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Ross Welcome to Renegade Inc. However you look at it, 2020 was a train wreck. So as we look forward to 2021, we wanted to get political and economic insight from two friends of the show. Chris Williamson and Michael Hudson share their views on what we can look out for in the new year.

Ross Michael Hudson, fantastic to have you back at Renegade Inc.

Michael Hudson Good to be back, Ross.

Ross Michael, describe 2020 in one word.

Michael Hudson In one word? The pandemic, setting the stage for homelessness.

Ross Wow! what is the one thing? Because we focused hard on the negative throughout the year. What’s the one thing you think has been positive or been something that’s transpired from this pandemic which actually we should look at and think, you know what, that’s quite a good bit of advancement?

Michael Hudson Well, the pandemic’s been a bonanza for the stock market and for the wealthiest one percent. They’ve gained a trillion dollars since the start of the pandemic. Amazon stock is going through the roof. And with 70 percent of restaurants in New York City going bankrupt, this is made Doordash and other Internet firms make a fortune by essentially wiping out the restaurants, taking 30 percent of the receipts and the charge for the restaurant menu. Essentially, this puts most restaurants in America out of business.

That means that it’s a bonanza for the really big companies to pick up all the slack now that you’re wiping out the middle class. It’s a great prospect for private capital real estate companies like Blackstone, because they can buy a huge number of foreclosed properties and empty properties that can’t be rented out and Blackstone can pick up these homes that are defaulted on, buy them out, turn them into rental property and make a fortune by raising the cost of housing in the United States, all increasing the rent by the people who have lost the jobs. And it’s great prospects for the big restaurant chains, McDonald’s and the others. The big chains can survive, whereas the small individual restaurants have basically been driven out of business. So if you’re a billionaire, it’s been just a wonderful year.

Ross So we’re talking about the One Percent here as the late, great David Graeber termed?

Michael Hudson But if you look at Donald Trump, that is the economy. When he says the economy’s getting better, he means the One Percent is getting better. Is that what you’re talking about?

Ross But isn’t it the case in the US, your president and lots of others confuse the stock market and the real economy. We’re not in an industrial capitalist society in the US and the UK anymore. It’s a rentier financial capitalist society. And that confusion between the stock market doing well and the real economy, doing well. Actually, those two things are starkly different, aren’t they?

Michael Hudson Yes, of course. So if you say what’s been good, all the good is indeed for the rentier economy. All the good is for the stock market, for the absentee property owners, for the big chains, but not good for the 99 percent. They’re pretty much left behind.

Ross Is there going to be a lot of what is called jingle mail in the US, which is basically owner occupiers sending keys back, saying it is totally economically unviable for us to even consider reopening this restaurant, small business, whatever it might be?

Michael Hudson The only people who are going to voluntarily walk away from buildings are basically absentee owners of commercial buildings. There’s going to be a great shortage, a great downsizing, of our commercial properties, especially because so many businesses have gone out of business. Jingle mail was basically on private homeowners whose mortgage was far above the actual market value. The mortgages were not written down and so these were voluntarily walking away. But housing prices have gone up in the United States. So nobody’s going to want to voluntarily walk away from their home. If you’ve been unemployed, haven’t got a pay cheque and are not able to pay your mortgage, you’re going to want to stay there and put off eviction for just as long as you can. But if you’ve invested in a small office building that had a restaurant on the ground floor and its offices have now decided that everybody can work from home, we don’t need so much office space anymore. In that case the heavily mortgaged commercial owner may walk away. That’s going to affect primarily the smaller banks, the community banks that have made most of these small loans to small business owners. The big absentee owners have gone to the big banks, Chase and Citigroup etc. So you’re going to have a weakening of the small banks and the community banks and they’ll probably be absorbed into the larger banks as a result.

Ross What do you think was revealed in 2020 that we all intuitively knew but couldn’t actually see because it hadn’t crystallized?

Michael Hudson Well, it’s obvious that the economy never recovered from the Obama depression after he bailed out the banks, not the economy. So the question is, how long can the economy limp along without recovery?

ORDER IT NOW

Well, it’s obvious now that the debts can’t be paid, but the coronavirus only catalyzed that. It’s made it even clearer. So in a sense, the Biden administration is going to be picking up just where the Obama administration left off, namely with huge evictions. Obama evicted about 10 million families. Most of them were black and Hispanic, lower income families who were the victims of the chump mortgages. Biden’s going to start his administration by kicking out probably another five million families. Again, black and Hispanic families are going to be the big losers because they were the people who had the highest coronavirus or were the first to be laid off. So it’s going to begin with a large eviction.

This reverses the trend in homeownership going up to 2008. It’s been going down, and this is going to continue now. People somehow imagined that there was going to be a recovery, that somehow we could recover from the post 2008 breakdown. But now it’s obvious we can’t recover. You’re going to have the polarization of the economy that has been occurring for the last 12 years. It will simply accelerate.

Ross What do you think are the megatrends that we should be looking at in 2021? What do you think is the direction of travel, if you like, for so-called developed economies?

Michael Hudson Well, the big trend in any economy is the growth of debt, because the debt grows exponentially. The economy has painted itself into a debt corner. We can see that in real estate. We can see that for small business. There’s also almost no way to recover. The Federal Reserve has been printing quantitative easing to keep stock and bonds high. But for the real economy, the trend is polarization and lower employment.

The trend also is that state and local finances are broke, especially in the biggest cities, New York City, San Francisco and Los Angeles. They’re not getting income tax revenue from the unemployed or closed businesses. They’re not getting the real estate tax with so many defaults and mortgage arrears. In New York City there’s talk of cutting back the subways by 70 percent. People will be afraid to take the subways when they’re overcrowded with people with the virus. So you’re having a breakdown not only in state and local finances, but of public services that are state run – public transportation services, health services, education is being downsized. Everything that is funded out of state and local budgets is going to suffer.

And living standards are going to be very sharply downward as people realize how many services they got are dependent on public infrastructure.

Ross Which, of course, opens the door for vulture funds and predatory capital, whether it be private equity, VCs or whatever else to come in and do public infrastructure deals?

Michael Hudson Well, you’ll have privatizations. The American economy will be privatized because the states can’t support their transportation system and other systems. The pressure to privatize subway and transport system, schools are going to be more privatized, as jails have been in the United States. So you’re going to have a huge privatization trend.

Ross What is the one thing that has really surprised you in 2020? What have you laughed at? What has given you a chuckle?

Michael Hudson The surprise – that I really shouldn’t have been surprised at – is how naive Bernie Sanders supporters were in thinking that they were going to get a fair deal and that the elections were going to be fair. The illusion is that people were actually going to have a fair election when the last thing the vested interests wanted was Bernie Sanders or Elizabeth Warren or any kind of reformer. So what happened to Sanders is what happened to Corbyn in Britain and the Labour Party’s neoliberal leadership.

So what’s for laughs? I guess, Tulsi Gabbard’s takedown of Kamala Harris was absolutely wonderful. Everybody just broke out laughing, cheering for her. And of course, that’s why she was marginalized, and now we have Kamala Harris as the senior vice president.

Video clip (Tulsi Gabbard) Senator Harris says she’s proud of her record as a prosecutor and that she’ll be a prosecutor president. But I’m deeply concerned about this record. She put over 1500 people in jail for marijuana violations and then laughed about it when she was asked if she ever smoked marijuana. She blocked evidence that would have freed an innocent man from death row until the courts forced her to do so. She kept people in prison beyond their sentences to use them as cheap labour for the state of California. And she fought to keep the cash bail system in place that impacts poor people in the worst kind of way.

Ross Michael, one prediction or three, over to you for 2021. What should our viewers be thinking about looking at, and considering as we go into the New Year?

Michael Hudson What’s on the upswing is poverty, homelessness, crime. It’ll be very good to invest in crime prevention services, burglar alarms other things. You’re going to have a lot of bond defaults for tax exempt bonds for cities and states can’t pay. And the transportation costs are going to rise, I think. So the cost of living is going to rise as public services are privatized and cut back. That will all be good news for the stock market.

Ross You mentioned Bernie Sanders and Jeremy Corbyn. The current sort of divisive political climate is engendering needless sort of scapegoating, recriminations, witch hunts and all the rest of it. How does that logically end, in your view?

Michael Hudson With Sanders certainly, capitulation. He wants to remain a player in the game. So he’s jumped on the Biden bandwagon, and he’s denounced everything that he stood for. He’s all for the Obamacare now, postponing socialized medicine. He’s joined the flock.

ORDER IT NOW

He was a catalyst for a left wing movement in the United States. But a catalyst is not part of the reaction, the chemical reaction. So he’s put something in motion that he’s not a part of. We’ll just have to see whether there is a recognition in America that no progress can be made in the context of the Republican and Democratic Party. They’re the same party. It’s a duopoly that takes third parties off of the ballot. Unlike in Europe, where you can have in parliament all sorts of other parties, you’re having just a really a political lockdown in America to go hand in hand with the economic lockdown.

Ross So, the world is incredibly divided, as we know. But it’s divided on different lines now, isn’t it? Because this multipolarity is here to stay. However, in the Beltway in Washington, the Americans think that unipolarity is here, which is laughable. But this multipolar world is split between, let’s say, finance capitalism and everybody else, because the West, the developed west, wants financial capitalism, doesn’t understand that it’s sowing the seeds of its own demise. Just elaborate on this a little bit – the West and financial capitalism versus growth economies that create real value.

Michael Hudson Well, that’s exactly what’s happening. Countries are beginning to say no to the US demands that they neoliberalize their economies and follow the Washington consensus. So you’re going to have China, Russia and the Shanghai Cooperation Organization nations essentially going their own way, de-dollarizing and creating their own economy on non-neoliberal lines, as opposed to the United States. In United States, there’s going to be a lot of people losing their status. And when people lose their status and they’re impoverished, that’s the breeding ground for fascism.

Ross Why is it that the US as a political class, have never understood that meeting other nations halfway is way better than trying to throttle them into economic submission?

Michael Hudson Well, it’s a mentality. Donald Trump said America has to win every deal, that we won’t be a member of any deal that we won’t. The American mentality also for one hundred years, actually, since the beginning of the republic, says we will never follow what other nations tell us to do. We will not join the World Court. We will not join any international organization unless we have a veto power in it. So America has veto power in the International Monetary Fund, the World Bank and the United Nations, and it refuses to compromise with other nations because we’re the exceptional country.

“Exceptional” means that we don’t have to abide by the treaties we signed. We don’t have to abide by international law. We can do whatever we want, because we’re America. That spirit has increased, especially as people are impoverished, living on the street and homeless. They think, well, at least we’re exceptional and we can do whatever we want.

Ross That kind of hubris puts all the Greek heroes to shame. And you know what happened to all of them?

Michael Hudson That’s right. It’s wealth addiction. It’s an addiction to power. Hubris really is when you become so successful, it goes to your head and you think you can do absolutely anything. And after all, you never know when other countries will push back until they actually begin to push back. So America, after World War Two, expanded and expanded and expanded its power with no pushback. So it thought we could do this forever. And now there’s a pushback and it thinks this is not natural. “America is exceptional. Don’t countries get it?”

Ross Michael Hudson, always a pleasure to have you. Thank you very much for your time and happy New Year.

Michael Hudson Happy New Year to you, too, Ross.

 
• Category: Economics • Tags: Banking Industry, Coronavirus, Wall Street 
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  1. Wyatt says:

    Well, it’s a mentality. Donald Trump said America has to win every deal, that we won’t be a member of any deal that we won’t. The American mentality also for one hundred years, actually, since the beginning of the republic, says we will never follow what other nations tell us to do. We will not join the World Court. We will not join any international organization unless we have a veto power in it. So America has veto power in the International Monetary Fund, the World Bank and the United Nations, and it refuses to compromise with other nations because we’re the exceptional country.

    The reason for that being that poorer, more conniving nations look at the US as a piggy bank rather than a respected, sovereign nation. The Paris Climate Accords handicapped American industry and funneled money to China on the grounds that they were a developing nation that needed assistance rather than the largest polluter in the world, not just of the air, but the sea and land as well. An intelligent man does not surrender his power if he has it.

    Likewise, given that America came from an English founding, the American founding fathers were well aware of the long arm of the British Empire. They may not have been aware of what a bunch of backstabbing bastards the English were (and presumably still are,) but they understood that involving the US with European affairs would inevitably press us into service of the British Empire.

    Now guess what happened when Anglophilic presidents were in charge during the preludes of the World Wars.

    For the better part of its existence, America distanced itself from European affairs and prospered as a result. Once we became embroiled in their wars and their empires and their ideological movements, collapse was inevitable. America was once a nation with a libertarian streak. Don’t fuck with me, I won’t fuck with you. The North eroded that with tariffs against the South, Lincoln amplified it and the states were quashed by the Civil War, the 17th Amendment and the Civil Rights Act of 1964. Very gradually, America has been pushed into this excessively nationalist, creeping authoritarian mentality that demands conformity and punishes dissent.

    Trump wanting to “win every deal” was his way of expressing frustration with America having to deal with dumb shit like the Paris Climate Accords, the TPP and the eternal War on Terror. Everything we get involved in, America loses more and more of its treasure and identity and we do this to enrich politicians, big business and empower Israel.

    And because Trump was the only one to open his mouth and expound upon this stupidity, fuck everyone else. He was the only one who bothered to point out the insanity and try to do anything about it and for that reason, he is the only one who should lead. Hang the traitors and drown the rat bastards who continuously sell out the American middle class.

    • Agree: phillip sawicki
  2. jadan says:

    America is failing to socialize and to fulfill its own mandate to provide liberty and justice for all because it is dominated by a libertarian capitalism that is cannibalistic in nature. Privatization means the power to tax passes into private hands in the form of use fees as the sacred principle of private property devours the wealth and prerogatives of the sovereign people. The commons is no longer common. The people are no longer the people but a gathering of benighted individuals strangled by debt.The feudal lords monetize everything to generate income for themselves. They steal from the people and dismiss public interest as “socialism” or “radical leftism”. Today these lords are known as “investors”. Wall Street is now dedicated to the allocation of capital for investors and usury is regarded a “productive” and factored into GDP.

    Hudson is absolutely correct in his analysis and there is no light at the end of the tunnel unless there is fundamental systemic change. This country is ruled by ideology not common sense. This radical capitalism is preached by the “rentier” class, the billionaires who fund their money-for-nothing cult by devouring the middle class and the poor. Warren Buffet profits nicely from the sale of mobile homes which shelter those who cannot afford something more substantial. From the perspective of the investor class if you can’t afford to pay to play, you’re a useless eater, yet you can think of yourself as a liberal and even progressive, like Jamie Dimon, and other oligarchs who will freely distribute bullshit but are very miserly when providing credit for productive purposes.

    The lunatic Trump is hoist on his own petard, thankfully, but Joe Biden isn’t going to cure the disease of which Trumpism is a symptom. The pandemic is an unmistakable signal of systemic failure. He is not an advocate of systemic change.

    • Agree: RadicalCenter
  3. Bro43rd says:

    Mr Hudson is just an Keynesian writ large. Somehow he is praised for his economic genius advocating for more of what got us here to begin with.
    As to the previous poster decrying our libertarian capitalism, what a load of malarkey. More like government enabled crony capitalism. But what else would one expect from someone who praises Mr Hudson.

    • Replies: @James Charles
  4. Hudson makes a lot of sense except for apparently being a virus hysteric. He laments NYC, LA, and other big cities losing much of their tax revenue from these vicious, irrational lockdowns, but seems just fine with the lockdowns.

    End the lockdowns and let people get back to work, back to school, back in business, back to normal human life, and the employment and tax revenue will bounce back. Then tax the daylights out of the big corporations and ultra-rich who profited from the lockdowns and distribute the proceeds to all us citizens — with a big extra share for people who lost their businesses due to lockdown.

    • Agree: phillip sawicki
  5. SOL says:

    Trump wasn’t good enough for the oligarchs.

  6. Here are good investments for 2021: land, house, food, water, brass encased lead projectiles, firearms and being part of a group of like minded individuals that will watch each others’ backs.

    • Agree: RadicalCenter
  7. @Bro43rd

    Don’t worry?

    ‘We’ have ten years?

    “ . . . our best estimate is that the net energy
    33:33 per barrel available for the global
    33:36 economy was about eight percent
    33:38 and that in over the next few years it
    33:42 will go down to zero percent
    33:44 uh best estimate at the moment is that
    33:46 actually the
    33:47 per average barrel of sweet crude
    33:51 uh we had the zero percent around 2022
    33:56 but there are ways and means of
    33:58 extending that so to be on the safe side
    34:00 here on our diagram
    34:02 we say that zero percent is definitely
    34:05 around 2030 . . .
    we
    34:43 need net energy from oil and [if] it goes
    34:46 down to zero
    34:48 uh well we have collapsed not just
    34:50 collapse of the oil industry
    34:52 we have collapsed globally of the global
    34:54 industrial civilization this is what we
    34:56 are looking at at the moment . . . “

  8. The “pandemic” did not lead to mass poverty and potentially mass homelessness; the lockdowns did.

    Nor did the “pandemic” lead to huge corporations profiting more than ever while hundreds of thousands of small family businesses are destroyed; the lockdowns did that too.

    The lockdowns may have been a necessary and proportionate response, or not (as I think). Either way, it was in fact the lockdowns that caused this destitution and greatly exacerbated the coming violence and unrest.

    • Replies: @jadan
  9. jadan says:
    @RadicalCenter

    The lockdown would not mean economic disaster if the US managed the situation as the social democratic states of Europe have done so far. The government compensates those elements of the economic system that are hurt by lockdown to keep the entire economic engine running, or idling, at least. Piddling US stimulus payments are inadequate and grudgingly given because the ideology of finance capitalism does not recognize the rights of the people and rejects the concept of the commons. Compensating the investor class to maintain asset prices is just trickle down voodoo economics. The assets of the wealthy are sacrosanct, but not the assets of the middle class, nor the means of livelihoods of those without a net worth who struggle to subsist. Lockdowns can be better managed, and if they are funded, they need not be disastrous. What is necessary is systemic change in the US. This is a mild pandemic, and it is not a 100 year event. There will be worse pandemics and other “acts of god”. It won’t be civil war that destroys this republic, it will be the stupidity of the small government free market crowd that denies the necessity of government to provide for the general welfare.

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