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Debt Forgivness and Nationalization Are the Answers to the Economic Crisis
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The US airline companies have bankrupted themselves by buying back their stock in an enrichment scheme for CEOs and board members ( https://www.lewrockwell.com/2020/03/david-stockman/the-crony-capitalist-thieves-are-back/ ). With the impact of the virus on their revenues, Congress is handing them a $50 billion bailout. Instead of being bailed out they should be nationalized.

In the health and economic crisis in which we find ourselves, the government is going to need all the public trust it can get. Bailouts of those who caused their problems and ours won’t meet the fairness test.

As I previously wrote, nationalization is a four-letter word for many, but it actually offers a chance to correct for the decades of deregulation and concentration and thereby restore competition to the economy. Nationalized banks too-big-to-fail, for example, can later be broken up and the pieces sold back into private hands. Commercial banks can again be separated from investment banks, and concentrated financial power can be broken.

Now that we know that markets are not self-regulating, we can restore sensible financial regulation and require banks to lend for productive purposes, not for financializing and leveraging existing assets. The US financial system has not served the productive side of the US economy for a long time.

While ordinary heavily indebted Americans are losing their jobs right and left as businesses close, shopping center lobbyists are asking for a $1 trillion guarantee. The hotel industry wants $150 billion. The restaurant industry wants $145 billion. The National Association of Manufacturers wants $1.4 trillion. ( https://www.cnbc.com/2020/03/21/coronavirus-1-trillion-rescue-package-might-not-be-enough-for-businesses.html ) Food service distributors are in trouble. Boeing wants $60 billion funded in part by loan guarantees. Local and state governments need support. The US conference of mayors wants $250 billion. The list is endless.

And what is to be done for the 40% of Americans who, according to a Federal Reserve study, cannot raise $400 in cash without selling personal property? How are the large number of uninsured going to be cared for during this health crisis? Where will hospitals and medical practices get the money?

The only solution is to nationalize health care so that the bills can be paid. We cannot survive large numbers of infected and jobless people roaming the streets raiding for food and whatever they can take.

The only solution for the economy is debt forgiveness for the ordinary people and nationalization for the companies. Trump indicated that aid might be given in the form of an equity stake, and later sell the government’s stake for a profit in a privatization when things return to normal. This would be a partial nationalization. Much better to go whole hog as it allows a cure for concentration and deregulation.

ORDER IT NOW

The pandemic has made it clear that a society of self-seeking individuals is not a society. A society is a social system. A successful social system is one that can support its members. Once a self-sustaining social system exists, then there is a basis for people to branch out on their own. But without a sustainable social system, there can be nothing.

To create a sustainable society in the United States requires the abandonment of dogmatic ways of thinking. Old ideologies are in the way. We and our leaders must think creatively if we are to successfully deal with the health and economic crisis.

(Republished from PaulCraigRoberts.org by permission of author or representative)
 
• Category: Economics • Tags: Coronavirus, Debt Jubilee, Health Care 
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  1. MarkU says:

    I have never been able to understand why essential infrastructure is in private hands? Surely even a person of only moderate intelligence can see where that leads?

    • Replies: @Realist
  2. FB says: • Website

    A society is a social system.

    A successful social system is one that can support its members. Once a self-sustaining social system exists, then there is a basis for people to branch out on their own. But without a sustainable social system, there can be nothing.

    Another amazing article from PCR…

    Folks, this man has been appealing to the common sense of ordinary folks for so long now…but without making any headway…

    Of course markets aren’t ‘self-regulating’…of course we are plagued by concentration and de-regulation…and the solution is sweeping nationalization…

    To create a sustainable society in the United States requires the abandonment of dogmatic ways of thinking. Old ideologies are in the way.

    Of course old ideologies are in the way…unfortunately a great majority of ordinary people are brainwashed beyond help…they will never realize that our system has always been socialism for the rich, and rugged individualism for everyone else…

    • Replies: @Dutch Boy
  3. JasonT says:

    On economic issues, PCR and Michael Hudson are as good as they get. That is why they have been marginalized by the trained monkeys that are voted into office in Western countries.

    • Replies: @Twodees Partain
    , @exudd1
  4. A123 says:

    Something seems horrifyingly unfair about most of the debt jubilee ideas:

    — Irresponsible borrowers who flipped extravagant homes using pricey variable rate mortgages and then used home equity for luxury vacations get massive cash via debt forgivness.

    — Irresponsible students who borrowed $100K+ for an underwater basket weaving degree that yields no employment prospects gets a subsidy for knowingly making poor choices.

    — Responsible spenders who rented, saved, and did not run up credit cards or student loans get nothing. (1)

    The audio is a bit difficult to hear, but it appears that the man opens the conversation by saying, “My daughter is getting out of school. I’ve saved all my money. She doesn’t have student loans. Am I going to get my money back?”

    Warren doesn’t even have the grace to praise him for being responsible. Instead, she responds instantly: “Of course not.”

    The man, beginning to be upset, asks, “So you’re going to pay for people who didn’t save any money, and then those of us who did the right thing get screwed?”

    And that’s when Warren’s tin ear and lack of compassion kick in. She smirks, she shrugs, and she says, “No, it’s not anyone got [sic] screwed…”

    “Of course, we did,” says the man. “My buddy had fun, bought a car, went on vacation. I saved my money. He made more than I did, but I worked a double shift for the extra money for my daughter since she was 10. So you’re laughing at me.”

    A plan that went after emergency medical debt could fly, but broadly bailing out the intentionally negligent is never going to make it.

    If the plan is to give cash to the lower & middle classes it should not be based on irresponsible debt choices.
    ____

    Also, how will this be paid for? Starting massive inflation while rates are zero makes the savings problem vastly worse.

    PEACE 😷
    _______

    (1) https://www.americanthinker.com/blog/2020/01/man_confronts_elizabeth_warren_about_her_plan_to_wipe_out_student_loans.html

    • Agree: Mark G.
  5. pogohere says:
    @A123

    “. . . but broadly bailing out the intentionally negligent is never going to make it.”

    If Wall Street bankers and hedge funds took massive risks that they entered into knowing they had bet their enterprise on it, should they get their money back?

    • Replies: @A123
  6. Wilson says:

    If the government was “nationalized” instead of a being patronage system and the Federal Reserve was “nationalized”instead of being a free insurance system for the wealthy we wouldn’t always need more “nationalization” and more “free money” because the country wouldn’t always be on the verge of collapse

  7. @JasonT

    “Voted into office”? See, now you reveal that you really don’t get it. Surely you don’t think that votes are counted and the one with the most votes wins….Do you?

    • Agree: Adam Smith
    • Replies: @A123
  8. A123 says:
    @pogohere

    Of course not.

    And, your absurd question comes across as “strawmanning” (1)

    A type of trolling where the Troller attempts to pwn someone by claiming something they said means something totally different to what that actually meant.

    Innocent Person: “I think it is important that school children wear school uniforms”.

    Strawmanning Person: “Hitler believed in people wearing uniforms, are you trying to make all children Nazis?”

    PEACE 😷
    _______

    (1) https://www.urbandictionary.com/define.php?term=Strawmanning

  9. A123 says:
    @Twodees Partain

    … you don’t think that votes are counted and the one with the most votes wins….Do you?

    Of course that is how it works.

    — Registered Democrats get to vote more than once. That is why Voter ID is prohibited.
    — The Dead (greatful or ungreatful) are proxy voted DNC.
    — Illegals get to vote for Dems.
    — Harvesters get to pick up absentee ballots and only turn in the DNC ones.
    — If that is not enough, fabricators at the counting site will print blank “Fairness” ballots and mark the necessary Social Justice Warrior [SJW] votes.

    Ballot counting will continue until the desired outcome is achieved!

    To give you an idea of the magnitude of the problem. Trump won the popular vote, but the official vote tallies showed him at least 2MM behind.
    _____

    The only votes not counted are overseas military. (1)

    Advocates for military voters say that anomalies in reporting do a disservice to them and their families, many of whom have been deployed to war zones.

    “The military represents the people that are fighting for our freedom, fighting for our democracy, representing us around the world, and it’s tragic if they do not take part in the franchise,” said Susan Dzieduszycka-Suinat, president and CEO of the U.S. Vote Foundation. She also oversees the foundation’s Overseas Vote Initiative, which provides voter registration and voting tools to military and overseas voters.

    _____

    This is the biggest risk coming in November. Everyone knows that Trump will BIGLY win an honest election. If the DNC tries to rig the national vote to implausible results, it will be rejected by the American People. There could be a true Constitutional Crisis if victims of Trump Derangement Syndrome [TDS] are incapable of accepting that the Burisma Bribe Boy, Quid Pro Joe has lost.

    PEACE 😷
    _______

    (1) https://arizonadailyindependent.com/2016/08/27/why-overseas-military-personnel-ballots-may-not-be-counted/amp/

    • Replies: @BuelahMan
  10. Paul Craig Roberts is just panicked that all the serfs he made in his Neo-Feudalist Republican Empire are just about broke enough to raid his house & refrigerator for food & barbeque sauce so that the Zombies from the Zombie apocalypse can eat his domestic pets on the outdoor gas grill he has in his backyard.

    Roberts should have thought about this before he worked for Ronald Reagan et al. and helped kick start Trickle Down Economics.

    Judge Judy would most certainly ask Dr. Roberts why he would assume that he could urinate on her leg and have the audacity to tell her it’s raining?

    Stop urinating on our legs, Dr. Roberts.

    Welcome to the New World Disorder, professor.

    RW

    • Agree: BuelahMan
    • Troll: FB
    • Replies: @animalogic
  11. U-turn says:

    We need to understand that the interest of government is distinct and different to that of the people. Governments seek power and revenue through taxation while people seek freedom and justice. The first is the antithesis of the second. The Framers understood this well and and devised a Constitution to created a government limited to exercising those specific powers delegated by the people for the sole purpose of protecting their equal Rights: life, liberty, property, security and resistance of oppression.

    The people have now become enslaved through debt created by corrupted government with its endless wars, its corporate international and social welfare programs enabled through its collusion with a private global banking cartel while operating in defiance of the principles under which our government was created while always increasing its revenue and powers. We need to reject this system and its illegal $20+trillion, exponentially growing “public” debt along with the taxes required to feed it and return to the sane system of Constitutional government. Asking government to forgive a debt it itself created and keeping this corrupt system in place amounts to nothing more than spitting into the wind.

    • Agree: Thomasina
  12. Thomasina says:
    @A123

    Excellent post! Couldn’t agree more. Thank you.

  13. BuelahMan says:
    @A123

    Maybe someone can explain to me how a vote count is real when we are given these worthless assholes to vote for every year.

  14. @A123

    Oh, God, where do you start with this miserable attitude ?
    “broadly bailing out the intentionally negligent is never going to make it.”
    How the hell do you know — or the Gov’ — know whose been intentionally negligent ? Jesus, court cases run months over this very question.
    Underlying all this meaness is a nasty form of “justice”. Justice spelt “resentment”. How dare some nobody get help when they don’t “deserve” it ? (I’ll be gracious enough to assume you simply forgot tbe whole “socialism for billionaires” business already in the works.)
    I’ll end this way: the point of dealing with problems of mass, unaffordable debt is to FIX the entire economy. If a few nerdowells get a break that really is SMALL BEER in tbe scope of things.
    Get over your own trifling resentments. Its not about you. Its about the 99%….unless, of course, you are drawn moth-like to the flame of the 1% — you secretly ID with them, b/c nothing is as lovely as imagining oneself as one with power, beauty, success etc ? — then it all makes sense….

    • Replies: @credit
  15. @Robert White

    Very….christian of you. Whatever faults of Dr Roberts 30 odd years ago, lets NEVER, EVER forget them & in a purely ad hominon way let’s use that to delegitimise whatever he says 35 years later.
    No wonder he stopped comments for so long, if this is the SHIT he had to put up with.

    • Agree: RadicalCenter
  16. There is considerable wisdom here. While I may not agree with every point, the drift is right.

    But I think America is certain to ignore it.

    Decisions are made not just with information and intelligence but with a lot of ideology and attitude.

    And I don’t think there can be any doubt that the dominant and well-understood ideology and attitudes of America go strongly against this.

    An early Rooseveltian response would be the best hope, but there is no Roosevelt to lead.

    Hard to see anything like that from Trump or Biden. And leaders in Congress are uninspired, to say the least.

    I just don’t think America’s political system is up to the task, so there’s going to be immense pain and suffering ahead.

    • Replies: @John Chuckman
  17. @John Chuckman

    I’m surprised to see such measures advocated by this author whose background is so very different, but I’m glad he has done so.

  18. Biff says:
    @A123

    If there’s anyone that should be shoved out into the cold, and into homelessness, by a rich(bailed out) callous banker it would be you. Think of the irony!

  19. @animalogic

    Slow to anger is a Christian bible exhortation, BuckO.

    I’m a slow guy, but I’m not stupid, or Functionally Retarded.

    Ronald Reagan hired Dr. Paul Craig Roberts to create inequality & casino capitalism as evidenced via the Chicago School of Neoliberals. They thought they were omnipotent.

    Well they ain’t, and now I’m here to take over.

    RW

  20. credit says:
    @animalogic

    it does not matter whether one has been “intentionally negligent.” if , however,someone is negligent, careless, inexperienced, ignorant of risk or just a gambler, they should suffer the consequences if only to forestall the same stupid mistakes in future. and this morally relative idea that “socialism for billionaires” justifies socialism for everyone ignores the damage already done by constant bailouts. at least you seem to acknowledge that we have not been practising capitalism thus far.

  21. Jmaie says:
    @A123

    Responsible spenders who rented, saved, and did not run up credit cards or student loans get nothing. (1)

    Not true sir, we get to pay for all this largess as well…..

  22. onebornfree says: • Website

    Paul Craig Roberts= just another socialist opening his yap and saying nothing. [as usual]

    Too dim to understand that governmentally enforced socialism for decades in the US is the root cause of the problems he sees and that even more governmentally enforced socialism will make things even worse, not better.

    And so : “mo’ gubmint, mo’ gubmint, mo’ gubmint!” is always the predictable answer from the braindead such as Roberts.

    “stupid is as stupid does”. And so it goes….

    No regards, onebornfree

    • Disagree: John Chuckman
  23. Dutch Boy says:
    @FB

    America is a great country where the rich and the poor have an equal opportunity to stay that way.
    Mr. Dooley

    • Thanks: John Chuckman
  24. Franz says:

    The comments here at Paul Craig Roberts and at Michael Hudson on “debt cancellation” or “Jubilee” is a concept not grasped by a majority of people, right-wingers and conservatives especially.

    REAL SIMPLY: Because of compound interest there reaches a point where the debt exceeds the productive economy‘s ability to service it.

    I impress: Productive economy. Americans have still not come to grips with the fact that Eisenhower was still president when the US Economy shifted from productive (Mines, Factories, Agriculture) work to managerial and professional work. The one is not the same as the other and yes, classical economists DID make the distiction but you have to read the fine print. List and Ricardo are helpful on that.

    If we cannot pay our public debt, weak segments will go down one by one, till nothing is left but a few rent-seeking billionaires who will fly off and pay nothing. If a debt exceeds any possible productive gain, it has to be repudiated.

    And why this boo-hoo from right wingers? “Odious debt” is a term from international law that says if a dictator is overthrown, we don’t “Owe it to the banks and builders” to pay for his palace. Do any of our conservative/libertarian budget balancers want to lose their whole life’s savings and their valuta for aid to Israel, wars for Israel, TSA and Homeland Security boondoggles? Do you really?

    Fiscal conservatism ended when Carter and Reagan gave open-ended cash to Israel for “security”. You wanna go broke for that, go ahead. Leave the rest of us out of it.

    • Agree: anarchyst, Rurik
    • Replies: @gsjackson
  25. gsjackson says:
    @Franz

    “Eisenhower was still president when the US economy shifted from productive …. to managerial and professional work.”

    I did a research project in grad school that had me going through American news magazines in 1956, Time, Newsweek, US News & World Report and a few others. It was like looking at a different world altogether.

    It was clear that we were still in the age of literacy then. These magazines ran well over 200 pages, more than three times their size today, had intellectual heft (one of them ran a 20-page essay on economics by Ludwig Von Mises, for crying out loud), and a wordly perspective — in a typical issue foreign correspondents would file stories from around 20 different countries.

    Another notable difference was in the advertisements, which reflected a nation that was an industrial giant. There were ads for major manufacturing plants, ports of commerce (‘do your business through the great industrial port of New Orleans’), and the like.

    It was clearly a high point of ‘the American Century,’ all expatriated now. Trump says he wants to bring it back. Lots of luck to him.

    • Replies: @Franz
    , @John Chuckman
  26. @animalogic

    Better if he never came around? He’s trying to do the right thing NOW.

  27. Franz says:
    @gsjackson

    I did a research project in grad school that had me going through American news magazines in 1956, Time, Newsweek, US News & World Report and a few others. It was like looking at a different world altogether.

    That sounds excellent; I was partner in a business where we sold “collectables” and it included old LIFE magazines and the others. It’s fascinating.

    What hurts the most was they were all written on the 6th to 8th grade level, say 12 to 14 years old. Especially in the 50s and 60s there just weren’t enough college grads around to build a periodicle unless it was a specialty journal like medicine or engineering.

    How bright they expected ordinary people who just learned by living amazed me. For history buffs, Will and Ariel Durant’s multivolume history of the human race was written for and read by people who carried lunch buckets to work and knocked out engine blocks or cooked lunches in cafeterias. Whatever the verdict on the Durants, their books were not written for geniuses or idiots, just “regular people.”

    Seems like every time a new technology gives people an excuse not to read, the aggregate population gets dumber. The Brit writer Anthony Burgess (who wrote and taught) though it was a plot in the 70s, and I have no way of knowing if he was right. Seems like.

  28. @gsjackson

    I like your observations.

    “MAGA” is indeed an effort to bring back 1958 and the “American Dream” ad slogan.

    Just imbecilic.

    A bit like Luddites wanting to get rid of machines.

    Simply unbelievable that this is the brain and the mouth representing America.

  29. Realist says:
    @MarkU

    I have never been able to understand why essential infrastructure is in private hands? Surely even a person of only moderate intelligence can see where that leads?

    Exactly…what we need is for the dumb sons of bitches in government to take control of even more.

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