PERIES: Michael, if you heard stock market reporting yesterday or saw The New York Times’ business section today, you would have thought we were in another stock market plunge. What’s behind this fluctuation? HUDSON: The markets are confused, because there are two sets of forces at work, one positive and one negative. The positive thing for the 1% is that we’re going into a serious depression – austerity in the United States, austerity in Europe. For the last six years, since 2008, almost all of the gains have been going only to the 1 percent. They’ve kept the debts on the book. It’s creating large unemployment. So the 1% in Europe and America are saying, this the best opportunity we’ve had in a century. Here is a chance to do what we call “reform.” A century ago, reform meant increasing wage levels, increasing living standards and taxing the rentiers. But now, neoliberal reform means, in Europe, breaking the labor unions, lowering wages, and putting the squeeze on labor. All that is supposed to be good for profits. PERIES: But, Michael, just last week the Bureau of Labor Statistics in the U. S. announced that unemployment is the lowest it has been in a very long time. Why? This is contrary to what you’re saying. HUDSON: It’s true that the unemployment rate among people searching for jobs is low, but there’s been a large movement out of the market for a number of reasons. Number one: Fewer people are even looking for work. They’ve given up. Number two: Many of the jobs that are being created are very low-wage jobs at the low end of the spectrum, or they’re part-time jobs. If you work for part time at all, you’re not considered unemployed. If you’ve given up looking for work, you’re not considered to be unemployed. So even though the minimum wage has been raised in Massachusetts and out West,when the minimum wage level is raised, that means the families that have been living on food stamps while they’ve been working at McDonald’s or at other low-wage companies don’t qualify anymore. So there’s been very little change in the actual family budgets. The markets were expected to sort of somehow take off with higher profits as ifthere is a business cycle recovery. But it’s become apparent that we’re really not in a business cycle anymore. We’re at the end of a long 50-year cycle since World War II, where the debts have been rising so much that all of a sudden, the economy can’t be financed by debt anymore. And if the economy isn’t financed by debt, that means that markets can’t grow. All of a sudden, what was fueling the growth and consumer demand that was increasing profits has come to an end. This is especially apparent in Europe. So, basically, what people thought was supposed to be good news – no more room for debt to grow – turns out to be quite bad news. https://youtube/watch?v=Y13Qz3ttpws#t=16 nakedcapitalism/2014/10/michael-hudson-stock-markets-volatile.html
Posted on: Mon, 20 Oct 2014 12:09:50 +0000
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