Tuesday, March 22, 2016

"As long as creditors remain in control, they are quite willing to sacrifice the 99 Percent to pay the One Percent."

"The financial sector today is decoupled from industrialization.

As Greensboro's real estate elites' projects are decoupled from economic reality
with the help of City Council, the Triad Business Journal and the News and Record

Its main interface with industry is to provide credit to corporate raiders. Their objective is asset stripping, They use earnings to repay financial backers (usually junk-bond holders), not to increase production. The effect is to suck income from the company and from the economy to pay financial elites.

Lorillard, Fresh Market leveraged buyouts etc...

These elites play the role today that landlords played under feudalism. They levy interest and financial fees that are like a tax, to support what the classical economists called “unproductive activity.” That is what I mean by “parasitic.”

Roy Carroll, Jim Melvin, Marty Kotis, Randall Kaplan and the Koury Clan

How about another $5 million from taxpayers for the Aquatic to line Koury and Kotis profits 
on 'Gate City Blvd'?

If loans are not used to finance production and increase the economic surplus, then interest has to be paid out of other income. It is what economists call a zero-sum activity...

...Power tends to pass into the hands of lenders, so they lose control – and become less democratic.

To return to my use of the word parasite, any exploitation or “free lunch” implies a host. In this respect finance is a form of war, domestically as well as internationally.

In Greensboro, it's the 1% who control City Council
who suck business and profit at the expense of unconnected local, smaller competitors

What's amazing is how easily Tony Wilkins 
got sucked into being such a blatant pawn

At least in nature, “smart” parasites may perform helpful functions, such as helping their host find food. But as the host weakens, the parasite lays eggs, which hatch and devour the host, killing it. That is what predatory finance is doing to today’s economies. It’s stripping assets, not permitting growth or even letting the economy replenish itself.

...In nature, a parasite first dulls the host’s awareness that it is being attacked. Then, the free luncher produces enzymes that control the host’s brain and make it think that it should protect the parasite – that the outsider is part of its own body, even like a baby to be specially protected.

The financial sector does something similar by pretending to be part of the industrial production-and-consumption economy.

...The reality is that they are a subtrahend, a transfer payment from the “real” economy to the Finance, Insurance and Real Estate Sector...

...Creditors are trying to privatize what remains in the public domains of debtor economies. Buyers of these assets – usually on credit – build interest and high monopoly rents into the prices they charge.

How much do our top real estate folks owe in Greensboro
that may not be repaid as we descend?

...growth in income and nearly all growth in wealth or net worth has accrued to the One Percent, almost nothing for the 99 Percent.

How about a big shout out to our mayor
for letting it happen with such ease in our community

...you can think of the economy as the One Percent getting the 99 Percent increasingly into debt, and siphoning off as interest payments and other financial charges whatever labor or business earns. The more a family earns, for instance, the more it can borrow to buy a nicer home in a better neighborhood – on mortgage. The rising price of housing ends up being paid to the bank – and over the course of a 30-year mortgage, the banker receives more in interest than the seller gets.

...The mathematics of compound interest means that economies can only pay their debts by creating a financial bubble – more and more credit to bid up asset prices for real estate, stocks and bonds, enabling banks to make larger loans. Today’s economies are obliged to develop into Ponzi schemes to keep going – until they collapse in a crash.

Which is exactly what is happening here at the local level

...As long as creditors remain in control, they are quite willing to sacrifice the 99 Percent to pay the One Percent.

...the United States and Europe are in a state of debt deflation, where people and businesses have to pay banks instead of spending their income on goods and services. So markets shrink, sales and profits fall, and the stock market turns down.

This decline was offset by the Federal Reserve and the European Central Bank trying to re-inflate the Bubble Economy by Quantitative Easing – providing reserves to the banks in exchange for their portfolio of mortgages and other loans. Otherwise, the banks would have had to sell these loans in “the market” at falling prices.

Roy and Marty made most of their money on the coat tails of federal intervention

In the name of saving “the market,” the Fed and ECB therefore overruled the market. Today, over 80 percent of U.S. home mortgages are guaranteed by the Federal Housing Authority. Banks won’t make loans without the government picking up the risk of non-payment. So bankers just pretend to be free market.

...Negative interest rates mean that pension funds cannot invest in securities that yield enough for them to pay what they have promised their contributors. Insurance companies can’t earn the money to pay their policyholders. So something has to give.

There will be breaks in the chain of payments. But the way Wall Street administrators at the Treasury and Fed plan the crisis is for small savers to lose out to the large institutional investors. So the bottom line that I see is a slow crash.

...A financialized economy tends to strip the economy of money, by sucking up to the creditor One Percent on top. That is what happened in Rome, and the result was the Dark Age.

...The One Percent who hold most of the economy’s savings are quite willing to plunge society into depression to collect on their savings claims. Their greed is why we are in an economic war much like Rome’s Conflict of the Orders that shaped the Republic, and its century of civil war between creditors and debtors, 133-29 BC.

...today’s financial crisis is leading to a New Cold War. It is as much financial as it is military.

...Most politicians today – at least in the United States – are proxies for their campaign contributors. President Obama is basically a lobbyist for his Wall Street in the Democratic Party’s Robert Rubin gang.

...In the long term, debts won’t be paid in the way that Rome’s debts were not paid. The money economy itself was stripped, and the empire fell into a prolonged Dark Age. That is the fate that will befall the West if it continues to support the “rights” of creditors over the right of nations and economies to survive."