So Michael, let's just get started here. Can you respond to this global depression that we're living through right now amid the Covid-19 pandemic? And what do you think about this new bailout that was passed?
(3:50)
MICHAEL HUDSON: Well the word bailout, as you just pointed out, really was used by Obama, and the bailout only applies to the banks. The word coronavirus is just put in as an advertising slogan.
Banks and corporations, airlines, have a whole sort of wish list that they have their lawyers and lobbyists prepare for just such an opportunity. And when the opportunity comes up whether it's 9/11, with the Patriot Act, or whether it's today's coronavirus they just passed a coronavirus onto an act which is shouldn't be called giveaway to the big bank banking sectors.
Let's talk about who's not bailed out. Who's not bailed out are the small business owners, the restaurants, the companies that you walk down the street in New York or other cities, and they're all shuttered with closed signs. Their rent is accumulating, month after month.
Restaurants, and gyms, and stores are small markup businesses and small margin businesses, where, once you have no sales for maybe three months, and rent accruing for three months, they're not going to have enough money to earn the profits to pay the rents that have mounted up for the last three months.
The other people that are not being bailed out are the people, the workers especially the people they call the prime necessary workers, which is their euphemism for minimum-wage workers, without any job security. There have been huge layoffs of minimum-wage labor, manual labor, all sorts of labor.
They're not getting income, but their rents are accruing. And their utility bills are accruing. Their student loans are accruing. And their credit card debts are mounting up at interest and penalty rates, which are even larger than the interest rates. So all of these debts are accruing.
And the real explosion is going to come in three months, when all of a sudden, this money falls due. The governor of New York has said, "Well we have a moratorium on actually evicting people for three months." So there are restaurants and other people, individuals, wage-earners, who are going to be able to live in their apartments and not be evicted.
But at the end of three months, that's when the eviction notices are going to come. And people are going to decide, is it worth it?
Well especially restaurants are going to decide. And they're going to say, well there is no way that we can make the money to pay, because we haven't had the income to pay. And they're just going to go out of business. They're not going to be helped.
The similar type of giveaway occurred after 9/11. I had a house for 20 years in Tribeca, one block from the World Trade Center. And the money was given by the government to the landlords but not to the small businesses that rented there the Xerox shops and the other things.
The landlords took all of the ostensible rent loss for themselves, and still tried to charge rent out to the xerox shops, and the food shops, and ended up collecting twice, and driving them out.
So you're having the pretense of a bailout, but the bailout really is an Obama-style bailout. It goes to the banks; it goes to those companies that have drawn up wish lists by their lobbyists, such as the airlines, Boeing, the large banks.
The banks and the real estate interests are going to be the biggest gainers. They have changed the real estate law so that the real estate owners, for a generation, will be income tax free. They are allowed to charge depreciation, and have other fast write-offs, to pretend that their real estate is losing value, regardless of whether it's going up and up in value.
Donald Trump says that he loves that depreciation, because he pretends that he's losing money, and gets it is a tax write-off, even while his property prices go up.
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