The Toll Booth Economy

[Crewleader]

May 20, 2009
The Latest in Junk Economics
The Toll Booth Economy

By MICHAEL HUDSON

It looks like bookstores are about to be swamped this summer and fall by advisories which publishers commissioned a year ago, as the economy was going off the rails. The preferred marketing strategy is to offer advice by celebrity insiders on how to restore the happy 1981-2007 era of debt-leveraged price gains for real estate, stocks and bonds. But the Bubble Economy was so debt-leveraged that it cannot reasonably be restored.

For the time being we are being fed Wall Street defenses of the Bush-Obama (that is, Paulson-Geithner) attempt to re-inflate the bubble by a bailout giveaway that has tripled America’s national debt in the hope of getting bank credit (that is, more debt) growing again. The problem is that debt leveraging is what caused our economic collapse. A third of U.S. real estate is now estimated to be in negative equity, with foreclosure rates still rising.

In the face of this stultifying financial trend, the book-buying public is being fed appetizers pretending that economic recovery simply requires more “incentives” (special tax breaks for the rich) to encourage more “saving,” as if savings automatically finance new capital investment and hiring rather than what really happens: money lent out to create yet more debt owed by the bottom 90 percent to the economy’s top 10 percent.

http://www.counterpunch.org/hudson05202009.html