Marshall Auerback discusses the latest in Euro woes and the possibility of it spreading beyond the Eurozone. In the first clip Marshall stresses the need for ECB intervention to calm the onset of a debt-deflation dynamic. In the second, he follows up on the likelihood that the crisis will spread to sovereign currency nations like the US, where he explains that insolvency is not a threat.
http://watch.bnn.ca/#clip574795
http://watch.bnn.ca/#clip574835
Comments Off on Marshall Auerback on BNN: What’s Europe’s Next Step?
Posted in Marshall Auerback
Tagged debt deflation, ecb backstop, euro crisis, euro yield spikes, solvency, sovereign currency
Michael Hudson on Bonnie Faulkner’s Guns & Butter.
“Without consumption, markets are going to shrink. Companies won’t invest, stores will close, “for rent” signs will spread on the main streets and local tax revenues will fall. Companies will lay off their employees and the economy will shrink more. Why aren’t economists talking about these effects of debt deflation, which are becoming the distinguishing phenomenon of our time? They advocate giving more money to the banks, hoping that somehow everything will be okay, as if the banks would lend out the money to fund new production and employment. Mainstream economics and political leaders in both parties are failing to ask why the banks are using these giveaways to speculate abroad, pay their managers bonuses and high salaries or to pay dividends rather than to lend to small businesses or do other things to actually get the economy moving again. This phenomenon cannot be explained without seeing that debt service is siphoning off revenue into the financial sector, which is not recycling it back into the production-and-consumption economy.”
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