The Top Three Economic Stories of 2015
UMKC’s Michael Hudson breaks down how the increasing wealth gap, suppression of wages, and IMF rule changes are creating a battle between the classes
JESSICA DESVARIEUX, PRODUCER, TRNN: Welcome to the Real News Network. I’m Jessica Desvarieux in Baltimore. And welcome to this edition of the Hudson Report. Now joining us is Michael Hudson. He’s an economics professor at the University of Missouri Kansas City, and he has a new book out titled Killing the Host. Thank you so much for joining us, Michael.
MICHAEL HUDSON: It’s good to be here, Jessica. Since we last talked I’ve also been appointed a professor at Peking University in Beijing.
DESVARIEUX: Awesome. Congratulations. So Michael, let’s get right into it and talk about the big stories of 2015, economic stories, I should say. What would you say are the three most important stories that people should be aware of?
HUDSON: Well, the leading story is that the economy has not recovered. That the 1 percent have recovered, but the 99 percent have not recovered. And there is no sign of recovery, or even any sign that the presidential candidates running in next year’s election are trying to do anything.
The next story is that the 1 percent have recovered. I’m told that the largest sustained gains in any kind of asset have been number one Andy Warhol paintings, and number two, Stradivarius violins. These are trophies for the rich. They’re going way up while wages are not going up and consumer prices are not going up.
And the third story would be international, that the United States has changed the rules of the International Monetary Fund. Essentially, the U.S. has dragged Europe into an economic war against Russia, China, and the BRICS.
DESVARIEUX: Can you be more specific about that last story? How are they doing that?
HUDSON: Well, earlier this month the International Monetary Fund changed its rules that it had had since 1945. The whole international financial system since 1945 was based on the fact that governments when they’re bailed out, or when they borrow from other governments, they have to repay their debts, and that the IMF is going to bring leverage to make sure that the international, intergovernmental finance system remains intact by saying it’s not going to make a loan or be part of any loan renegotiation or debt renegotiation to countries that owe money to foreign governments.
Last month the IMF said no, no. What we really meant is foreign governments have to repay the U.S. government, and they have to pay the U.S. commercial banks that have made loans to countries to enable them to bail out their banks at the expense of their population, but countries don’t have to repay Russia or China. We’re trying to exclude them from the international monetary system. The United States has boycotted the Asian Infrastructure Investment Bank. So it’s not going to be part of the rebuilding of the Eurasian economies. And it’s told Europe to essentially back Ukraine avoid importing Russian gas. There is a trade war and a financial war against Russia, China, and the BRICS that is splitting the world into two halves, turning the Cold War into what’s really a class war.
DESVARIEUX: Okay, Michael. So what should we be paying attention to in 2016?
HUDSON: Well, the failure of the U.S. economy and the European economies to recover. The continued austerity programs that they have. And what is going to be the political response to this austerity? At what point are voters going to say, wait a minute, we’re not going to vote the establishment mainstream parties if both the Republicans and the Democrats here, or in Europe the Conservatives and the Labour Party and the social democratic parties, they’ve all moved to the right wing of the spectrum, to pro-Wall Street. And either you save the economy, or you save Wall Street and the 1 percent. And so far both parties, both sides of the spectrum in Europe and America, are saving the 1 percent, not the 99 percent.
And you know, 200 years ago the solution to all this was to restore prosperity by extending democratic parliamentary reform, thinking that people were going to vote in their own self-interest. But that hasn’t happened. Instead of voting for self-interest, people get to vote which party supporting Wall Street do they want to watch on television, when the president and the cabinet come on and promote one tax cut on the 1 percent after another. One tax increase on the 99 percent after another. As they gut environmental laws. Which party do you want to actually administer this move to the right? A friendly Democratic face, or a sort of frowning Republican face, in the world of Orwellian doublethink rhetoric. At what point are voters going to see through all this?
DESVARIEUX: All right, Michael Hudson. We’re certainly going to be tracking that as the elections are coming up next year in 2016. Michael Hudson, thank you so much for joining us.
HUDSON: It’s always good to be here, Jessica.
DESVARIEUX: And thank you for joining us on the Real News Network.
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