From Michael Hudson by way of Naked Capitalism (also circulating via Mauldin’s newsletter):
Michael Hudson: Will Greece Let EU Central Bankers Destroy Democracy?
The majority of today’s financial discussions use bank-centric framing and terminology to discuss the situations facing the debtor nations (and debtor citizens and corporations). However, there are two sides to every contract, and it’s clear that the borrowers are not exclusively to blame for their over-indebtedness, as a result of fraudulent inducements, bribes, and all manner of self-serving spin from the financiers. Moreover, when the bankers’ “solutions” consist of (a) more debt for the over-indebted, and (b) taxpayer bailouts for the bankers when the over-indebted finally stop paying, it’s clear that the bankers are part of the problem, not part of the solution — literally!
So I like the article above because it re-frames the issues (with emphasis on Greece and Iceland) in terms of the more fundamental, classical economic issue: how do we reorganize to optimize national output? It most likely does not entail continuing to enable the lenders to live off the labors of others, at least not as much as they do now.
Quick implications for debtor nations and investors therein: (1) Stop feeding the squid! Get out of debt if you can, and don’t fund the banksters’ shenanigans with your “investments”. (2) Prepare for higher interest rates due to defaults and devaluation-driven inflation. Obviously more thought will be needed here, but as in the 1970s, a simple stock-and-bond portfolio may result in serious losses after inflation. Watch and learn from the other nations, before it comes to our own doorstep…
I like this article because here you share how do we reorganize to optimize national output? It most likely does not entail continuing to enable the lenders to live off the labors of others, at least not as much as they do now.