Michael Hudson – USA

Linked with A Short History Of US Government Handouts, with Once in a century rip-off, with Financial Bailout, America’s Own Kleptocracy, and with A Debt Write Down, and Jubilee Year Clean Slate.

Michael Hudson (born in 1939, Chicago, Illinois, USA) is Distinguished Research Professor of Economics at University of Missouri, Kansas City (UMKC). He is also a Wall Street analyst and consultant as well as president of The Institute for the Study of Long-term Economic Trends (ISLET) and a founding member of International Scholars Conference on Ancient Near Eastern Economies (ISCANEE) … // … The New School in New York City, where he taught previously, and UMKC, where he is currently a Distinguished Research Professor, are the main U.S. alternatives to Chicago School anti-government economics. He also lectures and publishes in association with UMKC at The Berlin School of Economics. Hudson served as Chief Economic Advisor for Dennis Kucinich’s 2008 presidential campaign and holds the same position in Kucinich’s Congressional campaign. He has been economic advisor to the U.S., Canadian, Mexican and Latvian governments, to the United Nations Institute for Training and Research (UNITAR), and he is president of the Institute for the Study of Long-term Economic Trends (ISLET). Hudson is a former balance-of-payments economist for Chase Manhattan Bank and Arthur Andersen, and economic futurist for the Hudson Institute
(no relation). For Scudder, Stevens & Clark in 1990, he established the world’s first Third World sovereign debt fund, which became the second best performing international fund in 1991 (an Australian real estate fund was number one … (full text).

Dr. Hudson is President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and author of Super-Imperialism: The Economic Strategy of American Empire (1972 and 2003) and of The Myth of Aid (1971). ISLET engages in research regarding domestic and international finance, national income and balance-sheet accounting with regard to real estate, and the economic history of the ancient Near East … (full text).

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Michael Hudson – USA

Watch these 3 videos:

… Hudson calls it “Stage One of a two-stage plan”, so far unannounced, to transfer trillions more to people who, in any sane world, would be behind bars, the purpose being to re-inflate the bubble economy that made them wealthy beyond their dreams while leaving wages stagnant and creating little meaningful work. The “change” president is continuing the Bush-Paulson giveaway, allowing the process of creating a few giant Wall Street-based trusts which will act as the economy’s central planners in the new “socialism for the rich”. Any talk of nationalisation should be seen in this context. “ Washington has given them $9 trillion so far, with promises now of another $2 trillion – and still counting.” Instead of sputtering about capping CEO bonuses, if he is serious, why hasn’t Obama reversed the Clinton-Rubin repeal of the Glass-Steagall Act, responsible for the massive speculation for the past two decades? … (full text, Febr 17, 2009).

He says:

  • … (on government bailout, which means taxpayers stuck with the bill. Do you think this is the right move?) – MICHAEL HUDSON: No, it’s the worst possible move, and it puts the class war back in business with a vengeance. Wall Street has been preparing for this for years, because every financial analyst knows that the debts can’t be paid. And the question that Wall Street has, if you’re going to take a gamble on bad debts that can’t be paid, how are you going to come out a winner? And there’s only one way of coming out a winner, and that’s to make the government bail you out. This has been known for years, because it’s inherent almost in the mathematics of compound interest. Every banker I know knew that the loans they were making were going to go bad. They were trying to sell them to somebody else, ultimately expecting them to end up with some sovereign wealth fund … (full interview text, September 17, 2008);
  • … Because it’s not leading to recovery at all. It’s now up to $12 trillion. It’s a giveaway to the banks, to the creditors, without a single penny for actual debt reduction. And I had thought that at least half a percentage point, $50 billion, was going to be to write down troubled mortgage debtors, but it turns out that not a penny of mortgage debt is going to be written down. When the banks have lent more money than a mortgage owes, with 38 percent, the government is going to create its own debt to come in and make up the difference, so the debt is going to continue to grow exponentially, and it’s way beyond the ability of the economy to pay. If people have to pay the amount of debt that they have now, there won’t be any money to buy goods and services, companies will not sell as much, they’ll invest less, they’ll hire less, and they’ll continue to downsize. And what’s happened is that this is the greatest transfer of wealth really in American history. It’s doubled the American debt. The closest parallel I can think of is William the Conqueror’s conquest of England. He came with a military band, conquered the land and imposed taxes over the whole land, basing it all on the Domesday Book, what—the rent could be squeezed out. In this case, the rip-off has been non-military. The bankers have done insider dealing to get the government to give them or guarantee them $12 trillion of bad loans they’ve made, many of them fraudulent … (full interview text, February 13, 2009);
  • … And the most worrisome aspect of the appointment of Summers is, indeed, as Naomi pointed out, what he did in Russia under privatization. He created a kleptocratic class of billionaires who will be ruling Russia for the next hundred years. And the key was to use public expenditure that would increase private wealth. And I think what the plan is that, from everything Obama has said, is that there is going to be a heavy government expenditure on infrastructure here, very much like there was in Chicago, and this infrastructure is going to create huge real estate fortunes for the property along the lines that—in the vicinity of the location of the infrastructure. It’s going to create huge financial fortunes … (full interview text, November 25, 2008).

… Maybe. if Obama would take U.S. bankers and financial officials and give them Iranian names, he could get the motivation to act against them. Barack Obama is putting on a good show for America. But already many Americans are realizing that it is a shallow display and a superficial one. The change that is unraveling day by day in America is actually beyond Obama’s control and his solutions will be about as effective as the little boy who put his finger in the dike until the dam burst and the boy and his whole town were lost. Barack Obama needs to tell America the truth. He needs to tell them exactly what his plans are and how they work and who they benefit the most. He needs to be wise and be a leader and not a figurehead. He needs to think of the Biblical character Noah if he chooses to consult scripture and then ask himself how much of the evil world of his day Noah tried to preserve before the deluge wiped it all away. Anything less will be short-changing the American people and time is running out. (full text, February 18, 2009).

… On February 10, it explained that he’ll « flood the financial system with as much as $2.5 trillion » on top of $9 trillion previously doled out, and this is just « Stage One of a two-stage plan, » according to economist Michael Hudson. He asked: « recovery for whom (and what do) they want to recover? » For Wall Street, of course, in a new « Bubble economy » of the kind Alan Greenspan engineered: « wealth in the form of indebtedness of the ‘real’ economy at large to the banking system, and unprecedented capital gains to be made (from) a wave of asset-price inflation. » The problem, according to Hudson, is it can’t be done given « today’s debt levels, widespread negative equity, and still-high level of real estate, stock and bond prices. No amount of new (bank) credit or capital will induce (them to loan more) to real estate that already is over-mortgaged, or to individuals and corporations already over-indebted » or on the edge like the auto giants, auto suppliers, homebuilders, others, and who knows who next will join them … (full text, 16 February 2009).

Find him and his publications on amazon; on University of Missouri-Kansas City, Department of Economics; on Michael Hudson.com (Biography, books, video, radio, speeches); on wikipedia /Books; on Google Video-search; on inauthor Google-search; on Google Book-search; on Google Scholar-search; on Google Group-search; on Google Blog-search.

He writes:

  • … The financial system is to be concentrated into a cartel of just a few giant conglomerates to act as the economy’s central planners and resource allocators. This makes banks the big winners in the game of “chicken” they’ve been playing with Washington, a shakedown holding the economy hostage. “Give us what we want or we’ll plunge the economy into financial crisis.” Washington has given them $9 trillion so far, with promises now of another $2 trillion– and still counting … (full text, Febr. 18, 2009);
  • … This means that the postmodern economy as we know it must end – either in financial polarization and debt peonage to a new oligarchic elite, or in a debt cancellation, a Jubilee Year to rescue society. But when the government says that it is reviewing “all” the options, this reality is not one of them. Treasury Secretary Henry Paulson’s first option was to buy packages of junk mortgages (collateralized debt obligations, CDOs) to save the wealthiest institutional investors from having to take a loss on their bad bets. When this was not enough, he came up with “Plan B,” to give money to banks. But whereas Britain and European countries talked of nationalizing banks or at least taking a controlling interest, Mr. Paulson gave in to his Wall Street cronies and promised that the government’s stock purchases would not be real. There would be no dilution of existing shareholders, and the government’s investment would be non-voting. To cap the giveaway to his cronies, Mr. Paulson even agreed not to ask executives to give up their golden parachutes, exorbitant annual bonuses or salaries … (full text, October 13, 2008);
  • … The alternative is a century and a half old, and emerged out of the ideals of the classical economic doctrines of Adam Smith, David Ricardo, John Stuart Mill, and the last great classical economist, Marx. Their common denominator was to view rent and interest are extractive, not productive. Classical political economy and its successor Progressive Era socialism sought to nationalize the land (or at least to fully tax its rent as the fiscal base). Governments were to create their own credit, not leave this function to wealthy elites via a bank monopoly on credit creation. So today’s neoliberalism paints a false picture of what the classical economists envisioned as free markets. They were markets free of economic rent and interest (and taxes to support an aristocracy or oligarchy). Socialism was to free economies from these overhead charges. Today’s Obama-Geithner rescue plan is just the reverse. (full text, February 17, 2009);
  • … Much of the blame should go to the Clinton Administration for leading the call to repeal Glass-Steagall in 1999, letting the banks merge with casinos. Or rather, the casinos have absorbed the banks. That is what has put the savings of Americans at risk. But does this really mean that the only solution is to re-inflate the real estate market? The Paulson-Bernanke plan is to enable the banks to sell off the homes of five million home mortgage debtors faced with default or foreclosure this year! Homeowners with « exploding adjustable-rate mortgages » will lose their homes, but the Fed will pump enough credit into the mortgage-lending agencies to enable new buyers to go deeply enough into debt to take the junk mortgages off the hands of the gamblers who presently own them. Time for another financial and real estate bubble to bail out the junk mortgage lenders and packagers. America has entered into a new war – a War to Save Computerized Derivative Traders. Like the Iraq war, it is based largely on fictions and entered into under seeming emergency conditions – to which the solution has little relation to the underlying cause of the problems. On financial security grounds the government is to make good on the collateralized debt obligations packaged (CDOs) that Warren Buffett has called weapons of mass financial destruction. (full text, September 20, 2008).

links:

Forum on iTulip.com;

The blog: KontentKonsult Video;

Robert Kuttner and Michael Hudson on the Obama Administration‘s $789 Billion Economic Stimulus Package and $2.5 Trillion Bank Recovery Plans, February 13, 2009;

Institute for Foreclosure Legal Assistance;

Mortage Lending overview;

Say « No » to Gotcha Bank Fees;

The Confabulum;

The Center for Responsible Lending: