Fri 2010-09-17 19:54 EDT

Obama's Thatcherite Gift to the Banks

Michael Hudson

I can smell the newest giveaway looming a mile off. The Wall Street bailout, health-insurance giveaway and support of real estate prices rather than mortgage-debt write-downs were bad enough, not to mention the Oil War's Afghan extension. But now comes a topper: the $50 billion transportation infrastructure plan that Obama proposed in Milwaukee -- cynically enough, on Labor Day. It looks like the Thatcherite Public-Private Partnership, Britain's notorious giveaway to the City of London underwriters. The financial giveaway had the effect of increasing prices for basic infrastructure services by building in heavy financial fees -- guaranteed for the banks, who lent the money that banks and property owners used to pay in taxes in more progressive times...This threatens to be the kind of tollbooth program that the World Bank and IMF have been foisting on hapless Third World populations for the past half-century. The ``infrastructure bank,'' reports The New York Times, ``would be run by the government but would pool tax dollars with private investment.'' It would be a test balloon for financing ``a broader range of projects, including water and clean-energy projects,'' for which Democrats already are drawing up a blueprint...

bank; Obama's Thatcherite Gift.

Mon 2010-02-08 17:08 EST

The Bernanke Disaster: The Road to Debt Peonage

Michael Hudson

...On the political front, his reappointment is being cited as yet another proof that the Democrats care more for bankers than for American families and employees. As a result, it will do what seemed unfathomable a year ago: enable GOP candidates to strike the pose of FDR-type saviors of the embattled middle class. No doubt another decade of abject GOP economic failure would simply make the corporate Democrats appear once again to be the alternative. And so it goes... For Bernanke, the current financial system (or more to the point, the debt overhead) is to be saved so that the redistribution of wealth upward will continue...Meanwhile, the government is permitting corporate tollbooth to be erected across our economy -- and un-taxing this revenue so that it can be capitalized into financialized wealth paying only a 15 per cent tax rate on capital gains...Financial and fiscal policy thus reinforce each other in a way that polarizes the economy between the financial sector and the ``real'' economy.

Bernanke Disaster; DEBT peonage; Road.

Thu 2009-07-30 00:00 EDT

Michael Hudson: The Toll Booth Economy

Michael Hudson: The Toll Booth Economy -- by Michael Hudson ``The Latest in Junk Economics'' What is missing is a critique of the big picture how Wall Street has financialized the public domain to inaugurate a neo-feudal tollbooth economy while privatizing the government itself, headed by the Treasury and Federal Reserve. Left untouched is the story how industrial capitalism has succumbed to an insatiable and unsustainable finance capitalism, whose newest final stage seems to be a zero-sum game of casino capitalism based on derivative swaps and kindred hedge fund gambling innovations...What have been lost are the Progressive Eras two great reforms. First, minimizing the economys free lunch of unearned income (e.g., monopolistic privilege and privatization of the public domain in contrast to ones own labor and enterprise) by taxing absentee property rent and asset-price (capital) gains, by keeping natural monopolies in the public domain, and by anti-trust regulation...A second Progressive Era aim was to steer the financial sector so as to fund capital formation. Industrial credit was best achieved in Germany and Central Europe in the decades prior to World War I. But the Allied victory led to the dominance of Anglo-American banking practice, based on loans against property or income streams already in place. Todays bank credit has become decoupled from capital formation, taking the form mainly of mortgage credit (80 per cent), and loans secured by corporate stock (for mergers, acquisitions and corporate raids) as well as for speculation. The effect is to spur asset-price inflation on credit, in ways that benefit the few at the expense of the economy at large.''

Michael Hudson; Toll Booth Economy.