On Austerity: We are being told that we blew our paycheck and ran up our credit card and now we have to tighten our belt. The reality is that the major banks blew their money gambling and then transferred their debts to the public.
The structural issue: We have an inverted pyramid with collateral at the bottom and growing debt at the top. To pay for it they are taking money from consumption and investment.
What should have been fixed: What should have happened is that the debt piled up by banks and speculators should have been written off. Shareholders and bondholders should have suffered losses so we could have cleared the financial system of unpayable debt. Step two would have been raising interest would have inhibited gambling and encouraged saving. We would be in a much better situation.
On bank balance sheets' fantom assets: Banks are maintaining fantom wealth on balance sheets. In many cases, underlying asset is worth little, but the debt secured against the asset is held on the balance sheet at the full value of the loan. If house were sold, they would have to realize loss.
On the effect of low interest rates: In the old days, prudent people were rewarded with interest. Now they are being punished. Hundreds of billions of dollars are effectively being transferred from citizen savers to financial fraudsters.
Interview begins at 12:20:
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