Thee global economic is engaged in a slow-moving crash.
When you consider the reasons, it’s inevitable.
While the rich are getting richer , everyone else is stuck or heading down [see our earlier posts].
And the rich are getting richer because their wealth is invested heavily in the parasitical FIRE sector, the finance, insurance, and real estate markets,
Real economic growth, based on the consumption of goods and services, can’t happen without growth in the wages of the working and middle classes, the driving factors leading to consumption of those tangible goods and broadly used services.
But corporate mergers are producing cuts in pay and benefits, with cash assets stripped away and pocketed by plutocratic plunderers, rather than being shared with those folks whose labors produced all that wealth and could use their enlarged share of the pie to actually grow the economy [and, yes, we’re well aware that endless economic growth is itself problematic in the longer run].
And to buy what goods they can, people are increasingly forced to turn to debt, either through bank loans or credit cards, paying ever-higher rates of interest to the FIREy plutocrats.
And with education being privatized or subjected to reduced state subsidies, ever larger numbers of young people are being forced to take loans to attain educations once taken for granted.
And the FIRE folks get richer again.
And now for the warning, via Agence France Presse:
France’s central bank trimmed its growth forecasts for 2016 and 2017 on Friday, citing a deterioration in the global economy and Britain’s decision to leave the European Union.
The Bank of France revised its 2016 and 2017 growth forecast down to 1.3 percent, having previously expected growth of 1.4 percent this year and 1.5 percent next year.
It also predicted growth of 1.4 percent in 2018, down from its previous figure of 1.6 percent.
“In 2017 and 2018, the downward revision of our GDP growth projection… is mainly due to the deterioration in the international environment,” it said in a statement.
“The projection is thus particularly affected by less favourable foreign demand prospects.., notably as a result of the impact of Brexit on the UK economy and of its dissemination to the euro area economies.”
Understanding the predatory FIRE sector
For more on the current slowdown and its causes and the predatory nature of the FIRE section, watch this very informative German television interview with University of Missouri-Kansas City economist Michael Hudson, perhaps the most incisive commentator of the modern economic conditions:
Michael Hudson: How Private Debt Makes the Rich Richer
Program notes:
Michael Hudson talks about the causes of inequality in the 21st century
Our author Michael Hudson summarizes some important theses from his book “The Sector – Why Global Finance Is Destroying Us”.
The interview took place on the occasion of the 16th International Literary Festival in Berlin for a symposium titled “Inequality in the 21st Century. Progress, capitalism and global poverty. “ The authors, Angus Deaton, David Graeber and Michael Hudson, presented the most important theses of their current books.
Michael Hudson Bio: Michael Hudson is one of very few economists – globally – who perfectly predicted the 2008 financial crisis.
Michael is President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and author of Killing the Host (2015), The Bubble and Beyond (2012), Super-Imperialism: The Economic Strategy of American Empire (1968 & 2003), Trade, Development and Foreign Debt (1992 & 2009) and of The Myth of Aid (1971), amongst many others.
ISLET engages in research regarding domestic and international finance, national income and balance-sheet accounting with regard to real estate, and the economic history of the ancient Near East.
Michael acts as an economic advisor to governments worldwide including Iceland, Latvia and China on finance and tax law.
