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OpEdNews Op Eds    H1'ed 3/15/20

Economic Effect of Coronavirus Could Be Revolutionary

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Message Paul Craig Roberts
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From Paul Craig Roberts Website

Corona Virus + Bank Debt = Big Trouble
Corona Virus + Bank Debt = Big Trouble
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Coronavirus and globalism will teach us vital lessons. The question is whether we can learn vital lessons that do not serve the ruling interest groups and ideologies.

Coronavirus will teach us that a country without free national health care is severely handicapped. Millions of Americans live paycheck to paycheck. They cannot afford health care premiums, deductions, and copays. Millions have no insurance. This means millions of people infected with coronavirus who cannot get medical help. The morbidity from this is intolerable in any society.

Shutdowns associated with efforts to contain the spread of coronavirus will deny income to millions of Americans who live paycheck to paycheck. What do they do for food, shelter, transportation? You don't have to think very long along these lines to see a very frightening scenario.

Globalism has taken down the ladders of upward mobility by exporting American middle class jobs to Asia. A population once able to save now lives on debt, the service of which is interrupted by recession/depression and by debt service absorbing all net disposable income.

Globalism has also reduced the survivability of our society by making it dependent on externally produced goods, the supply of which can be cut off by disruptions in other societies, by policy disagreements leading to sanctions, and by an inability to export enough to pay for imports, which is what the off-shored production of US firms is.

The United States has an unprotected population and an economy in trouble. For years corporate executives have run the companies for the benefit of their bonuses, which are largely dependent on rises in their company's share price. Consequently, profits and borrowings have been invested in buying back the companies' shares and not in new investment in the businesses. Corporate indebtedness is extreme and will threaten many corporations and many jobs in a downturn. Boeing is a case in point.

Economist Michael Hudson has for many decades studied the use of debt-forgiveness to restart economies killed by debt burdens. Debt forgiveness for corporations has a different implication than debt forgiveness for individuals. For corporations, forgiving debts lets those who financialized and indebted the economy and the population off the hook. To avoid rewarding them for the catastrophe they produced and to prevent widespread public outcry and distrust, nationalization is implied for insolvent companies and banks.

Nationalization would be limited to insolvent companies and financial institutions and doesn't mean that there would be no private companies or businesses. Additional nationalization could be used to prevent strategic companies from substituting their interests for national interests, which they do when they move American jobs and factories offshore. Pharmaceuticals could be nationalized along with health care. Energy which often sacrifices the environment to its profits could be considered for nationalization. A successful society has to have more driving it than private profit.

For most Americans nationalization is a dirty word, but it has many benefits. For example, a national health care system reduces costs tremendously by taking profits out of the system. Additionally, nationalized pharmaceutical companies could be made more focused on research and cures than on profit avenues. Everyone knows how Big Pharma influences medical schools and medical practice in line with Big Pharma's approach. A more open-minded approach to medicine would be beneficial.

Socialist is another American dirty word, one that is being used against Bernie Sanders. I have not turned into a socialist overnight. I am simply thinking out-loud. How can the economy recover when the population and corporations are smothered by debt? Debt forgiveness is the only way out of this debt suffocation. Can debts be forgiven without nationalization? Not without a huge giveaway to financial mangers and Wall Street. It is the members of the "one percent" who have received 95% of the increase in us income and wealth since 2008. Do we want to reward them for smothering the economy with debt by bailing them out without nationalizing them?

The combination of an economy covered in debt and an unprotected population is clearly revolutionary. Do we have leadership capable of breaking out of interest group politics and ruling ideologies in order to save our society and put it on a more sustainable basis?

Or will the economic hardships be blamed on the virus, the catalyst that ignited the debt time-bomb?

 

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Dr. Roberts was Assistant Secretary of the US Treasury for Economic Policy in the Reagan Administration. He was associate editor and columnist with the Wall Street Journal, columnist for Business Week and the Scripps Howard News Service. He is a contributing editor to Gerald Celente's Trends Journal. He has had numerous university appointments. His books, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is available (more...)
 

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9 people are discussing this page, with 12 comments


Lance Ciepiela

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The Federal Reserve has 'slashed interest rates to zero percent'as an emergency measure on Sunday to provide cash liquidity for the financial markets as an economic pandemic hits the economy and a rapidly spreading pandoravirus strikes an 'unprotected' American public. Fed Chairman Powell is resuming the fed's QE (Quantitative Easing- Bank Bailout/Wall St Bailout) for the banks 'too big to fail' and buying Treasury bonds to bolster up the biggest banks with cash at taxpayer expense but no 'helicopter money' for the taxpayer adding on to the national debt. The president may nationalise the Federal Reserve System, 'if he says so', 'with the US Treasury having sole legal authority to issue new money for the benefit of the American public rather than the benefit of the banking industry. The national debt would be cancelled as it becomes a bookkeeping entry with nationalization'.

Submitted on Monday, Mar 16, 2020 at 1:41:33 AM

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911TRUTH

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trump has been pressuring The Fed to go to negative interest rates and he will use this crisis to get negative interest rates and save himself millions on loan interest.

Submitted on Monday, Mar 16, 2020 at 4:33:29 PM

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Michael Dewey

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First thought on the virus was seemed like good way to shut down Babble-on before it ends up thrown down with violence in one hour. You mention some of the solutions of some nationalization of somethings. I lean that way towards turn cable-internet ripoff into public city utilities run through public banks at the post office.

Submitted on Monday, Mar 16, 2020 at 2:04:36 AM

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TruthWillPrevail2020

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Trump's trade war has already begun to shift supply chains back home (where they belong). And this crisis is going to give Trump the reason for what he has been planning to do all along - reset the currency. He is going to cancel the debt to the fraudulent illegal Federal reserve and bring back a metals back currency, probably with a crypto component. Jubilee!

Submitted on Monday, Mar 16, 2020 at 2:10:40 PM

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911TRUTH

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Yeah, sure he will.

If it doesn't benefit him personally, it won't happen.

Submitted on Monday, Mar 16, 2020 at 4:38:40 PM

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john taylor

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Reply to TruthWillPrevail2020:   New Content

Dude, his phony wealth is in FED reserves notes. He's not biting the hand that feeds him. Trump works for the financial elites, period. They all do. That's why they killed JFK, RFK, MLK & Malcolm X.

Submitted on Tuesday, Mar 17, 2020 at 12:16:28 PM

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Charles Homer

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As shown in this article, one highly influential American neoconservative group recommended the use of targeted bioweapons because they would prove to be "politically useful":

click here

Given the current global pandemic, it seems most interesting that certain factions in Washington are willing to retain dominance at any cost, no matter how it impacts the world.

Submitted on Monday, Mar 16, 2020 at 3:50:14 PM

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911TRUTH

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Babbling Biden is the DNC's and corporate America's chosen one over Bernie.

This means this country will never have a single payer universal health care system.

Never.

Submitted on Monday, Mar 16, 2020 at 4:36:22 PM

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Rob Kall

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I'll be discussing this with PCR at 2:30 PM EST today. reply to me if you have suggestions on things to talk about.

Submitted on Monday, Mar 16, 2020 at 4:44:52 PM

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Anton Grambihler

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I am interested in his thoughts on reversing/ending the disasters of 1913.

The Amendment for Income Tax.

The Amendment for Senators becoming additional representatives of the people instead of representatives of the States.

The Creation of the Federal Reserve.

The Creation of the ADL.

Submitted on Monday, Mar 16, 2020 at 5:38:48 PM

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Jerry Lobdill

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Gee, I wish I'd known about this interview plan earlier. Have you published it? I was very interested in PCR's recent comments about Michael Hudson's ideas. My previous comment here does not mean that I disagree with him.

Submitted on Wednesday, Mar 18, 2020 at 3:38:55 PM

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Jerry Lobdill

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So this is what it takes for PCR to allow comments on his articles? OK.

Your thoughts are spot on, Dr. R. But I think we need to restructure our monetary system and let the perps and beneficiaries of the 2008 crash twist slowly, slowly in the wind. In fact, we should take back the $26T we gave them in the wake of the collapse of their Ponzi game. It should be used to provide work and sustenance for the ordinary Americans who will be otherwise impoverished and hungry as a result of this crisis.

Meanwhile, we need to adopt MMT and an employer-of-last-resort government program to provide government-funded public infrastructure maintenance and development. Hint: Bring in Stephanie Kelton, L. Randall Wray, and Michael Hudson and kick out all Wall Streeters. Stop hyping the stock market and get real about the state of the nation.

Submitted on Monday, Mar 16, 2020 at 10:30:38 PM

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