Paul Craig Roberts – paulcraigroberts.org April 16, 2020
The answer to the question is “YES.” The large bailed-out creditors will end up with the property of the non-bailed-out debtors who are being pushed deeper into debt with “bail-out loans” and fees and penalties for missed debt payments. Write-offs for the One Percent, and more indebtedness for everyone else.
Turn your mind to the economy. The US has a work force of 164,000,000. The unemployment forecast from the work closedowns is 30%. That would mean 49,000,000 people who are potential rioters. (We are half way there with today’s report of a 16% unemployment rate with 22 million unemployed). Many of these people were already living paycheck to paycheck, could not raise $400, and their debts leave them no discretionary income. As they could barely service their debts when employed, how do they service them when unemployed and when their small businesses are closed and incurring costs but have no revenues? Loans further indebt them. The cash payouts to the unemployed might cover food and housing but will not service their debts.
Fast food franchises and stores in malls are saying they are not paying their rents for three months. Mall owners won’t be able to pay their creditors. The bailout works for no one except those who caused the problem. As they are being bailed out, they will have the money to buy up or foreclose on the bankrupted businesses. More property will be concentrated in fewer hands.
The bail-out scheme concocted by the New York banks and Trump’s Treasury Secretary, who earned the name “the foreclosure king” during his Wall Street career, leaves creditors whole and debtors deeper in debt.
The more debt is concentrated in fewer hands and the more indebted everyone else becomes, the less consumer purchasing power there is to drive the economy. The foreclosed assets become less valuable as their profitability declines with consumer purchasing power.
The destruction of the US economy has been underway since global corporations moved middle class jobs offshore. It has been underway since the financial sector diverted a larger share of consumer income to the service of debt. It has been underway since corporations invested their profits in buying back their own shares instead of expanding their production capabilities. It has been underway since Quantitative Easing inflated stock and bond prices beyond realistic values. It has been going on since the rules against concentration were set aside and the Glass-Steagall Act was repealed. It has been going on since endless wars crowded out infrastructure investment and social safety net expansion.
Is this a plot or stupidity? Whatever the answer, the economy is being destroyed.
The economic problem is that private sector debt, both personal and corporate, is too great to be paid. This problem existed prior to the closedown. The closedown means that there is even less income with which to service the unsustainable level of debt. This is not a problem that can be fixed with more debt.
The problem is that banks lend to finance the purchase of existing financial assets, not to exand the economy’s productive potential.
The problem is that corporations use their profits and borrow money in order to buy back their own equity instead of investing in their businesses. The executives indebt the corporations while decapitalizing them, and they are rewarded for doing so with “performance bonuses.”
The problem is that global corporations thinking short-term moved high-productivity, high-value-added US jobs to Asia, thus reducing earned income in the US, impairing state and local tax base, and causing the Federal Reserve to substitute a growth in consumer debt in place of the lost consumer income growth.
The people in charge of the fix are only fixing it for themselves and in a short-sighted way. There is only one way to fix the situation, and that is to write down private sector debts to levels that can be serviced. As the creditors are being bailed out regardless, their loan losses don’t matter.
The bank and corporate bailouts are an opportunity to fix the economy in other important ways. In effect, the bailouts amount to nationalization. The government should accept the ownership that it is purchasing. Then the government can break up the “banks too big to fail” and separate investment from commercial banking without having to pass new Glass-Steagall legislation and without having to battle against financial lobbying in Congress. Once broken up, the banks could be sold off. This would take enormous vulnerability out of the financial system and restore financial competition. With corporations in government hands, the jobs could be brought home from overseas. The middle class would be restored.
These measures together with a debt writedown would restore consumer purchasing power. Pent-up demand would propel the economy to higher growth as occurred following World War II.
This is a real solution to a real problem. But with the One Percent in charge of the problem, we are not going to get a real solution. We are going to get more money used to push up prices of financial assets and paper over unsustainable debt and a dying economy with an artificially-inflated stock market.
The elite have failed us too many times. It is time to dethrone them
Did not read beyond the first few lines. Nothing has changed, the dog gets closer and it bears more teeth more. The West is communism with incentives. The system has been collapsing since the 1970s. The Late 80s saw massive financial deregulation. Then we had the DotCom bubble go pop and then Clinton dumped Glass Seagall for his mate Dubya & then all the big Central Banks allowed the financial centers to build the mother of all debt bubbles. This was popped by design in 2008, although it started in August 2007. And let’s remember that the US government lied for 18 months about it being in a recession. Nothing was fixed and there have been rolling QE under various guises such as Help2Buy in the UK, cost so far, £20 billion, that’s pure debt. And last year the US Federal Reserve Bank was pumping $100 billion per month into the global financial system.
For all the fake news media’s concern about the economy, this must be set in some sort of context. There has been a global currency war where countries devalue their currency in order to get a trade advantage. The UK played this game and gained zero trade advantage. The US has embarked on countless illegal sanctions. Sanctions are an act of war and are usually taken as a sign that hot wars are going to follow. Then we have various trade wars, which I won’t go into too much detail, but the EU suffers US sanctions and Trump has threatened to destroy the German economy by putting high tariffs on German cars. So the idea that our corrupt elites care about trade, jobs, and society is a myth.
Covid is essentially an excuse for another massive bout of QE and while all of the above destruction of the global economy has been going on, the UK deep state decides to Brexit. Forget the stupid rigged referendum. David Cameron was so say negotiating with the EU. The fake news reported all kinds background deals & these deals were very minor tweaks. The main thing that Cameron wanted which the fake news ignored, was a veto on the City of London regulation. The EU didn’t give Cameron what he wanted and that is by far and away, the main reason for Brexit. If you think it’s about all the things mentioned in the UK fake news media, then you are a plonker with some deep-seated prejudices. The City is a state within the UK. It is above UK laws & it is the City that feeds the offshore banking system and the trusts that hide your hard-earned labour.
Brexit is a trade war against the EU & fits in with US policy. These actions appear to be Tumpian, but they are not. MI6 did all it could to stop Trump becoming US president, MI6 directly interfered in the US election, because they wanted Killary because she has a massive ego problem with Putin and this mindset makes Hillary much more likely to make war with Russia. MI6s secret war with Russia and Putin is another reason for Brexit. The EU and Russia are a marriage made in heaven. So how does that affect the little old UK island group moored off the EU coast as the political and economic centers of Europe move Eastwards. The UK is becoming a EU & geopolitical side-show and as much as MI6 tries, they can’t stop this. Compounding this terrible position, the UK must contend with China’s Silk Road 2 project. Publically the UK is in favour, but this is a big lie, as it compounds the UKs marginalisation. The timing of Covid is a UK masterstroke.
I feel stupid asking this, but how is “Covid a UK masterstroke”?
Did not read except for the title. Reading PCR is a waste of time.
It’s not new feudalism. We are approaching the Messianic Age.
MESSIAH IS COMING!
More: https://archive.org/details/TheJewishUtopia/mode/2up
Astraea: because Brexit was a disaster. The Chinese wouldn’t damage their economy or the economies of those who buy their products. The EU wouldn’t inflict this damage, especially on its weakest member states. The US wouldn’t do this because it’s not entirely clear if this removes Trump, or delays the election. Also, consider that some areas in the US are very unstable. Would elements in the US put 30% of its workers out of work? Would they disable two Pacific carriers?
The Brexit disaster had no upside, but Covid attacks all our enemies and competitors. The US, EU, and China were not going to give the UK decent trade deals. MI6 directly interfered in the US election with the faked Russiagate Dossier in a blatant attempt to stop Trump and he knows this. We know the EU situation as the UK wants divergence. A trade deal with China isn’t that important as we don’t export that much, but China would never give the UK a trade deal that is as good as the EU. Germany out exports the UK in China by 5 to 1. This idea that the UK was somehow going to transform itself into an exporting powerhouse, is a joke. Covid, which could be around for at least two years, will weaken the global playing field that can only transform the UK’s post-Brexit chances. It also appears that Britain’s Covid experience appears to be largely faked and that implies that the population has been preprepared, pre vaccinated in some way. We’ve pasted the peak in most areas, yet a 4000 bed Covid death center is empty… maybe wave 2 will fill it up.
I’ve postulated this on here several times, and no one has questioned it. Maybe they think it’s too daft, who knows. I don’t see the financial collapse, which started before Covid, the US election year and Brexit as a coincidence with Covid. Then factor in Gates stepping down from Microsoft and the 201 conference and the World Military Games in Wuhan as coincidences.
There is more and I have not linked these in previous Covid related comments. MI6 contaminated addresses all over London, British Airways planes and sites across Europe with Polonium 210, then we have the Skripals fiasco, in my view, another MI6 operation…do we see a pattern here? I can’t be bothered to go into all the neuances, but I think Covid came from Porton Down and different releases were made in China, Iran, the EU, in their two weakest countries, Italy and Spain… plenty of hate on Spain over Gibralter and the US where the UK wants to force the US into better trade deal terms and maybe dump Trump out of the White House. Hillary could still run, or maybe Michael Trans Obama.
All my analysis points to the UK behind Covid and elements in the US might be helping out. The most amazing thing, as a fun comment, the UK fake news media hasn’t blamed Russia & Putin for Covid. Of course, this would draw too much attention to the UK, so this strengthens my view. Until I see solid evidence, Covid was released separately in various locations. It did not start in China and spread to Iran and Italy.
Carl Jones I was with you and you had my attention until you proved what a complete and utter D *& C K ou are by bringing Brexit into it!! Get a LIFE MOVE ON it is 4 YEARS since the vote that YOIU are bstill refusing to accept because you have no patriotism!!
GET A LIFE, GET A JOB nor DO ONE LOSER!!
Carl admits he didn’t read what PCR has to say and then expects us to read what he has to say? D*&CK seems appropriate.
Wow, such delightful abuse and the EDITOR allows it. However, I am not surprised at all.
I read until the writer goes off the rails. PCR goes off the rails in the first few sentences, as I clearly state and I gave my reasons. PCR has a big habit of repeating himself, regurgitating the same narrative in article after article.
British and PROUD: why not bring Brexit into it? Even the fake news pundits say Brexit has just started, the UK has just left the starting blocks. Of course, blinkered sheeple like you can’t see the farmer behind his arse. “Patriotism” is literally for morons or those who like to control morons. I live in London, where are all you ‘patriots’? What is your patriotism based on… oh, don’t tell me, Britain’s fake history, maybe you wrap the Union Jack around your naked body and prance around the garden on the Queen’s birthday? I have no intension of moving on… whatever that is, when Brexit and its consequences are current and will be so for decades.
Mefobills: “Carl admits he didn’t read what PCR has to say and then expects us to read what he has to say”. Can you point to where I said: “Then expects us to read what he has to say”. I am not forcing you to read anything. I am very selective on what I read. and I would hope others do the same. I might read 1.5 articles on this site. I might watch 1 in ten videos, depending on length.
My purpose on this site, is no different from reading the Mailonline. I am not here to impress anyone, I am not here to engage with so many others who’s comments are riddled with racism, religious hate, and deep-seated prejudices. I don’t know Rixon, he doesn’t appear to want to know us (whoever we are.lol), and I have no idea if he is a real person. He probably is a real person, but I don’t have the slightest shred of evidence to make a decision either way. As to the people who post comments, I am of the same mind. Very few post under their real names, so they should be viewed accordingly.
I believe my main audience to be the various intelligence agencies around the world, not just UK and US, who scour sites like this one, for insight. These agencies employ all sorts of writers from all the political positions to cater for every taste. And the same can be said for alternative websites. I have no idea if the people who post comments are real. The two abusive replies above could have come from some GCHQ tin hut full of retired ex-military trolls, who knows, who cares. I don’t and the more vile abuse I get, the happier I am. Big grin as I post this. Oh, I am used to being booted off government-run alternative news websites. Just one last comment: I attended one (maybe 2) of Ian Fantom’s 9/11 group meetings in London. If memory serves me correctly, these were held in a Kings Cross station pub. I’ve never been so rudely treated as I was by Ian and I hadn’t even talked to him beyond a hello. It’s as if he had been pre-warned, by who, I can only guess… I believe these little groups are out there to fly trap people like me. They don’t want a bigger truth movement. They seek to contain truth and this is why the truth movement is so small. Oh no, Greta, a 16yr old, now 17, outperforms the truth movement by 10,000% in 1/20th of the time and she did it by lying through her teeth.