This page has been archived and commenting is disabled.

Financial Interests Dictate Sovereign Policy

ilene's picture





 

Financial Interests Dictate Sovereign Policy

Courtesy of Michael Hudson

Interview with Michael Hudson, originally published in Eleftherotypia

1. A recent article of yours, “Schemes of the Rich and Greedy,” cites the bailouts in Europe among such schemes. What are the main faults with bailouts, and for whom are they designed?

The financial sector is trying to get politicians to siphon off money from labor and industry to pay bankers. This will impede capital formation and living standards.

The banks misrepresented the real value of balance sheet and hence what they really were owed under actual market conditions. Now that they have taken the money and run, the «real» economy is being told to pay the off their bad loans. The arrogance of this demand prompted Angela Merkel to ask why governments – meaning «taxpayers» – should pay for bad bank loans and corrupt financial dealing.

Nice try if bankers can get away with it! But I’m glad to see Germany opposing the EU proposal to double its bailout fund.

2. You have written that “Latvia has become a testing ground for how far living standards can be depressed, how steeply an economy can be taxed while removing public social support in the face of a wealthy kleptocratic class at the top.” Do you think the same is intended for Greece, Ireland and any other “PIG” that may see its fiscal affairs fall into the control of the EU and IMF?

Foreign bankers are urging Greece “Why can’t you be like Latvia and sacrifice your economy for our benefit?” The reality is that paying creditors under these conditions is like paying tribute to a power that has conquered you militarily.

Fortunately, labor in most of Europe is much less passive than in Latvia. The post-Soviet economies have little labor union tradition, and politics are largely ethnic. As a result of the oppressive Stalinist era bringing in Russians to replace local middle class professionals in the 1950s, the ruling neoliberals have been able to turn the frustration of voters mainly against Russian-speakers rather than at what is the most anti-labor, pro-property tax regime in history.

The rest of Europe now has the bad tax and financial policy of Latvia and the Baltics before its eyes as an object lesson in what to avoid. When the neoliberal bubble burst, Latvia’s government borrowed from the EU and IMF on terms that impose such deep austerity that the economy has plunged by over 20% and unemployment is rising, while the flat-tax rake-off on wages and salaries has now been jacked up to 68%. Over 12% of the population is now working abroad. They send home what they can to help their families survive.

So rather than being a model to emulate, Latvia shows what is wrong with the neoliberal policy that bankers are telling other countries to adopt. It’s not a bailout of the economy, but of an economic strategy that threatens to make economies poorer.

3. How do you explain the IMF’s role in Europe’s debt crisis? Is it that the EU lacks the technical expertise to deal with sovereign debt issues, as some have suggested, or because it is a junior partner of multinational finance capital?

What passes for ‘expertise’ is political, not objective and neutral. At the hands of neoliberals, ‘financial expertise’ means calculating how much taxable surplus, disposable personal income, rental income and profits the financial sector can grab for itself.

Real experts would follow the advice that John Maynard Keynes gave in the 1920s regarding German reparations and Inter-Ally debts. It is better to wipe out bad debts than to try to pay creditors at the cost of reducing capital formation, living standards and public spending on education, health care and other basic infrastructure. A wise government would subordinate the financial sector to promote economic growth, capital formation and rising living standards.

The EU and IMF ‘Washington Consensus’ policy was applied to Third World dictatorships in the 1960s, ‘70s and ‘80s under gunpoint, but Europe is freer to choose. To follow ‘expert’ advice as Iceland and Ireland have done quickly turns into an exercise in asset stripping, replacing social democratic government with an extractive financial oligarchy.

4. Is it in Germany’s interest to drive out of the eurozone the fiscally weak countries?

What really is Germany? Its banks? Its industrial exporters? Or is it German labor? Politicians serving the bank lobby take the following position:

Germany has produced great composers, physicists and chemists, and also scholars of classical antiquity. But our bankers are gullible. They were stupid enough to trust Icelandic bank looters, Irish speculators and American junk-mortgage salesmen. So they’ve lost a lot of money. They’ve asked us to pass on their request that you Greeks, Irish and other people tax yourselves to death and wreck your economies so that they won’t have to pay for their naivety by bearing all the cost of their expensive education in how today’s world of financial sharpies really works.

You can’t blame the bankers for trying. But other countries should call their bluff. Germany would be better served helping countries recover from neoliberal fairy tales and to adopt more progressive tax and financial policies. Otherwise, bankers will end up doing at home what they are trying to do to the rest of Europe.

5. Do you see a way out of Europe’s sovereign crisis?

The economic problem is not caused by sovereign debt but by bad bank loans, deceptive financial practice and neoliberal bank deregulation. Iceland’s Viking raiders, Ireland’s Anglo-Irish bank and other foreign banks are trying to avoid taking losses on financial claims that are largely fictitious, inasmuch as they exceed the ability of indebted economies to pay. The ‘crisis’ can be solved by making the banks write down their debt claims to realistic ‘junk’ valuations. There is no need to wreck economies by subjecting them to financial asset-stripping.

In such cases there’s a basic principle at work: Debts that can’t be paid, won’t be. The question is, just how won’t they be paid? As matters stand, countries are being told to subject themselves to massive foreclosure – not only a forfeiture of homes, but of national policy.

In this respect the sovereign crisis is a crisis of sovereignty itself: Who shall be in charge of the economy, its tax philosophy and public spending: elected officials acting in the public interest, or an intrusive financial oligarchy? The EU was wrong to tell governments to pay for following its advice – and pressure – to trust financial crooks and deregulate bank oversight. The European Central Bank should reimburse victimized governments for the bailouts that have been paid. This reimbursement can be done by levying a progressive tax policy and creating a central bank to help finance governments.

The proper aim of a national economy is to promote capital formation and rising living standards for the population as a whole. not a narrowing financial class at the top of the pyramid. So I see two major policies to lead the way out of this mess:

First, shift taxes back onto land and resource rent, and onto financial and capital gains. This will prevent another real estate bubble from being inflated by debt leveraging. By holding down housing prices, it will save labor from having to pay an equivalent amount in income tax. Low real estate taxes (under 1% until just recently) have not saved homeowners money in Latvia. Low property taxes merely have left more rental income to be pledged to banks, to capitalize into large mortgage loans.

Second, de-privatize basic utilities and natural monopolies to save Europe from rentiers turning it into a tollbooth economy. Europe needs a central bank that can do what central banks are supposed to do: create money to finance government deficits. But the European Central Bank and article 123 of the European Constitution as amended by the Lisbon Treaty prevents the central bank from lending to governments. This forces governments to levy taxes to pay interest to banks – for creating electronic credit that a real central bank could just as well create on its own computer keyboards.

Government banking is not necessarily inflationary. It finances what is necessary for economies to grow: investment in infrastructure and capital formation to raise productivity and minimize the cost of doing business.

What turns out to be inflationary is commercial bank lending. It inflates asset prices – unproductively. Banks lend mainly against real estate and other assets already in place, and stocks and bonds already issued. This is unproductive credit, not real wealth creation. The only way to keep this unproductive debt overhead solvent is to inflate asset prices more – by untaxing assets to leave more revenue to pay bankers on exponentially growing debts.

It doesn’t have to be this way. The recent 30 years of financial polarization is reversible. The alternative is to succumb to neoliberal austerity. 

 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 12/23/2010 - 11:40 | Link to Comment Bartanist
Bartanist's picture

Hopefully in the not too distant future people will wake up to the fact that the banks use debt to enslave people.

The money that is loaned for a house, a business, to "bail out" a country is just created by the bank out of thin air. The bank takes no risk. The bank has give NOTHING of themselves, their labor or anything whatsoever. There is no quid pro-quo. They just created something insubstantial and thereby have granted themselves rights as slavemasters over the people they have indebted with the fictional money.

It is a ruling class trick to control and enslave people by using nothing but a concept. How elegant and yet how evil. If money is what differentiates classes, then we can say that there are no differences in the classes other than those who are more favored by the creators of the debt enslavement fiction and those who are less favored.

For those in favor, such as cronies, useful politicians, pet companies, military and research projects, money is doled out generously in the form of debt, often with no strings and forgiven, and for those out of favor money is not doled out,never foregiven and debt becomes oppressive. It is discrimination at its grandest ... and all designed to maintain a power structure favoring members of the elite "club" or "gang" if you will ... for at their deepest, they are nothing more than oppressive gang trying to give off the appearance of "superiority" while enslaving the masses with fiction.

Is this "fiction" really what our society is based upon? Does this fiction define what the propagandist claim as the moral high ground of "capitalism"? How can enslavement, fraud, theft, extortion and murder define a moral high ground?

Thu, 12/23/2010 - 09:33 | Link to Comment Catallaxative
Catallaxative's picture

"An economic strategy that threatens to make economies poorer." And a political strategy as well. That strategy is exactly the agenda of those at the top. Collapse, consolidate, control, enslave.

Thu, 12/23/2010 - 08:58 | Link to Comment AUD
AUD's picture

Here's a quote from Doug Noland that Hudson can shove up his arse.

I saw nothing in the Q3 Flow of Funds that is counter to my thesis of a very problematic inflation of government finance – with an inevitable crisis of confidence and fiscal train wreck.  And as one would expect from such a historic Bubble Dynamic, the longer this Bubble is prolonged the greater the unavoidable financial, economic and social dislocation.   

Thu, 12/23/2010 - 09:18 | Link to Comment macroeconomist
macroeconomist's picture

Hudson is not arguing in favour of extending the bubble or increasing government deficits. He's calling for a Nordic way of solving the crisis: Write off the debt, let the bondholders-stockholders take the losses, merge the banks in bad condition, let the government operate this bank until it gets all taxpayer money (and possibly more) back and de-privatize energy monopolies so government will have more revenues. Ever read about the Nordic crisis and how they solved it in 2-3 years? Know that the Norwegian government ended up as a net beneficiary of the bank re-structuring program?

http://www.bof.fi/NR/rdonlyres/20420DE9-B9FA-4438-A6B3-DAFF64773FE6/0/080928_SH_Financial_Crises.pdf

http://www.bof.fi/NR/rdonlyres/A6F65EFC-54B2-4A1B-9CAD-E3DB539F21FD/0/0905netti.pdf

 

Sat, 12/25/2010 - 04:57 | Link to Comment LudwigVon
LudwigVon's picture

No thanks on an inefficient slide towards socialism in the US.

Over my lifetime, Europe has sickened me more than anywhere else. 

The smell of dead liberty. No return. Back to the black until you learn your lessons.

Thu, 12/23/2010 - 11:57 | Link to Comment Bartanist
Bartanist's picture

In a way it is being done. Only the government is not doing it, the Fed is.

In the US and for most of the world, the Federal Reserve bank creates both debt and money on opposite sides of the balance sheet. What the Federal Reserve Bank creates, the Federal Reserve Bank can destroy just as easily.

However, the Fed is owned by the banks and the international banks (literally, the dominant shareholders of the Fed are the International Banks) are owned by powerful people (and I am not talking about the common shareholders).

The Fed is wiping out the international bank debt through its money and debt creation and destruction power.  It is leaving the debt intact for the government and the people. In the end the banks with be solvent. The owners of the banks will be solvent and the governments and the people will be bankrupt. If the fiat power is allowed to stand then the banks will be all powerful.

To stop this from happening the fiat power must be destroyed and that means ending the Fed and taking the consequences of a financial system that will be in turmoil for 5 to 10 years.

Unfortunately if history is any guide, politicians being weak and divided will once again cede the money creation power to an elitist run centralized bank to solve the turmoil, and this bank will probably be even be more global, controlling, worse than the Fed and run by the same people. (yielding another Obama type non-victory victory which is in reality a defeat for the people).

Thu, 12/23/2010 - 17:05 | Link to Comment RockyRacoon
RockyRacoon's picture

If the "powerful people" had not wanted Obama to win in order to further their own agenda, he would not have won.  Is there much argument about that?  Any other thought on the matter would run head-first into the improbability that a man of Obama's background and experience being elected to anything much above the last office he held.  Wonder how long ago he was groomed for the Presidency?  (And, no, I don't buy into the birther crap and the rest of that which is mere distraction.)

Thu, 12/23/2010 - 09:31 | Link to Comment snowball777
snowball777's picture

YMMV

Thu, 12/23/2010 - 08:26 | Link to Comment LudwigVon
LudwigVon's picture

"Europe needs a central bank that can do what central banks are supposed to do: create money to finance government deficits."

LOL !

Yeah we need more central banks to satisfy the statists, to fund their largess and to keep the world poor.To hell with capitalism and price.

Europe needs to dissolve the Euro yesterday, they are delaying the inevitable, no nation will give away sovereignty(which is ultimately what is being asked), a unified currency needs a country which is unified to exist within. 

This article is pure trash. Power comes from capital investment and productivity, a strong economy and in turn, a strong military are merely symptoms of those multi-century proven precursors. 

Capital investment is only truly unlocked when governments are not moving price discovery and resources out of the grasp of citizens. Central banks facilitate this central planning by allowing the theft to occur. The future of great nations, all of them, have ended by the hubris of socialism.

Keynes allowed for this cheat, a boosting forward of capital creation, built on a ponzi scheme that will end. It is better to keep the goods and services we as a nation have moved forward in time(by borrowing based on a fiat promise from abroad(STEALING)), and now retreat back to pure capitalism, than suffer the slow decline socialism has proven to bring without fail. 

Thu, 12/23/2010 - 08:33 | Link to Comment AnAnonymous
AnAnonymous's picture

Austrian hogwash. Running deficits exist way prior central banking. Running deficits is the key stone of any expansion scheme, which are backed up by armed action.

Central banking only renders running deficits easier and more efficient. 

All that is offered is to run a similar scheme but with less efficient tools.

 

Sat, 12/25/2010 - 04:51 | Link to Comment LudwigVon
LudwigVon's picture

Running deficits is the key stone of any expansion scheme

Yep covered that too: "a boosting forward of capital creation, built on a ponzi scheme that will end."

Running deficits exist way prior central banking.

Never said it didn't, it is only wise until you default deliberately, with guns. After that you can: 

1: Use capitalism

2: Try the ponzi again after the foreigners will buy at under 4%

After we default (one way or another) the best method would be do 1 until they forget, then 2.

Sat, 12/25/2010 - 04:40 | Link to Comment LudwigVon
LudwigVon's picture

I see you respect the name enough to know it however, this is neither Austrian nor "Hogwash" (lol)

The future of great nations, all of them, have ended by the hubris of socialism.

Sat, 12/25/2010 - 04:36 | Link to Comment LudwigVon
LudwigVon's picture


Central banking only renders running deficits easier and more efficient. 

Yeah I think I said: "Central banks facilitate"

If this is the path you chose, perhaps you Statists should become more efficient in war.

That and enjoy the downturns more, as they are assured. I do.

Thu, 12/23/2010 - 08:24 | Link to Comment macroeconomist
macroeconomist's picture

Michael Hudson put it in the best possible way again. Someone who understands Keynes and Minsky in the correct way.

"Government banking is not necessarily inflationary. It finances what is necessary for economies to grow: investment in infrastructure and capital formation to raise productivity and minimize the cost of doing business."

"What turns out to be inflationary is commercial bank lending. It inflates asset prices – unproductively. Banks lend mainly against real estate and other assets already in place, and stocks and bonds already issued. This is unproductive credit, not real wealth creation. The only way to keep this unproductive debt overhead solvent is to inflate asset prices more – by untaxing assets to leave more revenue to pay bankers on exponentially growing debts."

I know I'm gonna get junked here but a big government and a big bank is necessary, along with strict regulation on credit creation if we want to avoid catastrophes like this. 

Those ready to bash Keynes for printing money, you may not have seen this.

http://www.zerohedge.com/article/inflation-seen-nations-salvation-redux-how-keynes-grew-hate-keynesianism-and-love-monetary-b

and this:

http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm

It's the monetarists who love printing, not Keynesians!!

 

"When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.” 

Keynes (1936)

Thu, 12/23/2010 - 09:29 | Link to Comment snowball777
snowball777's picture

"...a big government and a big bank is necessary, along with strict regulation on credit creation..."

Entitlements and warheads do not infrastructure make. And broke isn't big.

We need some kind of monetary management (unless you like periodic bank runs), but it certainly doesn't need to be an 'independent' corporation performing our central banking duties.

Wholly agreed on the limitation of credit creation...we need to set fractional reserve limits at something like 1.2x instead of 40x, regulate the use of OTC derivatives which spiraled to insane nominal values, and put back Glass-Steagall so these clowns can't (lever up then) gamble with OPM at will.

Thu, 12/23/2010 - 08:19 | Link to Comment AUD
AUD's picture

Europe needs a central bank that can do what central banks are supposed to do: create money to finance government deficits

Michael Hudson is a blowhard, you could come up with something better than this trash Ilene.

Thu, 12/23/2010 - 09:58 | Link to Comment hugolp
hugolp's picture

Chartalists like Hudson will always be as crazy as they are. I have tried making sense with them, but its imposible. They really thing monopolies are good. They see no harm in using violence to impose their view.

Thu, 12/23/2010 - 07:06 | Link to Comment DeltaDawn
DeltaDawn's picture

I agree with everything but the proposed solution - progressive tax. The real solution is a debt jubilee and getting rid of the IMF,the world bank,central banks,the UN. No more mega pension funds...each family saves their own money and cares for their family/friends. HL's comment may sound out-of-the-box to some, but I was chilled to the bone when I heard recently Russia is building thousands of large new nuclear shelters by 2012. Why is this a priority for them? The leaders of Russia and China are wolves and Americans are fat,lame sheep.

Thu, 12/23/2010 - 07:02 | Link to Comment DeltaDawn
DeltaDawn's picture

I agree with everything but the proposed solution - progressive tax. The real solution is a debt jubilee and getting rid of the IMF,the world bank,central banks,the UN. No more mega pension funds...each family saves their own money and cares for their family/friends. HL's comment may sound out-of-the-box to some, but I was chilled to the bone when I heard recently Russia is building 5000 new nuclear shelters by 2012. They can protect 50% of their population. Why is this a priority for them? The leaders of Russia and China are wolves and Americans are fat,lame sheep.

Thu, 12/23/2010 - 08:28 | Link to Comment AnAnonymous
AnAnonymous's picture

The real solution is a debt jubilee

 

Funny. A debt jubilee on a debt that is not supposed to be repaid?

So far, we are moving through debt schemes, we are moving to us an amount of wealth for a fraction of it (we are only paying the interests)

We have been  defaulting for decades now. What you are calling for has already happened in a certain way. Jubilee are only  useful when you can repay the debt. Ponzis only get better by extending them, never by ceasing them.

Thu, 12/23/2010 - 05:09 | Link to Comment BigDuke6
BigDuke6's picture

Europe... awake!

All this has happened before and will do again.

Thu, 12/23/2010 - 06:24 | Link to Comment AnAnonymous
AnAnonymous's picture

Duplicious.

 

The EU and IMF ‘Washington Consensus’ policy was applied to Third World dictatorships in the 1960s, ‘70s and ‘80s under gunpoint, but Europe is freer to choose.

 

How do you remember this happening? Major disagreement by European and US populations?

The reality is that the policies enacted by the IMF were largely supported by Europeans and US populations who could not end finding rationales to apply them.

Dont want to sound racist as I know the following saying is now perceived with racist innuendo in the US but chickens are coming home to roost.

That is usually the way it works: people start small to train and when they are confident enough, they switch to bigger, more rewarding targets. They got their test fields in third world shit holes with the large support of the US and European populations and now the veterans are back, more experienced, more effective.

 

 That is why the article is completely delusional or misinformative (duplicity, propaganda, my pick).

What is happenning was wished for by many US citizens and European nationals. The bankers and co. are not an elite that act disconnected from its base but an elite performing what the base has been wishing for so long.

The bankers are the expression of the democratic will of the US/Europe populations.

 

 

Thu, 12/23/2010 - 08:59 | Link to Comment Monday1929
Monday1929's picture

Good points. The Middle Class never had a problem with the $5.00 minimum wage, and the destruction of the lower middle class. Only when the water reached their chins were objections raised.

Thu, 12/23/2010 - 04:09 | Link to Comment AchtungAffen
AchtungAffen's picture

I guess you can talk Keynes at Zerohedge and people to understand. Ilene +1

Thu, 12/23/2010 - 05:00 | Link to Comment AnAnonymous
AnAnonymous's picture

People on this site are extremelly open to accept anything pointing at WWI reparation fees put on Germany as extremelly bad. In their psyche, it is what started the shit. Of course, reminding that WWI reparation fees treaty was a copycat of the treaty Germans forced on others after the 1870 war.

People enjoy their lies and they do not like being disturbed when they savour lying.

Thu, 12/23/2010 - 16:56 | Link to Comment RockyRacoon
RockyRacoon's picture

People on this site...

Gross generalizations will get you nowhere.  Who likes to be thought of as a generic member of some amorphous mass?  Just my two cents worth.

Thu, 12/23/2010 - 11:34 | Link to Comment Bartanist
Bartanist's picture

I do not follow you.

Cause and effect do not dictate right and wrong. Two wrongs don't make a right, but the cause and effect may be the same even when the parties change. It is seemingly all about individuals who are doing what they think is best to maintain and increase their power.... it is gang warfare just played on different battlefields and using different weapons.

IMO, there is no such thing as altruism. People make their decisions for personal reasons, even saving the life of someone is done for personal reasons, because internally the person doing the saving feels better about themselves for saving the life than letting it perish. Doing the "right" thing by definition is personal.

Right and wrong is all about internal justification, motivation and propaganda. Do I have my own code of ethics and morals that I believe are right. Yup! Are my actions based on my beliefs? You bet!

Can I say that Germany was right in 1870 and the allies wrong post WWI. No. But I do not know the details either. The rules and decisions appear arbitrary and designed to create a specific effect ... in both cases. I cannot find a right and wrong here, only power and powerlessness.

Thu, 12/23/2010 - 11:28 | Link to Comment weinerdog43
weinerdog43's picture

Why stop at the 1870s?  Let's go back to 1618-1648.  Until the Great War, it was the costliest, most damaging war Europe had ever seen.  The French, Spanish, Swedes & Danes all fought for 30 years in what is now Germany.  Guess who suffered the most?  The average German peasant. 

Europe has a long, long history of fighting, and identifing a single cause or problem is an exercise in futility.

Thu, 12/23/2010 - 04:08 | Link to Comment Alcoholic Nativ...
Alcoholic Native American's picture

It's almost as if "Soverign" policy trickles down! Onward Christian soldiers!

Thu, 12/23/2010 - 03:35 | Link to Comment gwar5
gwar5's picture

Jim Rickards, in one of his latest interviews:

"...People have to understand in their minds that The Federal Reserve is of the banks, by the banks and for the banks. Their primary constituent is the big banks and their job is to take care of them and make sure they survive. They're not there for the regular taxpaying people, and to keep inflation down and all that stuff.... sure, they're happy when it happens, of course, but the Fed is really just there to protect the banks. Once you understand that the rest becomes pretty clear about what they're doing."

Yes, makes sense to me now why the globalists banksters are trying to form a world political system. They need a globalist world government to mask a World bank shadow government.

This became crystal when the Fed released their dump of data to reveal the scope of their largesse to all the central banks fo Europe. We're just one lick behind Ireland for the rest of the nasty to come.

End the Fed, default on them, and put our gold in West Point where there are facilities so they don't get their hands on it. The Fed made plenty over 100 years, they owe us.....oops flash of lights and knock at the door...

 

 

 

 

 

 

Thu, 12/23/2010 - 02:30 | Link to Comment HL Shancken
HL Shancken's picture

Perhaps Michael Hudson considers himself an "outside the box" thinker, but is he really? He has posited a theory based on a worldview in which banks are the primary power centers, but the problem is, they are not.

 

Power, real power, is not measured by money or gold. Power is weaponry. More specifically it is superweaponry, namely, nuclear weapons. 

 

It has probably not occurred to Mr. Hudson that something much more sinister than he thinks goes on behind the scenes, and if it has, I very much doubt that he has taken into consideration the ongoing war being carried out by communists against capitalism and the nation-states which defend it and stand in the way of worldwide communist takeover.

 

What is taking place on an international scale was first conducted in the former Soviet Union during the 1990's. It is the sabotaging of the capitalist system in order to discredit it and justify the imposition of a new, socialist system to be administered by single-party, Communist Party, rule. Mr. Hudson and so many like him, play an important if unwitting role in this grand strategy, and those they convince with their words will play their part as  well.

 

Jeff Nyquist made a comment today in response to a question about the likely timing of Russian action now that the START treaty has been ratified. I repeat it here and, as an astute Russian recently said, "those who know will understand." The rest will continue to place their trust in the likes of Michael Hudson.

 

"A surprise attack on the United States requires certain political and economic precursor events. Russia cannot politically survive the psychological aftermath of a nuclear attack unless they make the attack unavoidable, or attribute the blame to a Third Party or to the United States (or a combination of factors unrelated to Moscow). You must have an alibi. You must have a scapegoat. We can see these are under construction in terms of al Qaeda, North Korea and Iran. Even Venezuela may come into sharper focus here. The global economic crisis MUST worsen and America must be blamed in the court of world opinion. All these preconditions are absolute and absolutely necessary. Furthermore, an new international economic architecture must be ready BEFORE the total collapse of the dollar. Moscow and Beijing have been working on these preparations for years.

When the attack comes it will begin with terrorist nuclear strikes against cities. The real aim, in the resulting mayhem, will be a decapitation strike combined with psychological warfare operations in which anti-government extremists proclaim that the Federal Government is involved in a conspiracy to deprive the people of their liberty. Many will believe this propaganda, as millions already do. The result will be anarchy and disintegration. Conspiracy theory will then serve its intended purpose by making a frightened and paranoid country ungovernable and incapable of maintaining a credible deterrent.

In the weeks and months following the first terrorist strikes, active measures and psychological warfare will turn Americans against each other. When this reaches a critical point, the missiles from Russia and/or China will strike our decayed and unready nuclear forces -- probably with the excuse of preempting the coming to power of a dangerous right-wing dictator in the US.

This general picture is a scenario - one of many - in which I have not filled in all the blanks. But the general principles of the surprise attack are covered, and proved for the enemy those necessary preconditions without which no attack can be safely conducted."--Jeff Nyquist

 

 

http://thefinalphaseforum.invisionzone.com/index.php?showtopic=44

 

 

 

 

Thu, 12/23/2010 - 09:42 | Link to Comment snowball777
snowball777's picture

Ironic that you can't see the tool being used on you is capitalism. They aren't going to start a war...they're just going to buy your ass at a fire sale once the dust of the US implosion has cleared.

Thu, 12/23/2010 - 04:09 | Link to Comment AchtungAffen
AchtungAffen's picture

Oh those pesky commies.Keep seeing them in the soup goddamit.

Thu, 12/23/2010 - 03:41 | Link to Comment gwar5
gwar5's picture

Money is still the power.

Weaponry is 20th century old school. Nobody likes to blow stuff up anymore to take stuff, it's just too messy. People get mad and never get over it. And there's nothing left. Besides money is required to pay for the armies.

Thu, 12/23/2010 - 09:28 | Link to Comment doolittlegeorge
doolittlegeorge's picture

I agree.  Buffet called them "financial weapons of mass destruction" and "he is more than happy to employ them, too."  Democracy has been in peril for some time now in the USA and "they come into our House to say it right to our face."  The day Kudlow decided "it's okay to blow up America's debt markets" while "whining about how New York City was a victim on 9/11" thereby justifying it did it for me.  Europe truly is in the thrall of financial elites but "it has to do with their history."  It is a connection to us since "that is our History as well."  Still "I like to think that the USA is more than just a single City that has been in decline for over 50 years and offers nothing but death and destruction to its own."  If I am wrong (as I so often can be--) i will not be the first.  Indeed "the surprise would be if this Doolittle guy was actually right."  Interestingly "the data is not breaking as it should against us ignorant hick farm boys."  Instead "entire European nations are being obliterated like they're nothing more than a New York City bank."  I do give credit to Michael Bloomberg:  "his news organization does seem to understand that not reporting on impending Doom is in fact contrary to the interests to the organization" unlike CNBC.  Of course "he is Mayor as well."  Maybe there "really is a public spirit involved here."  "Smells Like Teen Spirit" to me of course.

Thu, 12/23/2010 - 04:56 | Link to Comment AnAnonymous
AnAnonymous's picture

Messy? I dont think people like US citizens take concern about what is messy and what is not. It is a failure in perception: US citizens love to depict themselves as exceptional in anything they rank good and sadly common in anything they label bad.

The reality of facts show that the US are exceptional fellows in anything they perceive bad and common in anything they label good.

The trouble is that the scientific method brought systemics, which was lavishly applied to anything. But systems have their limitations. War is good until a certain point. Beyond this point, it turns bad.

The rejection of war is not based on a messy concern. We simply reached the point we have more to lose by war than to win. War has grown counterproductive.

The whole world save tiny pockets is turned to benefit the western world, especially the US. Nothing to gain from large wars, the stuff is already performed.

Blowing stuff around is blowing up our stuff. War leaders dont squirm to send other people to the front line but they prefer to send their offspring in the most secure way possible.

 

Systemical use of theft leads to the same dead end. Theft is so good when you have much more to rob from. Theft is glorious.

When you start to own 80pc of the whole, suddenly, theft is no longer as attractive as it was when it allows you to move from 10 pc to 80pc.

At this point, you want to denounce theft as immoral, contrary to human rights, highly counterproductive, a crime of humanity.

We have thieved a lot. We are nearing a point when thieving would mean thieving ourselves before others. Hence the rise in all younger generations of the mantra on enforcing property rights, libertarians, anarcho capitalists drivel and all.

Take to fabricate a new ideology to conserve what was gained by the consequences of the previous ideology, that allowed to justify the massive theft performed so far.

US is nothing but duplicity.

Thu, 12/23/2010 - 11:18 | Link to Comment Bartanist
Bartanist's picture

Well said. "Most" of us in the US and Western World have benefited to a certain extent from the theft and oppression of the rest of the world. Are we splitting hairs when we complain about the kleptocracy at the top who have benefited most. Are we hypocritical when we complain about them turning their sites inward, destroying the middle class (after the labor class)? Most likely when they have gutted the middle class two things will happen: they will find that they have insufficient quality human resources with capability to service their ever expanding desires (for they contribute virtually nothing themselves) so they will have to start to "settle for less" AND they will fall upon each other and since revolutions start at the top, that is when there is most likely to be real change... not from the masses, but from the top.

It has always occurred to me that the so called ruling class historically have more in common with each other than they do with their countrymen, race or religion. Most likely beyond believing themselves superior, they are also aware of their own and each of their classmates' faults and accept them ... preferring to hide their weaknesses from the masses. Historically they would much prefer to interbreed with an enemy ruling class than one of their lower standing countrymen. There has always been class warfare. The problem is that one side (the ruling class) is always fighting it and the other side has no clue that they are being warred upon.

Given the assumptions from the paragraph above, my greatest concern is not for war with commies or Muslims or whatever because these are seeming just tricks by the ruling class to polarize the population and keep them from understanding who they are really at war with. My greatest concern is that globally the ruling class is aligned in their plan for the planet and that to accomplish their goals they must move their war against the non-ruling "classes" (notice I did not say lower, because the non-ruling classes are generally far more noble) from covert oppression through the banks and fascist laws to aggressive open conflict ... wiping out billions of the other classes through nuclear war while they sit secure in their fiat paid for bunkers.

To look for real evidence of this, one must look in the area of conspiracies that the ruling classes always debunk... take for example the Georgia guidestones, the Illuminati and the Mason lore/conspiracy theories. We should all hope that the ruling classes are not aligned with each other and that the only people standing in the way of them are the less economically dominated Muslims who we are now warring against under seemingly false pretence.

Thu, 12/23/2010 - 09:39 | Link to Comment snowball777
snowball777's picture

Good thing for you we're so homogenous as to fit into a single generalization.

Thu, 12/23/2010 - 01:52 | Link to Comment knukles
knukles's picture

Never ceases to amaze me how folks continually confuse public and private policy, albeit simply a continuation of Hegelian Dialect; why a nation's people are held responsible by the public sector for the bad decisions of the private.

There exist no practical, logical, philosophical, moral or natural justification for such.

Thu, 12/23/2010 - 07:34 | Link to Comment nmewn
nmewn's picture

"Never ceases to amaze me how folks continually confuse public and private policy, albeit simply a continuation of Hegelian Dialect; why a nation's people are held responsible by the public sector for the bad decisions of the private."

+ a continually decaying "asset".

Thu, 12/23/2010 - 00:49 | Link to Comment New Revolution
New Revolution's picture

Are you insane?    A central bank is there to create money to finance government spending?   You are insane.    A central bank is there to steal from the citizens of the country that is naive enough to charter a central bank.    And yes, they do finance government spending, deficit spending which is just more stealing from a nations rank and file citizens who in addition pay interest on the debt a central bank creates of out thin air,... to that central bank.   That has nothing to do with capital formation save in the hands of a ruling elite who use it to steal more from the people including their freedoms.

Your a rascal, and an ignorant one at that who will never see the Revolution coming that is upon us as I write.   Our aim is to sweep the likes of the rascals who own and operate said central banks right into jail, and sheep like yourself out to pasture and shunned by the free society that is hopefully left standing at the end of it all.    Live Free or Die.   

Thu, 12/23/2010 - 11:15 | Link to Comment MrBoompi
MrBoompi's picture

    I have to agree with you about the wisdom of being controlled by central banks owned by the world's super wealthy.  The money they create no longer helps most people.  The Fed doesn't seem to care about the value of the dollar or unemployment.

    Weren't they in charge before the Great Depression too?  The government wisely enacted prudent regulations that stabilized the economy for almost 4 decades, but the struggle to do away with those pesky banking regulations never really went away.

   Now, not only is there no real effort to re-regulate, the Fed actually blocks attempts to stop illegal or unethical behavior.

   I hope we can establish a monetary system that isn't so susceptible to fraud and manipulation for the continued benefit of the rentier classs.

Thu, 12/23/2010 - 14:11 | Link to Comment TheMonetaryRed
TheMonetaryRed's picture

I hope we can establish a monetary system that isn't so susceptible to fraud and manipulation for the continued benefit of the rentier class.

Fraud was rampant throughout the entire history of gold-based banking. The precious metals market is even today a carnival of cheating and self-dealing. Those who think that gold will solve the problem simply haven't looked at history.

People seem to think that gold is somehow a guarantee against fraud. The idea seems to be "if I know there is real money backing this debt, then I can always collect." No, you can't.

First, you don't "know". There are, always have been and always will be people in this world who have made a profession of making people think they know things that aren't actually true. If you think you can't be fooled by such people, you already have been.

Second, logically you can't know the "real" value of anything until after you have consumed it or traded it away for something else. This is the insuperable economic conundrum. So whether you possess it or someone else has promised it to you and it sits in a vault somewhere, your knowledge of "real" value is illusory.

Finally, it's all about "collecting", isn't it? Goldbugs should all re-read "The Merchant of Venice." Shylock had the ultimate "physical" backing for his "bond" - Antonio promises him a pound of his own flesh. There is no way for Antonio to say he doesn't possess the "physical" to repay the debt. And yet at the end of the play, Shylock goes away empty-handed.

The play reveals the fact that all money is, in effect, the "fiat" money of some power or other because all debts are only as good as the certainty with which one can collect them - the power that backs up one's "bond".

There is, of course, the possibility of running an economy without debt. Assuming people wanted the economy to function at a post-medeival level and assuming the continued existence and expansion of the Internet, such an economy would (and does) depend absolutely on electronic balance sheets. If you can figure out a way other than government regulation to insure the integrity of hyper-fast-changing (hundreds of thousands of transactions per second) electronic balance sheets that involves moving pieces of physical metal around,... well, I think the people over at CERN will want to hear about it.

Thu, 12/23/2010 - 00:42 | Link to Comment honestann
honestann's picture

The 21st century == predators gone wild.

Terminate central banks.
Terminate governments.
Terminate fiat "money".

Get real, be happy.

Do NOT follow this link or you will be banned from the site!