Re: Michael Hudson on Iceland and Latvia

Michael Hudson had an interesting piece on Counterpunch that a friend brought to my attention, entitled “Why Iceland and Latvia Won’t (and Can’t) Pay for the Kleptocrats’ Ripoffs.” I have mixed feelings about Counterpunch, and this article is a case in point for why I do not read it regularly. While it is a fine alternative to the corporate media, and fervently opposes corporatism and the lobbyist machine in Washington (rightly so), I feel the commentators chosen are often guilty of “missing the forest for the trees,” so to speak. (This is not always true by any means; they recently put out an excellent article by Paul Craig Roberts, “Americans: Serfs Ruled by Oligarchs.”

Back to Hudson’s article. As the title implies, the bailout debt bondage was imposed by kleptocrats — the British and Dutch governments that are pressuring less-developed debtor nations to pony up for their banks’ intentionally rampant and irresponsible credit inflation, and the ensuing mass insolvency. However, Hudson makes the tragic mistake of therefore absolving the responsibility for the kleptocratic and plutocratic actions of the governments of debtor nations themselves. As if there was no incentive for public officials, such as in Iceland, to fully privatize the banking infrastructure to the very state-created and state-maintained corporate banking cartels that have been washing taxpayer money into their pockets for years!

I believe by the time I got to this gem — “The neoliberal foreign advisors and creditors pressured these governments to sell off the banks and public infrastructure to insiders” — I stopped taking the article seriously. PRESSURED!? What kind of imbeciles are we talking about here? We all know how where “pressure” on politicians come from — the lining of their pockets with the profits of corruption. Does Hudson think we are really so stupid so as to believe that governments were somehow “forced” or “pressured” to allow this? Politicians allowed the bubble economy to come to be because they profited from it, and continue to profit from it through allegiances gained as a result of this bank-made economic crisis.

While Hudson rightfully points out the predatory nature of the debts in question, he attempts to strawman the “free market” by dishonestly and erroneously conflating it with neoliberalism — as often is the case, unfortunately, on Counterpunch, as well as in the corporate media. He, thus, erroneously conflates the consequences of mixed economic theory with his perverted conception of a free market. This is not to say that neoliberalism — the “free market” as Hudson sees it — is sustainable or ethical, but it is worth mentioning, as he appears to believe that neoliberalism and the “free market” are the same thing. Nothing could be further from the truth; neoliberalism is about as close to a free market as Stalinism. But what do you expect from a Keynesian? It’s always the same types of arguments — we need governments to intervene, to solve the structural problems wrought by previous government interventions. “Everything is the free market’s fault! Now we need the governments — those same governments which collectively propped up insolvent financial structures and institutions in favor of finance oligarchs — to graciously ‘save’ their population from those very same fraudsters!”

The situation at hand has nothing to do with free markets. Big banks (certainly in the UK and the Netherlands) exist as uniquely privileged cartels. Think about it: licenses, capital reserve requirements, legal fees, specified corporate and capital structures, regulatory reporting, accounting compliance, audit compliance, etc. Our admittedly neoliberal governments inherently bar entry into the banking (or virtually any other) industry for the vast majority of citizens, while allowing a few highly privileged corporations to run hog-wild in the ensuing monopolistic paradise of economic rent. And this is on top of capitalism’s natural barriers to market entry — grounded in the legitimization of theft from the commons in favor of the landowning class.

So, to Hudson, “the ideology of free markets…turns out to be a junk economics favorable to banks and global creditors.” And he leaves it at that. Oh, because it was the banks, not governments, who collectively bailed out the banks and submitted their future populations to debt bondage by those very bankers, right? As if governments should not be held accountable to their citizens for not only allowing, but colluding with central banks to artificially incentivize the guarantee of massive debts?

Let me tell you something: Central banks can have no monopoly (this is maintained by state governments), nor could they exist as they are (currency monopolies), in a free market. It is only in the kleptocratic and collusive venue of government and big business wherein banks are capable of such massive theft and fraud. As Max Keiser pointed out on France24, it’s simply called money laundering. People need to stop deluding themselves, foolishly thinking that the same kleptocrats and plutocrats that are robbing them blind are magically going to “save” them by 1) bailing out insolvent banks and publicly taking on trillions in insolvent assets, and 2) feining this disgusting charade that they are going to “stand up” to the very banks, the very lions, that they’ve already thrown their people to.

What, now that the Icelandic government is “standing up to the banks” (see how long that lasts, and who benefits in the end), they are no longer “kleptocrats,” but heroes? This is my problem with a lot of writers that appear on Counterpunch. What begins as sound rationale inevitably ends as simply straw-manning right-wing ideology (and nothing more), rather than saying anything meaningful. To what ends? To rile up a bunch of progressive fascists against a bunch of neoconservative and neoliberal fascists? Great, because the government Hudson would like to see imposed on the people is a far better alternative. Hudson, of all people, who understands the destructive nature of bubble economies, continues to operate on historically unfounded fallacies — how he can absolve responsibility for the actions of government on either side of the equation is beyond me.

In this way, the ideas often espoused on Counterpunch — and certainly by Hudson — in one form or another, are simply models that will inevitably perpetuate the status quo. While the post-Bretton Woods financial system in many ways is transforming, you would have to be foolish to believe (regarding GATT, the IMF, the World Bank) that the governments that willfully engaged in such rampant exploitation and imperialism are not rebuilding (or have not rebuilt) the infrastructure to do so again. Readers of publications like Counterpunch need to look a lot deeper than the ideas offered therein to understand the nature of globalization and the international banking cartels.

Too many people continue to operate under the fallacy that more government intervention into banking institutions and more government interventions via monetary policy will solve this economic crisis. The state-provided regulations and state-provided bailout funds that characterize the banking system — and maintain it at taxpayer expense — could not exist, obviously, without the corrupt public officials now sought out to be saviors of the public good. Hudson is right — the British and Dutch governments are kleptocracies — but he is very wrong when he suggests that the Icelandic and Latvian governments are not.

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