Lately, Professor Michael Hudson has been making a serious name for himself as a fierce critic of the present day power cabals in our financial and political circles, two groups that differ far less than many still wish to maintain.
This is Ilargi's intro over at The Automatic Earth.
With last week's The Financial War Against Iceland, Hudson ventures a few steps beyond "normal critical" financial writing. Here's how he describes his position:
In the mid-1960s I was the balance-of-payments economist for the Chase Manhattan Bank and then for Arthur Anderson, and later for the United Nations Institute for Training and Research (UNITAR). I have taught international economics at the graduate level since 1969, and now head an international group on economic and financial history based at Harvard. In 1990 at Scudder Stevens and Clark, I organized the world’s first sovereign-debt fund. All these jobs involved analyzing the limited ability of debtor countries to pay – how much could be extracted from them through foreign-currency loans and how much public infrastructure was available to be sold off in a voluntary virtual foreclosure process by countries willing to submit to creditor-dictated rules.
I first wrote about monetary imperialism in the 1970s in my book Super Imperialism. It should have been entitled "Monetary Imperialism" because it detailed how replacing gold with paper dollar IOUs for trade and balance-of-payments deficits in 1971 allowed the United States to exploit the rest of the world without limit. Phasing out gold payments among central banks in favor of fiat paper money allowed the United States to run up massive debts equal to its cumulative payments deficit, far beyond its ability to pay. It currently owes over $4 trillion, while running a chronic trade deficit with enormous overseas military spending, financed entirely by other countries through their central banks. This is euphemized as the "international monetary system.
Allow me to correct myself: the article actually places Hudson square outside of, rather than just a few steps beyond, the realm of customary essays by professional career economists. In fact, it puts him almost painfully standing on the toes of Naomi Klein, whose 2008 "The Shock Doctrine: The Rise of Disaster Capitalism" provides a lucid overview of the global misery wrought at the hands of Milton Friedman's Chicago School, the US government, the World Bank and the IMF. What Hudson writes about Iceland is more than eerily similar to what Klein tells her readers about what happened in South America and Eastern Europe. The similarities are such that it feels somewhat discomforting to see Hudson not acknowledging Klein in his footnotes. Another Hudson quote:
The United States, Britain and the International Monetary Fund ("the global investment community") are couching their demands for draconian austerity policies in the language of capitalism. But what they actually are promoting is a financial system that threatens to end in debt peonage, not democratic capitalism. Across the globe, from the Baltics to Hungary in Europe, and indeed from Russia to China, riots and wildcat strikes recently have broken out to protest this post-capitalist financial dynamic. It already has destroyed the industrial capacity of debtor countries subjected to the cruel austerity programs imposed by the IMF as acting agent for the global financial class. This merely repeats what the British did in India. Industrial growth has been replaced with a financialized real estate bubble. The "final stage" of this dynamic is to foreclose and sell off the assets of debtors at giveaway prices. Talk about democracy from the financial elite is a public-relations cover story. Their "magic of compound interest" sales pitch threatens to destroy entire nations.
In The Shock Doctrine, Naomi Klein describes in vivid detail how the Chicagoans, through their vehicles, the World Bank, and the IMF, pushed through their warped so-called free-market policies in those countries that were the most vulnerable because of foreign debt. Hudson merely confirms that what happened under Pinochet in Chili, and Yeltsin in Russia, continues unabated to this day. Iceland is but a dress-rehearsal. Bigger prices to be had are the Baltics, Hungary and other Eastern European states, a wide variety of vulnerable Asian countries, and the for the moment biggest trophy, Turkey. Which, coincidentally, signed a huge loan deal with the IMF at the exact same moment that US president Obama was clamoring for Europe to accept Turkey as a full-blown member of the EU. No, no coincidences there. You bleed 'em dry, and then you buy them for cheap. Of course we all recognize the added military value of these countries.
Michael Hudson's rise to fame in internet circles coincides with the rather sudden emergence on the web of two other hoi-polloi economists, Jeffrey Sachs and Simon Johnson. Sachs has been doing all sorts of stuff in Africa lately, trying to look like a do-gooder, but his prominence in The Shock Doctrine won't be lost on whoever's read the book. Johnson recently got noticed for a site, Baseline Scenario, that looks kind of intelligent and all, but....
One thing that strikes me in what I've seen from him is his praise of his (former?) employer, the IMF, an organization that I personally see as far more criminal than even the Vatican Bank.
I may be wrong about the two of them, but their sudden prominence makes me as nervous as their past does. I don't have that feeling with Hudson, though I do think he has to fess up publicly to reading Klein. And The Automatic Earth.