Tuesday, January 26, 2010

Michael Hudson on the Illusion of "Recovery"

Michael Hudson echoes a theme also articulated by Robert Reich: There can be no recovery because the economy has been predicated upon an unsustainable debt bubble. The economy must be re-built. Efforts to "re-inflate" the bubble will fail.

His article is a good articulation of this problem
http://neweconomicperspectives.blogspot.com/2010/01/state-of-union-rhetoric-2010-part-ii.html

Here is an excerpt:

"We are not really emerging from a “recession.” The word means literally a falling below a trend line. The economy cannot “recover” its past exponential growth, because it was not really normal. GDP is rising mainly for the FIRE sector – finance, insurance and real estate – not the “real economy.” Financial and corporate managers are paying themselves more for their success in paying their employees less.
This is the antithesis of recovery for Main Street. That is what makes the FIRE sector so self-destructive, and what has ended America’s great post-1945 upswing..."

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