WPA workfare but not the urgent agenda of breaking up concentrations of corporate/financial power and returning the cronies to the vicissitudes of what we call “the market.”
When the Republicans wanted to eviscerate the remains of the UAW at GM they pounded the table for a “controlled bankruptcy” that would put the union contracts on the negotiating table in the face of the progressive assertion that such a process would be too damaging to the economy of the midwest.
Yes, I know the R-Party are union busting, crony favoring hypocrites, but I still think putting the zombie banks through a similar process–firing management, breaking them up and returning them to the market– is better than folding them unaltered even more firmly into the center of the state as did the Obama Administration, whose Dodd-Frank “regulation” merely institutionalized the too big to fail concept and the state’s obligation to bail out malign actors in the finance sector.
This is now fraudulently touted by Obama fluffing PBS as the only possible alternative to total chaos, while over on this thread a particularly bracing former Republican is caving to the one size fits all (allegedly) “progressive” government spending nostrum.
Apparently UM-KC can’t even keep multiple local tools in its own toolbox, never mind master the Annales school.
I have the utmost respect for Black. However, in his condemnation of Germany as the villain in Europe, he accepts the global bank mob’s conveniently provided target, not the correct target, for revulsion.
Black himself alludes to the real bastards. The “Washington Consensus” was coined in 1989 to describe the rules of the game as determined by US globalists – the product of a relentless rise of chieftains of elite power who had just hammered Latin America into the ground at the cost of hundreds of thousands of lives and 20 years of crushing “austerity”, rolled over the Soviet Union with mass culture and trillions of dollars of completely useless military trinkets, was about to kick Iraq into the previous century, ran the world’s money systems and much, much more.
The same globalists that took a pass on a small intervention that could’ve saved 800,000 Rwandans at virtually no cost, had perfected what came to be known as financial weapons of mass destruction. And they were about to launch the WTO – designed with only 1 objective, a US-based global Market State/Empire driven by huge and increasing asymmetrical advantages based not just on the sort of privileged position the left has long condemned, but also a technological revolution that amplified power in entirely new – and ominous – ways.
The technocrats in Europe and the banks advising them bought fully into the fallacy that financial/corporate globalization would ensure the “First World” continued to prosper, even though premised on supranational corporate imperialism. They built a system based on the rules according to the IMF/BIS etc., ate huge helpings of financial poison on top of their own merry-go-round of A owing B owing C owing D dozens of times over, but “incredibly”, they too had ignored the enormous chasm globalization had opened up under “First World” prosperity as corporate power took the WTO far, far more seriously than the political idiots/thieves who signed off on it. And make no mistake, Europe, you did sign off. The Treasury Secretary will be happy to provide a copy…
Everyone forgets that in late 2008 and well into 2009, Merkel was pushing far, far harder to see some knocking of bankster heads and bringing in tough new international financial regulation. She was consistently rebuffed by Geithner. And she of course witnessed the magnitude of the heist pulled off by Paulson, Geithner et al. This was also the Geithner who essentially calls the shots at the IMF (he who pays the piper) which for some odd reason, has consistently supported the vicious rules it had helped write (in the sense that all these institutions are intimately connected to US power and policy).
http://www.nytimes.com/2009/04/03/world/europe/03summit.html?_r=1
http://dealbook.nytimes.com/2009/03/12/obama-wants-global-financial-plan/
We all know the IMF insists on paying back debt, privatization, “structural” reforms that pulverize Labour – the gamut of extraction-enhancing rules designed for that purpose. So who, exactly, is it that is insisting on absolute guarantees vis a vis their own particular wealth and power? Is it Germany? Do you not suppose it would be those at the top of the global financial/corporate power heap rather than a regional player that is still a protectorate?
This was and is about just who is going to ultimately carry the cans for all of this. The IMF has identified a portion of the wealth Europe is going to be forced to cough up to Wall Street IF it (Europe) moves to meaningfully recapitalize, or restructure its banking system. How is that for a lose-lose for all the peoples of Europe and a seriously encumbered, not to mention humiliated, Germany?
http://www.eubusiness.com/news-eu/imf-eurozone-public.g31
Which is more than a little ironic, given this chart I came across:
http://simonthorpesideas.blogspot.ca/2012/04/extent-of-debt-bis-figures.html
When the US was owed the money in the Third World crisis, it went after it tooth and claw. This incessant portrayal in the US, UK and elsewhere of Germany as “insane” or “brutal” or “stupid” or proto-neo-fascist even though it has already provided huge sums in assistance, and may in the end eat the entire debacle, is just missing it completely. This is about global financial/corporate gangsters, and headquarters is co-located on Wall Street and in Washington – the one that absolutely refused to consider measures that might’ve prevented the speculative assaults on the Eurozone that have been relentless for the last 3 years. There’s power and then there’s power.