by William Lazonick
"Plunderers of the world, when nothing remains on the lands to which they have laid waste by wanton thievery, they search out across the seas. The wealth of another region excites their greed; and if it is weak, their lust for power as well.
Nothing from the rising to the setting of the sun is enough for them. Among all others only they are compelled to attack the poor as well as the rich. Robbery, rape, and slaughter they falsely call empire; and where they make a desert, they call it peace."
Tacitus, Agricola
The fully financialized recovery is not sustainable. In fact, it closely resembles a Ponzi scheme.
The Fed creates enormous amounts of money, which it carefully feeds into the financial system through its Banks and their associated Funds. This is a 'trickle down approach' to monetary stimulus.
The monies created are directed primarily towards the same types of activities that have been dominant in the financial system for the previous ten years at least: financial speculation, building of monopolies, acquisition of assets for repressive exploitation through rents, and the transfer of wealth to the top one percent through largely non-productive activities.
The result can be seen in the continuing plunge of the velocity of money, which is a measure of how much actual GDP related activity is being generated by the additions of monetary growth. Most of the growth we are seeing is only on paper and in accounting gimmicks, and not in real advances and improvements in the standards of living and infrastructure.
In fact, one can make a good case that all those things that are dependent on longer term planning are suffering greatly, and even being 'hollowed out' for the sake of short term greed.
This short term mentality that has been engineered into our social, economic, and legal structures is going to bring about a cycle of booms and busts. We have seen two busts thus far, and are working on a third. And the third time might be the charm.
The forces of the anti-human are growing stronger and more strident. They are hungrier for power, and having laid waste to some areas, move on to others in a cycle of perpetual war and acquisition until exhaustion or collapse. The only imperative these new Lords of the World have is 'more.'
It is only in this context that some of the recent decisions that are being made and actions undertaken can be fully understood.
The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.
"Five years after the official end of the Great Recession, corporate profits are high, and the stock market is booming. Yet most Americans are not sharing in the recovery. While the top 0.1% of income recipients—which include most of the highest-ranking corporate executives—reap almost all the income gains, good jobs keep disappearing, and new employment opportunities tend to be insecure and underpaid. Corporate profitability is not translating into widespread economic prosperity.
The allocation of corporate profits to stock buybacks deserves much of the blame. 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. That left very little for investments in productive capabilities or higher incomes for employees."
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