Odious Debt - Michael Hudson

[don]

Iceland

[Starving Steve]

Re: Odious Debt - Michael Hudson

This is getting really difficult to understand: Do the banks run the govn'ts, including the Greek govn't, the Icelandic govn't, the new EU govn't ( whatever that means ), and the US govn't? Then, whatever runs what, whomever owes who, whatever bankers run the central bank wherever, then: WHAT DOES WHOLESALE DEBT REPUDIATION MEAN? And whatever wholesale debt repudiation means, is that repudiation inflationary or deflationary? Are we in a deflation now? When did this deflation begin?

Also, Starving Steve is beginning to notice that US $100 bills are not circulating. The new US $100 bill introduced Feb 10, 2011 is still not in Watsonville, California. It is unknown at the Chase Bank, one of the nation's largest banks. Is this indicative of a deflation?

Also interest rates are ZERO for savers. Money appears to have stopped circulating. The NYSE in real terms appears to be rising. What does this mean?

Also, houses have stopped selling. NO BUYERS. NONE, and none in British Columbia either.

Starving Steve is not only starving, he is scared.

[gwynedd1]

Re: Odious Debt - Michael Hudson

Well, since all our money is backed by debt, the interweb of leverage that keeps unraveling keeps shrinking money in circulation. This keeps driving up the relative price of assets otherwise known land, minerals and oil that cannot deflate fast enough to keep up with the depleted buying power. That's why goods and service won't get cheap either. The dollar carry trade just shoots that idea in the head as wealth is erecting toll booths on everything of worth not made by human hands. They don't want to create capital in Greece. Hot money wants to set up toll booths on water wells, roads and latrines.

[raja]

Re: Odious Debt - Michael Hudson

Hudson says the people of Iceland have to wait for an election to get rid of the government.

No, they don't.

They can refuse to pay their taxes, and starve the government.
Of course, this will require coordinated action, and they will have to do some suffering in the process, but better a little suffering now than a lifetime of slavery.

They also can boycott the Big Banks.
People don't realize that they are insuring their own slavery by continuing to patronize the Big Banks.
Just don't do business with these greedy assholes, and they will shrivel and die.
The power of the purse is stronger than the vote, when all we have to chose from is Political Enablers of the Financial Elite.

[Starving Steve]

Re: Odious Debt - Michael Hudson

Class, let's review some of the oddities of this Great Recession:

a.) Stocks are barely steady in nominal dollars but apparently rising in value in real dollars----- if for no other reason than the value of the dividend stream is forcing upward the bid on the stocks, regardless of barely steady corporate profits. Yes, one gets a headache trying to comprehend this. Let's sum up: stocks paying let's say a dividend of 4% are bid strongly, regardless of barely steady corporate profits and regardless of deflationary stock market conditions. So, by catching a bid in a deflationary economy with a steady ( maybe even rising dollar foreign exchange value ), the stocks might be actually rising in value in real terms.

b.) No matter how much a real estate market wants to inflate the price of homes/land/rents, the market has to drop if there are no mortgages and/or if the currency ( the beaver buck or the dollar or the pound, Euro, whatever ) is rising in foreign exchange value. And a currency rises in value if the currency is in short supply and the market requires that currency. Shortages trump all other conditions. The currency (or any commodity) in short supply has to catch a bid.

c.) If Starving Steve is correct, Bernanke is a genius. He has faked-out the markets by telling the markets that money is being dropped by helicopters to rescue.... whatever.

d.) As the debt pyramid implodes, the money supply shrinks if for no other reason than the fact that money is backed by debt. Heretofore, the more debt the banks could compile, the more money they could borrow from the central banks. But the reverse is also true: the less debt, the less borrowing power from the Fed or Bank of Canada, or whatever. As a result of less borrowing from the central bank or even a retirement of debt by banks to the central bank, the money supply goes flat. Then the money supply can, and probably would shrink. The economy might grow marginally because of population growth, but the money supply might actually shrink..... Hence, we might be entering into a de-flation, and this could accelerate.

e.) If the de-flation accelerates into a panic, the central bank would be forced to print and inject money into the banking system. That could cause a hyper-inflation as an over-reaction to the acceleration of de-flation. Oh yes....

f.) In a de-flation, the next market to implode would be in what, and where? Who knows? And which banks lent into that market and to whom? What collateral do these banks have for the loans that are now going to go sour?

g.) What is interesting, downright remarkable, is that as all of this continues to unravel, none of this risk was apparent during the Reagan/ Laffer /Greenspan boom. This was almost a repeat of the same series of mistakes made during the 1920's boom, and those mistakes during that boom were not apparent either until everything began to unravel during the October panic of 1929.

[Class: Maybe you might tack this blog onto the door of your local Republican Party headquarters. Give this blog to your local Republican Party Member of Congress. Maybe tack this blog onto the door of your local university economics department. You might also place this blog directly into the hand of Dr. Arthur Laffer at Stanford University. ]

[c1ue]

Re: Odious Debt - Michael Hudson

Hudson says the people of Iceland have to wait for an election to get rid of the government.

No, they don't.

They can refuse to pay their taxes, and starve the government.

This makes no sense whatsoever.

The issue isn't that the government must be destroyed.

The issue is that the government is clearly not acting as the representative of its constituency in this issue.

The people of Iceland don't want anarchy, they want a government which acts in their interest - as opposed to a government which acts on the bankster's interest.

[raja]

Re: Odious Debt - Michael Hudson

This makes no sense whatsoever.

The issue isn't that the government must be destroyed.

The issue is that the government is clearly not acting as the representative of its constituency in this issue.

The people of Iceland don't want anarchy, they want a government which acts in their interest - as opposed to a government which acts on the bankster's interest.

Who's talking about destroying the government?

I'm suggesting a People's rebellion that will force out the existing government, much like the American rebellion when they refused to pay taxes. Then, put in a government that will represent the People.
In other words, keep government, but throw out the parasites that now infest it.

And . . . starve the Big Bankers, by the People transferring their money to small local banks.
The present government says the Big Banks are TBTF, but the reality is that the People will decide that, not Goldman-Sachs gofers.

So, yes, destroy the Big Banks and destroy the present government by replacing it with a more representative one -- but don't destroy the use of banks or return to anarchy.

[c1ue]

Re: Odious Debt - Michael Hudson

I'm suggesting a People's rebellion that will force out the existing government, much like the American rebellion when they refused to pay taxes. Then, put in a government that will represent the People.
In other words, keep government, but throw out the parasites that now infest it.

If you're going to break the law by not paying taxes, why not break the law and just throw the rascals out?

I fail to see what taxation has to do with it.

And . . . starve the Big Bankers, by the People transferring their money to small local banks.
The present government says the Big Banks are TBTF, but the reality is that the People will decide that, not Goldman-Sachs gofers.

So, yes, destroy the Big Banks and destroy the present government by replacing it with a more representative one -- but don't destroy the use of banks or return to anarchy.

This statement would be really funny, if it weren't so sad.

The big banks right now don't want 'hot money' deposits. They're more than happy to let all the little people move their non-fee generating money into credit unions, because with ZIRP the banks actually lose money on deposits.

In normal times the banks would have to suck up the deposit pain, but with the Fed window today there is very little need for depositor cash.

Lastly, what makes you think the credit unions are going to be any better?

Are we already forgetting this:

http://www.curegister.net/2011/06/nc...er-losses.html

NCUA sues MBS dealers to recover losses to corporates


06/20/11: NCUA sues J.P. Morgan, RBS securities units. Filed Monday, the suits seek more than $800 million in recoveries related to mortgage-backed securities that helped sink five corporate federal credit unions, including U.S. Central and WesCorp. More suits may follow.

• Announcement PDF
• Filing against J.P. Morgan PDF
• Filing against RBS PDF

[Starving Steve]

Re: Odious Debt - Michael Hudson

At zero interest rates, the people don't need banks except to cash cheques. So, what I think I see is that people are hoarding cash, maybe even at home, maybe even in walls, in floors, maybe as insulation from cold. Money has stopped moving. Velocity = zero. This is very de-flationary. And..... and....and, why loan money onto real estate at 3.75% return when the 3.75% (and much more) can be lost in the first year of holding a de-flating real estate asset that had to be repoed?

Oh yes, in a pure de-flation, money is worth more sitting idle as cash, in some wall or safe-deposit box somewhere. The bank can do so, the people can do so, or both can do so and probably are doing so. The bank and the people both may be depositing money at zero return into short-term government bonds, just to be safe. But the point is: the cash disappears from circulation no matter how much the Fed prints.

In slow motion for slow-thinkers like myself: Zero interest rates force money out of circulation. That drop in velocity of money to zero means (m X v) = 0. Incomes fall because jobs disappear, and employers have less sales income to be able to hire workers. Interest income to savers vanishes, so they can't spend. That forces prices down because there is no money in circulation. Even whatever Bernanke prints at the Fed stays at the Fed, to decorate or insulate the walls of the Fed because no-one can pay-back loans. Loan demand vanishes, and no-one wants to lend...... In other words, at zero interest rates, everything in the economy freezes solid everywhere, and maybe even in Europe next. It's like the chill from America could spread outward to the entire world.

Scary stuff this de-flation, but still less scary than the bouts of inflation we've had for decades.

[gwynedd1]

Re: Odious Debt - Michael Hudson

Hi Starving Steve,

Deflation is not better. Deflation works with inflation to sheer the sheep best. The public would catch on to a steady inflation and they thought they did catch on by seeking inflation hedges which are nothing but deflationary traps. As Jefferson said "First by inflation, then by deflation" . Its all part of the process.

[gwynedd1]

Re: Odious Debt - Michael Hudson

I agree. How do you hurt banks with 0 interest rates? Even if you de-leverage, they go internationally for higher interest rates and whine like a stuck pig when they don't get the face value where oblamo and burn-us-easy bottle feeds them with the blood of the middle class and wipes their sloppy, dripping, double-ten, leveraged chins.

[lektrode]

Re: Odious Debt - Michael Hudson

Class, let's review some of the oddities of this Great Recession:

uh, mr steve.. with all due respect (believe it or not, i appreciate your posts/insight and read em ALL)

1st off, havent you heard?
'this Great Recession' = over, dude - the 'great recovery' has been underway since jan2009, after our latest cabal of fearless leaders bailed out AIG, GS, JPM and the rest of the TBTF-club in lower manhattan, along with the auto/gov unions, the welfare class, et al - right? well... thru last year, anyway - they havent the first foggiest notion of what to do for next year, but hey! why quible with success? - i mean just because theres a bunch of mal-content whiners protesting in the streets, thats nothing to be concerned about, what with all the good news we got coming out of the beltway?

no worries, mate, it's all good....

a.) Stocks are barely steady in nominal dollars but apparently rising in value in real dollars----- if for no other reason than the value of the dividend stream is forcing upward the bid on the stocks, regardless of barely steady corporate profits. Yes, one gets a headache trying to comprehend this. Let's sum up: stocks paying let's say a dividend of 4% are bid strongly, regardless of barely steady corporate profits and regardless of deflationary stock market conditions. So, by catching a bid in a deflationary economy with a steady ( maybe even rising dollar foreign exchange value ), the stocks might be actually rising in value in real terms.

and whats not to love about this?
i mean, just look at the bonuses they've paid themselves for saving the system for the rest of us, so we can rest easy now and pump whats left of our rapidly-evaporating savings back into the casino... uh... i mean.. stock markets - the barney-bill has fixed all the problems with the games being rigged and the dow is back up above 12000 again, so clearly the good times have returned, right? - and didnt unemployment drop again this past month?.. well... just because millions of 99'rs are exhausting their benefits/dropping from the list doesnt mean things arent getting better - right?

b.) No matter how much a real estate market wants to inflate the price of homes/land/rents, the market has to drop if there are no mortgages and/or if the currency ( the beaver buck or the dollar or the pound, Euro, whatever ) is rising in foreign exchange value. And a currency rises in value if the currency is in short supply and the market requires that currency. Shortages trump all other conditions. The currency (or any commodity) in short supply has to catch a bid.

look mr steve - just because theres millions of vacant houses, that nobody can afford to buy because they dont have jobs doesnt mean things arent looking up in real estate - i mean everybody over at the NAR is telling anybody who will listen that NOW is the best time to buy a house in years - right?... well... even if they did say that last year and the year before that and the year before that..(ad infinitum) - and surely you must know that the homebuyer tax credit addressed/fixed all the demand problems - right?... well... it will someday, even if most of us boomers will be dead by then, it was still a successful program - was it not?

c.) If Starving Steve is correct, Bernanke is a genius. He has faked-out the markets by telling the markets that money is being dropped by helicopters to rescue.... whatever.

absolutely mr steve! - see? it really is all a matter of perception.. and whether or not one is a GS alumni/partner and was able to be 'saved' by the wonderfully diabolical plans he and his pal timmy launched = a real credit to the dismal science and the academicians that advised them, along with all of the politicians that voted FOR these most excellent strategies

d.) As the debt pyramid implodes, the money supply shrinks if for no other reason than the fact that money is backed by debt. Heretofore, the more debt the banks could compile, the more money they could borrow from the central banks. But the reverse is also true: the less debt, the less borrowing power from the Fed or Bank of Canada, or whatever. As a result of less borrowing from the central bank or even a retirement of debt by banks to the central bank, the money supply goes flat. Then the money supply can, and probably would shrink. The economy might grow marginally because of population growth, but the money supply might actually shrink..... Hence, we might be entering into a de-flation, and this could accelerate.

well... now yer getting above my paygrade as a common tradesman, mr steve - i mean if it wasnt for all the good stuff eye read around here, i wouldnt have a clue about what yer talkin about - would otherwise have to get all my info from fair and balanced news sources like the wall st journal, foxnews and the huffington post...

e.) If the de-flation accelerates into a panic, the central bank would be forced to print and inject money into the banking system. That could cause a hyper-inflation as an over-reaction to the acceleration of de-flation. Oh yes....

again - no worries mr steve - uncle ben's helicopters can always be re-deployed to hoover-up all them billions - i mean you gotta believe him when he sez that he "can raise interest rates in 5 minutes" any ole time he's ready - right?
and merely because the price of just about everything (but labor) has skyrocketed... well... besides i-pads.. that doesnt mean that we have any inflation - i mean, he really is worried about deflation, still - right? well... even if the only thing that is deflating is the funny-money assets listed on the banks balance sheets - why would that be a problem, since the politicians fixed that one by changing the mark-to-market rules

f.) In a de-flation, the next market to implode would be in what, and where? Who knows? And which banks lent into that market and to whom? What collateral do these banks have for the loans that are now going to go sour?

quibling with success again, mr steve - besides, the TBTF-club still has many friends inside the beltway to deal with these details - and we can just wait until after the next elections to 'solve' those problems, anyway - right?
laissez les bons temps rouler, i say

g.) What is interesting, downright remarkable, is that as all of this continues to unravel, none of this risk was apparent during the Reagan/ Laffer /Greenspan boom. This was almost a repeat of the same series of mistakes made during the 1920's boom, and those mistakes during that boom were not apparent either until everything began to unravel during the October panic of 1929.

oh, but your missing the point on this one, mr steve - this is a perfect opportunity for the political class to show us just what great things they can do for The Rest of Us, another New Deal, if you will - dont spoil their party now...

[Class: Maybe you might tack this blog onto the door of your local Republican Party headquarters. Give this blog to your local Republican Party Member of Congress. Maybe tack this blog onto the door of your local university economics department. You might also place this blog directly into the hand of Dr. Arthur Laffer at Stanford University. ]

yep, i agree - and while yer at it, dont forget to pin one on the door of the 111th congress, since it was THEM who greased the skids for the Greatest Fraud That Has EVER Been Perpetrated, and give honorable mention to whitehouse occupant #44, since he signed-off on it all - since we want to make sure everybody gets equal credit for _everything_ thats happened since - right?

[don]

Re: Odious Debt - Michael Hudson

lektrode, I see by your posts you are on the prowl. Locked, loaded and ready. Forward!

[lektrode]

Re: Odious Debt - Michael Hudson

lektrode, I see by your posts you are on the prowl. Locked, loaded and ready. Forward!

aye, cap'n
thanyou, thanyouvermush...

guess i was in good company today, in the parody dept:
http://www.itulip.com/forums/showthr...-Bernstein-but...

[raja]

Re: Odious Debt - Michael Hudson

If you're going to break the law by not paying taxes, why not break the law and just throw the rascals out?

Here's why:

1. By with holding taxes, you keeping your assets safe from a group of people who are not representing you, and who are quite happy to screw you by making you debt slaves.
2. Tax withholding is faster than voting (depends on a country's elective and tax cycles).
3. Tax withholding doesn't require a majority to be effective.
4. Tax withholding cannot be watered down by compromise, as with election.
5. Tax withholding brings awareness to the issue, which is wealth and power disparity, helping to educate the public.
6. Tax withholding is easier to do than elective campaigning.
7. Tax withholding a good strategy when TPTB have dominated the media and subverted the election process.
8. Tax withholding is easier than protesting by sleeping outside in a park.
9. Tax withholding is not subject to vote tampering.
10. Tax withholding is on target because of its simplicity, unlike elections, where there a myriad of other issues that cloud the process (like what consenting adults do in private, abortion, gun rights, etc.)

The big banks right now don't want 'hot money' deposits. They're more than happy to let all the little people move their non-fee generating money into credit unions, because with ZIRP the banks actually lose money on deposits.
In normal times the banks would have to suck up the deposit pain, but with the Fed window today there is very little need for depositor cash.

You are only looking at the financial issue. You neglect the psychological, emotional and political effects.

Lastly, what makes you think the credit unions are going to be any better?

They are not too big too fail . . . so consider all the ramifications that go with that . . . .