Review of James Galbraith, Welcome to the Poisoned Chalice (2016)

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Tim Evans Galbraith’s articles and interviews collected in this book (ending in October 2015) traces his growing exasperation at the “troika” – the European Central Bank (ECB), IMF and EU bureaucracy – which refused to loosen their demand that Greece impoverish its economy to a degree worse than the Great Depression. The fight against Greece was, in a nutshell, a rejection of parliamentary democracy after the incoming Syriza coalition of left-wing parties won election in January 2015 on a platform of resisting austerity and privatization. The world has seen the result: In contrast to the support given to countries with right-wing regimes, the ECB and IMF tightened their financial screws on Greece. The incoming finance minister, Yanis Varoufakis – ...

Can Russia Learn From Brazil’s Fate?

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by Paul Craig Roberts and Michael Hudson September 28, 2016 William Engdahl recently explained how Washington used the corrupt Brazilian elite, which answers to Washington, to remove the duly elected President of Brazil, Dilma Rousseff, for representing the Brazilian people rather than the interests of Washington. Unable to see through the propaganda of unproven charges, Brazilians acquiesced in the removal of their protector, thereby providing the world another example of the impotence of democracy. Everyone should read Engdahl’s article. He reports that part of the attack on Rousseff stemmed from Brazil’s economic problems deliberately created by US credit rating agencies as part of Washington’s attack to down grade Brazilian debt, which set off an attack on the Brazilian currency. Brazil’s financial openness ...

Celebrating the One Percent: Is Inequality Really Good for the Economy?

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To paraphrase Mark Twain, everyone complains about inequality, but nobody does anything about it. What they do is to use “inequality” as a takeoff point to project their own views on how to make society more prosperous and at the same time more equal. These views largely depend on whether they view the One Percent as innovative, smart and creative, making wealth by helping the rest of society – or whether, as the great classical economists wrote, the wealthiest layer of the population consist of rentiers, making their income and wealth off the 99 Percent as idle landlords, monopolists and predatory bankers. Economic statistics show fairly worldwide trends in inequality. After peaking in the 1920s, the reforms of the Great Depression helped ...

Finance is Not the Economy

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JOURNAL OF ECONOMIC ISSUES Vol. L No. 3 September 2016 DOI 10.1080/00213624.2016.1210384 Dirk Bezemer and Michael Hudson Dirk Bezemer is a professor of economics at the University of Groningen, the Netherlands. Michael Hudson is a distinguished research professor of economics at the University of Missouri, Kansas City, and a professor at Peking University. The authors thank the editor and two anonymous referees for helpful suggestions that greatly improved this article. Bezemer wishes to thank the Equilibrio Foundation and the Institute for New Economic Thinking for financial support. Any remaining errors are the authors’ own. Abstract: Conflation of real capital with finance capital is at the heart of current misunderstandings of economic crisis and recession. We ground this distinction in the classical analysis of rent ...

Obama said Hillary will Continue his Legacy – Indeed!

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Leading up to Monday’s Democratic Party convention, Hillary chose Blue Dog Senator Tim Kaine of Virginia as her VP. This was followed by the Wikileaks release of Democratic National Committee (DNC) e-mail files showing it acting as the Clinton Campaign Committee even to the point of using the same lawyers as her own campaign to oppose Bernie Sanders. The response across the Democratic neocon spectrum, from Anne Applebaum at the Washington Post to red-baiting Paul Krugman and the Sunday talk shows it was suggested that behind the Wikileaks to release DNC e-mails was a Russian plot to help elect Trump as their agent. Former US ambassador to Russia Michael McFaul lent his tattered reputation to claim that Putin must have ...

Financially Approved Financed History

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A Travesty of Financial History – which bank lobbyists will applaud Review of William Goetzmann, Money Changes Everything: How Finance Made Civilization Possible (Princeton University Press, 2016) Michael Hudson Debt mounts up faster than the means to pay. Yet there is widespread lack of awareness regarding what this debt dynamic implies. From Mesopotamia in the third millennium BC to the modern world, the way in which society has dealt with the buildup of debt has been the main force transforming political relations. Financial textbook writers tell happy-face fables that depict loans only as being productive and helping debtors, not as threatening social stability. Government intervention to promote economic growth and solvency by writing down debts and protecting debtors at creditors’ expense is accused of causing ...

The Brexit Silence

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As published on Counterpunch The media in the United States have treated the British vote against remaining in the European Union (EU) as if it is populist “Trumpism,” an inarticulate right-wing vote out of ignorance at being left behind by the neoliberal economic growth policy. The fact that Donald Trump happened to be in Scotland to promote his golf course helped frame the U.S. story that depicts the Brexit vote as a “Trump vs. Hillary” psychodrama – populist anger and resentment vs. intelligent policy. What is left out of this picture is that there is a sound logic to oppose membership in the EU. It is Nigel Farage’s slogan, “Take Back Control.” The question is, from whom? Not only from “bureaucrats,” but from ...

The Federal Reserve and the Global Fracture

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Interview with Antti J. Ronkainen, January 11, 2016, for Revalvaatio (Finland). Edited transcript. The Federal Reserve is the most significant central bank in the world. How does it contribute to the domestic policy of the United States?             The Federal Reserve supports the status quo. It would not want to create a crisis before the election. Today it is part of the Democratic Party’s re-election campaign, and its job is to serve Hillary Clinton’s campaign contributors on Wall Street. It is trying to spur recovery by resuming its Bubble Economy subsidy for Wall Street, not by supporting the industrial economy. What the economy needs is a debt writedown, not more debt leveraging such as Quantitative Easing has aimed to promote. But the ...

The Atlanticist Tactic Revisited

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Paul Craig Roberts and Michael Hudson Two years ago, Russian officials discussed plans to privatize a group of national enterprises headed by the oil producer Rosneft, the VTB Bank, Aeroflot, and Russian Railways. The stated objective was to streamline management of these companies, and also to induce oligarchs to begin bringing their two decades of capital flight back to invest in the Russia economy. Foreign participation was sought in cases where Western technology transfer and management techniques would be likely to help the economy. However, the Russian economic outlook deteriorated as the United States pushed Western governments to ...