Michael Hudson: Wall Street Parasites Have
Devoured Your Retirement Plan and the U.S. Economy
By Pam Marten
September 01, 2015 "Information
Clearing House" - "WSOP"
- The riveting writer, Michael Hudson,
has read our collective minds and the simmering anger in our hearts.
Millions of American have long suspected that their inability to get
financially ahead is an intentional construct of Wall Street’s
central planners. Now Hudson, in an elegant but lethal indictment of
the system, confirms that your ongoing struggle to make ends meet is
not a reflection of your lack of talent or drive but the only
possible outcome of having a blood-sucking financial leech affixed
to your body, your retirement plan, and your economic future.
In his new book, “Killing
the Host,” Hudson hones an exquisitely gripping journey from
Wall Street’s original role as capital allocator to its present-day
parasitism that has replaced U.S. capitalism as an entrenched,
politically-enforced economic model across America.
This book is a must-read for anyone hoping to
escape the most corrupt era in American history with a shirt still
on his parasite-riddled back.
Hudson writes from his most powerful perch in
chapters describing how these financial parasites have tricked our
society into accepting them as a normal, productive part of our
economy. (Since we write about these thousands of diabolical tricks
four days a week at Wall Street On Parade, poignant
examples came springing to mind with every turn of the page in
“Killing the Host.” From the
well-placed articles in the Wall Street Journal to
a front group’s pleas for more Wall Street handouts in a New
York Times OpEd, to the
dirty backroom manner in which corporate speech was placed on a
par with human speech in the Supreme Court’s Citizens United
decision, to
Wall Street’s private justice system and the
Koch brothers’ multi-million dollar machinations to instill Ayn
Rand’s brand of “greed is good” in university economic
departments across America — America has become a finely tuned
kleptocracy with a sprawling, sophisticated public relations base.)
How else to explain, other than kleptocracy, the
fact that Wall Street’s richest mega banks collect the life
insurance proceeds and tax benefits
on the untimely deaths of their workers – all codified into law
by the U.S. Congress – making death a profit center on Wall Street.
Or,
as Frontline revealed, that two-thirds of your 401(k) plan over
a working lifetime is likely to be lost to financial fees.
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.”
To gloss over the collapse of this depraved
economic model in 2008, Hudson says these Wall Street central
planners simply depict “any adverse ‘disturbance’ as being
self-correcting, not a structural defect leading economies to fall
further out of balance. Any given development crisis is said to be a
natural product of market forces, so that there is no need to
regulate and tax the rentiers.”
Similarly, when citizens rise up en masse to
demand a realignment of their economy, as happened with the Occupy
Wall Street movement, first the public relations masterminds dismiss
them as an unhinged gathering of smelly hippies, followed by
their violent eviction in the middle of the night, with military
precision, by the Praetorian Guard of the kleptocracy. In Manhattan,
the Praetorian Guard (NYPD) has a high-tech surveillance center
mutually staffed by cops and Wall Street personnel – and
mainstream media find nothing unusual about this.
Hudson correctly calls 2008 a “dress rehearsal,”
writing that “Wall Street convinced Congress that the economy could
not survive without bailing out bankers and bondholders, whose
solvency was deemed a precondition for the ‘real’ economy to
function. The banks were saved, not the economy.” Hudson adds that
the “debt tumor” was left in place. (This is the nightmare we are
presently watching unfold.)
The result of the systemic disabling of
regulations on Wall Street has resulted in the following, says
Hudson: “…the wealthiest One Percent have captured nearly all the
growth in income since the 2008 crash. Holding the rest of society
in debt to themselves, they have used their wealth and creditor
claims to gain control of the election process and governments by
supporting lawmakers who un-tax them, and judges or court systems
that refrain from prosecuting them. Obliterating the logic that led
society to regulate and tax rentiers in the first place, think tanks
and business schools favor economists who portray rentier takings as
a contribution to the economy rather than as a subtrahend from it.”
(But, of course,
those business schools are financially incentivized to think that
way.)
The outgrowth of these tricks to make parasites
appear to be a natural appendage to a well-functioning economy
results in a “veritable Stockholm Syndrome.” Hudson explains:
“Popular morality
blames victims for going into debt – not only individuals, but also
national governments. The trick in this ideological war is to
convince debtors to imagine that general prosperity depends on
paying bankers and making bondholders rich – a veritable Stockholm
Syndrome in which debtors identify with their financial captors.”
Hudson has much to say on the perversity of
corporations buying back their own stock. In one chapter, Hudson
writes:
“In nature, parasites
tend to kill hosts that are dying, using their substance as food for
the intruder’s own progeny. The economic analogy takes hold when
financial managers use depreciation allowances for stock buybacks or
to pay out as dividends instead of replenishing and updating their
plant and equipment. Tangible capital investment, research and
development and employment are cut back to provide purely financial
returns.”
On the timely debate over wealth and income
inequality, Hudson writes that “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. The financial overhead
rises, squeezing the ‘real’ economy and slowing new investment and
hiring.”
Hudson is clearly on to something. The U.S. seems
to be crashing like clockwork every 8 years with the crashes gaining
in intensity. The 2000 dot.com crash wiped $4 trillion out of
investment accounts while, 8 years later, the 2008 crash brought
down the whole financial system, the U.S. and global economy, and
it’s still producing a dead weight on economic growth. Next year
will mark the eighth year since the 2008 crash and if last week’s
market convulsions were any indication, we’re in for some very rough
sledding.
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:
“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.”
Hudson writes about the revealing September 2014
Harvard
Business Review article by William Lazonick, who noted:
“Consider the 449
companies in the S&P 500 index that were publicly listed from 2003
through 2012. During that period those companies used 54% of their
earnings—a total of $2.4 trillion—to buy back their own stock,
almost all through purchases on the open market. Dividends absorbed
an additional 37% of their earnings.”
“This management strategy created financial wealth
by elevating the stock price,” writes Hudson, “not by producing
more goods. Earnings per share rose not because companies actually
earned more, but because there were fewer shares outstanding among
which to spread the earnings. Many of the companies downsized and
outsourced their employment and production. The immediate
beneficiaries were corporate officers exercising their stock
options.”
Hudson quotes another prolific writer on the
subject of our bankster-controlled society, Paul Craig Roberts, who
has noted the following about corporations buying back their own
stock: “The debt incurred will have to be serviced by future
earnings. This is not a picture of capitalism that is driving the
economy by investment.”
Hudson says that what is happening today in
corporate America is very different from the corporate raiders of
the 1980s who used leveraged buyouts to gobble up companies. Today,
says Hudson, “corporate executives raid their own company’s revenue
stream. They are backed by self-proclaimed shareholder activists.
The result is financial short-termism by managers who take the money
and run. The management philosophy is extractive, not productive in
the sense of adding to society’s means of production or living
standards.”
Make no mistake about it: this is a dangerous book
to the status quo. It is truth-telling at its finest in America’s
darkest age of entrenched lies. Michael Hudson has clanged the alarm
bells over more continuity government from the likes of Hillary
Clinton and her fellow Wall Street Democrats. He’s also scuttled the
chances that Donald Trump will be able to reengineer America from
“Give me your tired, your poor, your huddled masses yearning to
breathe free” to the evil fortress that kicks out infants by
directing hatred and blame for America’s woes to impoverished
immigrants running from their own leeches.
Hudson’s masterful book comes at the perfect
juncture of stock market convulsions and an early election season
when Americans are turning out by the tens of thousands to hear what
the candidates for the Oval Office plan to do to return the wealth
and the soul of America to the people.
“Killing the Host” is available
as an e-book at CounterPunch and in print at
Amazon.com.
© 2015 Wall Street On Parade