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Killing the Host: Wall Street and Main Street

Michael Hudson has been writing for years about the negative influence the US FIRE sector (Finance, Insurance, Real Estate) has on 90% of American workers. His latest tome, Killing the Host, argues "Asset price inflation is the primary dynamic explaining today's polarization of wealth and income.

"Yet most newscasts applaud daily rises in the stock averages as if the wealth of the One Percent, who own the great bulk of stocks and other financial assets, is a proxy for how well the economy is doing.

"What actually occurs is that financing corporate buyouts on credit factors interest payments and fees into the prices that companies must charge for their products.”

"Where this leads, says Hudson, is that 'Paying these financial charges leaves less available to invest or hire more labor. Likewise for the overall economy, the effect of a debt-leveraged real estate bubble and asset-price inflation is that interest payments and fees to bankers and bondholders leave less available to spend on goods and services.
http://www.counterpunch.org/2015/09/01/how-wall-street-parasites-have-devoured-their-hosts-your-retirement-plan-and-the-u-s-economy/
"'The financial overhead rises, squeezing the "real" economy and slowing new investment and hiring.'”
 
"Chapter 8 of 'Killing the Host' begins with this quotation from John Maynard Keynes: '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.' Hudson expands further:
http://www.counterpunch.org/2015/09/01/how-wall-street-parasites-have-devoured-their-hosts-your-retirement-plan-and-the-u-s-economy/
“'Instead of warning against turning the stock market into a predatory financial system that is de-industrializing the economy, [business schools] have jumped on the bandwagon of debt leveraging and stock buybacks. Financial wealth is the aim, not industrial wealth creation or overall prosperity. The result is that while raiders and activist shareholders have debt- leveraged companies from the outside, their internal management has followed the post-modern business school philosophy viewing ‘wealth creation’ narrowly in terms of a company’s share price. The result is financial engineering that links the remuneration of managers to how much they can increase the stock price, and by rewarding them with stock options. This gives managers an incentive to buy up company shares and even to borrow to finance such buybacks instead of to invest in expanding production and markets.'”

"The net result of this, says Hudson, is an effective 'debt-financed takeover from within.'”
 

Marshabar

Council Member
Perhaps it is economic jujitsu camouflaged as a big blunder. A pratfall that "accidentally" takes out the target. The target? The economy the rest of the world lives in. The perp? The alternate economy sucking the life out of us. If it seems implausible and impossible and deadly but they still keep doing it, they must have something in mind that we aren't seeing. Maybe we are seeing the leveraged buyout of the whole planet?

Hudson says "debt-financed takeover from within" but it may actually be so far in its out.
 
Perhaps it is economic jujitsu camouflaged as a big blunder. A pratfall that "accidentally" takes out the target. The target? The economy the rest of the world lives in. The perp? The alternate economy sucking the life out of us. If it seems implausible and impossible and deadly but they still keep doing it, they must have something in mind that we aren't seeing. Maybe we are seeing the leveraged buyout of the whole planet?

Hudson says "debt-financed takeover from within" but it may actually be so far in its out.
He makes an analogy involving economic parasites which have inverted the traditional relationship between finance, labor, and industry.
"Hudson writes: 'A parasite’s toolkit includes behavior-modifying enzymes to make the host protect and nurture it. Financial intruders into a host economy use Junk Economics to rationalize rentier parasitism as if it makes a productive contribution, as if the tumor they create is part of the host’s own body, not an overgrowth living off the economy. A harmony of interests is depicted between finance and industry, Wall Street and Main Street, and even between creditors and debtors, monopolists and their customers.'

"What has evolved, says Hudson, is that Wall Street banks have 'become the economy’s central planners, and their plan is for industry and labor to serve finance, not the other way around.'”
http://www.counterpunch.org/2015/09/01/how-wall-street-parasites-have-devoured-their-hosts-your-retirement-plan-and-the-u-s-economy/
 
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