Overview: The Bubble and Beyond by Michael Hudson


The Road from Industrial Capitalism to Finance Capitalism and Debt Peonage
Essays on Fictitious Capital, Debt Deflation and the Global Crisis by Michael Hudson


Preface
Summary and Analytic Table of Contents
Introduction: Today’s Financial Crisis and Economic Theory
Preface
Summary and Analytic Table of Contents
Introduction: Today’s Financial Crisis and Economic Theory

I. Fictitious Capital and Economic Fictions
  1. Two Traditions of Financial Doctrine
  2. The Magic of Compound Interest: Mathematics at the Root of the Crisis
  3. How Ricardo’s Value Theory Ignored the Role of Debt
  4. The Industrialization of Finance and the Financialization of Industry
  5. The Use and Abuse of Mathematical Economics
  6. The Financial Character of Today’s Crisis

II. From Inflated Debts to Debt Deflation
  7. Property is Worth Whatever a Bank Will Lend Against It
  8. The Real Estate Bubble at the Core of Today’s Debt-leveraged Economy
  9. Junk-Bonding Industry
 10. Privatizing Social Security to Rescue Wall Street
 11. Saving, Asset-Price Inflation, and Debt Deflation
 12. Saving our Way into Debt Peonage

III: The Global Crisis
 13. Trade and Payments in a Financialized Economy
 14. U.S. Quantitative Easing fractures the Global Economy
 15. America’s Monetary Imperialism: Dollar Debt Reserves without Constraint
 16. The Dollar Glut Finances America’s Military Build-up
 17. De-dollarizing the Global Economy
 18. Incorporating the Rentier Sectors into a Financial Model

IV: The Need for a Clean Slate
 19. From Democracy to Oligarchy: National Economies at the Crossroads
 20. Scenarios for Recovery

This summary of my economic theory traces how industrial capitalism has turned into finance capitalism. (emphasis added). The finance, insurance and real estate (FIRE) sector has emerged to create “balance sheet wealth” not by new tangible investment and employment, but financially in the form of debt leveraging and rent-extraction. This rentier overhead is overpowering the economy’s ability to produce a large enough surplus to carry its debts. As in a radioactive decay process, we are passing through a short-lived and unstable phase of “casino capitalism,” which now threatens to settle into leaden austerity and debt deflation.

This situation confronts society with a choice either to write down debts to a level that can be paid (or indeed, to write them off altogether with a Clean Slate), or to permit creditors to foreclose, concentrating property in their own hands (including whatever assets are in the public domain to be privatized) and imposing a combination of financial and fiscal austerity on the population. This scenario will produce a shrinking debt-ridden and tax-ridden economy.

Continue here ...  http://michael-hudson.com/2012/08/overview-the-bubble-and-beyond/

Note: I have purchased and received the book. It is not inexpensive, since it is print-on-demand, but I highly recommend it. Tom Christoffel

Regional/Greater Community Development News – August 6, 2012


    Multi-jurisdictional intentional regional communities are, in all cases, “Greater Communities” where “community motive” is at work at a more than a local scale. This newsletter provides a scan of regional community, cooperation and collaboration activity as reported in news media and blogs.
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Top 10 Stories
Is it time to start saying: “Some of our Adirondack communities are not dying, they are dead”?  
A Divided Land?
Do We Have a Park?
What is “Community”?
An Adirondack Doctrine
A Tri-Lakes Economic Center?
A Regional Community
From an Adirondack Park perspective, we may need to focus more on regions than on communities. In our effort to save everyone we may save no one.
And the environmental community needs to recognize this too. As our basic amenities go away, the strain of over usage in certain areas like the High Peaks will continue to worsen while other natural areas of the Park become abandoned.
Before talking about “smart growth” and “sustainable life” we may need to agree on first creating a true Park and that our efforts focus on regional economic centers.
This may take changing historical local and APA boundaries. For example, is it possible to trade building rights or density not from the same property owner but between different private and public lands to make appropriate development happen to create these regional economic centers?
More importantly it may require a change of perspective of what is a “sustainable community” in the future to one of a more regional definition.
Perhaps that will be a real test if indeed we have achieved consensus which may need to begin with the creation of a true "sense of place" we call a Park.
The proposed transportation sales tax got steamrolled by voters Tuesday, with 63 percent voting against the plan to raise billions for a controversial list of projects aimed at unsnarling traffic and improving transit in a 10-county region. So what’s next? We asked two leaders on each side of the T-SPLOST issue to suggest what needs to be done to find regional consensus.
By Bucky Johnson (Norcross mayor and was chairman of the T-SPLOST regional transportation roundtable)
 Over the past 15 months, I have had the opportunity to travel around the region to speak about the Transportation Investment Act of 2010. There was overwhelming agreement that metro Atlanta has a transportation problem. This was the first time in the history of metro Atlanta that a regional vote for transportation improvements has been attempted. …
By Steve Brown (Fayette County commissioner)
Easing metro Atlanta traffic congestion will require a systemic transformation of the bureaucratic process we now endure.
Economic development, often a hot topic, came to a boil in Peoria last week.
…more than 200 community leaders attended a session at the Peoria Civic Center to create "a more successful regional economic strategy."
In a lightning strike, a determined faction of the community had staged a coup, upsetting the established economic development apple cart. You don't see that very often in Peoria.
McConoughey's 10-year tenure as Heartland head was not without accomplishment, but the cry for regional collaboration and administrative transparency called for change.
Consultant Frank Knott, brought in last year to research the issue by the Tri-County Regional Planning Commission, shared his findings at the July 26 program at the Civic Center.
He started with the fact that central Illinois has plenty of assets but wasn't making the best use of those advantages.
Those that stormed the EDC palace promoted democracy. "Of the 300 community leaders we interviewed, many said they were being asked for their input for the first time," said Knott.
Telecommunication upgrades and trees are among the tangible benefits the Tampa Bay area will see right away as a result of the Republican National Convention, but the most lasting impact of the gathering may be regional economic development cooperation.
 The RNC … offers local businesses, governments and civic groups an unprecedented opportunity to work together to promote the area nationally as a good place to do business, said panelists at the Tampa Bay Business Journal's "The Economy Convention" event Monday afternoon at the University of Tampa.
A new regional economic development agency emerged after the last RNC in 2008 in the Twin Cities, Melvin Tennant, president and CEO of Meet Minneapolis, Convention & Visitors Association.
The opportunity here is enhanced because there are new elected and appointed officials in key posts who are not interested in fighting about political and geographic boundaries, said Tampa Mayor Bob Buckhorn.
"Those days are over, as well they should be," Buckhorn said. …
Regional government consolidation? Progressives won’t touch it. California municipalities careening toward bankruptcy don’t mention it. Leaders of the national movement for land banks talk about inside-the-boundaries development schemes, and sometimes about regional land-use planning, but they throw up their hands at it.
The tax bases of shrinking Rust Belt cities are too small to sustain services and meet infrastructure requirements, …
But except for a recent letter to the editor of the Syracuse daily newspaper, a letter proposing that the soon-to-be-broke City of Syracuse decertify itself as a separate entity so that Onondaga County can become the greater city and take over city functions, American urbanists don’t talk consolidation.
Instead, the newest version of the City Beautiful movement is underway. …
Across the land, city governments and town governments and county governments go it alone, pursuing developments alone, pursuing financial work-outs alone, electing and re-electing crowds of officials each by themselves, drawing up master plans that rarely intersect, hiring consultants to do studies and to propose alternatives that somehow, inevitably, leave every boundary unchanged. A senior bond attorney on Wall Street once told me that while he understands the rationale for consolidation, his firm wouldn’t be helpful anytime soon, because each issuance of a bond by each city, town, county, school district, sewer authority, or other entity was a fee to his firm. The historically low interest rates of today provide a fabulous opportunity to gather up lots and lots of old outstanding debt, bundle it up, create new super-entities (like, oh, regional or metro-wide governments) and get rid of all the clutter—or at least some of it—but the municipal bond industry isn’t the outfit that is going to make it happen.
Meanwhile, luminaries at various Washington think tanks employ the term “metro” and “metropolitan,” but neither they nor their conferees, being generally short on the experience of ever having tried to adjust the boundaries of a shrinking city, address the linked problems of tax-base shrinkage, depopulation, sprawl, aging infrastructure, and abandonment.
Former Met Council Chairman Ted Mondale said public officials in other states are envious that Minnesota has a regional planning agency like the Met Council.
Called one of the best ideas on governance ever to come out of Minnesota by a former chairman — called other things by irate city councils — the 3,600-employee strong Met Council casts a long shadow in the seven-county metro area.
The agency, comprised of three separate operating divisions — transportation, environmental services and community development — oversees 600 miles of regional sewer lines, collecting wastewater from 106 metro communities, two million residents.
… the Met Council, regardless whether a Republican or Democratic governor is in power — governors appoint the 17-member council — just upsets some people.
One affordable housing advocate views the stars aligning at the Met Council.
“I think looking forward it’s promising,” said Executive Director Chip Halbach of the Minnesota Housing Partnership, a coalition of organizations focused on homelessness and affordable housing.
The Met Council current annual budget is about $778 million.
About 39 percent of the council operating budget is state funding, with wastewater treatment charges making up about 22 percent of the revenue.
Baseball in the Bottom is back in the news. The zombie of two failed campaigns to build a baseball stadium in Shockoe Bottom walks again. No doubt, there will be much said about that zombie in coming months.
Meanwhile, just because people keep bragging about what a perfect economic driver baseball will be if you put it here, or there, doesn’t make any of it true.
Using minor league baseball to fix the perceived problems of a blighted neighborhood probably won’t work and saying it has worked that way in several other markets isn’t true. Comparing what has happened in minor league cities with Major League Baseball's history is a reach.
Let’s face it, as long as the City of Richmond won’t allow Henrico County and Chesterfield County fair representation on the Richmond Metropolitan Authority's board, any talk about regional cooperation to build ANYTHING under its auspices is a waste of time.
Six New England states led by Massachusetts plan to coordinate purchases of renewable energy, leveraging their scale for better pricing and encourage more clean energy diversity in the region.
The move follows Massachusetts' own move to encourage a competitive bidding process for renewable energy projects.
Under the resolution passed unanimously during the New England Governor's Conference in late July 2012, the New England States Committee on Electricity (NESCOE) will develop a request for proposals to be issued in 2013.
The resolution directs "NESCOE and their regulatory and policy officials to implement the work plan and any regulatory proceedings or procedures as are necessary or appropriate to execute the coordinated competitive regional procurement of renewable power, with the goal of issuing a solicitation for procurement by the end of December 2013."
...
Two separate geological studies released this week suggest the earth-quake hazard in the transboundary region of the Pacific Coast of North America - including southern British Columbia - is significantly greater than previously believed.
Both teams of U.S. scientists are urging heightened readiness throughout the region for a future offshore "mega-thrust" event that could compare with the one that triggered Japan's earth-quake-tsunami-nuclear catastrophe last year.
In one study - a 13-year comprehensive analysis of the Cascadia earth-quake-prone zone between Vancouver Island and Northern California - a team of researchers concluded the "clock is ticking" ahead of a potentially devastating earthquake in the region within the next 50 years.
"Over the past 10,000 years, there have been 19 earthquakes that extended along most of the margin, stretching from southern Vancouver Island to the Oregon-California border. These would typically be of a magnitude from about 8.7 to 9.2 - really huge earthquakes."
A Wairarapa business group and think tank has rejected the need for the region to join with Wellington, saying business will be better off with one regional district.
Consultants working on the Wairarapa Governance Review decided the region would be best served by one authority – a Wairarapa district council, born out of amalgamating South Wairarapa, Masterton and Carterton district councils.
Self-funded Wairarapa Development Group agrees. Chairman Shane McManaway is reluctant to see the region swallowed up in the greater Wellington area.
The capital city is in the throes of its own local government review, which includes an option to create a supercity type council, encompassing its northern neighbour.
“We don’t believe a unitary authority is good for the region. We don’t believe we have enough critical mass as an entity to get the value of the big powerhouse that the Wellington regional council can give us,” Mr McManaway told NBR ONLINE.
Extra

This new study explores the implications of a major financial crisis for the supply-chains that feed us, keep production running and maintain our critical infrastructure. I use a scenario involving the collapse of the Eurozone to show that increasing socio-economic complexity could rapidly spread irretrievable supply-chain failure across the world.
It is argued that in order to understand systemic risk in the globalised economy, account must be taken of how growing complexity (interconnectedness, interdependence and the speed of processes), the de-localisation of production and concentration within key pillars of the globalised economy have magnified global vulnerability and opened up the possibility of a rapid and large-scale collapse. ‘Collapse’ in this sense means the irreversible loss of socio-economic complexity which fundamentally transforms the nature of the economy. These crucial issues have not been recognised by policy-makers nor are they reflected in economic thinking or modelling.

More at Delicious: Links
Daily via Twitter
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Basic Geocodes - 
0000 - Earth
0900 - Arctic Ocean
1000 - Europe
2000 - Africa
3000 - Atlantic Ocean
4000 - Antarctica
5000 - Americas
6000 - Pacific Ocean
7000 - Oceana
8000 - Asia
9000 - Indian Ocean

"Global Region-builder Geo-Code Prototype" © 

Regional/Greater Community Development News – July 30, 2012


    Multi-jurisdictional intentional regional communities are, in all cases, “Greater Communities” where “community motive” is at work at a more than a local scale. This newsletter provides a scan of regional community, cooperation and collaboration activity as reported in news media and blogs.
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Top 10 Stories
The Milwaukee and Gary mayors had their eye on regional issues—and hope for a new economy based on a Chicago-centered megalopolis, linked by state of the art transportation, that can compete with the Silicon Valley on tech development and the East and West Coasts on tourism.
“I think it’s time that we as a region promote America’s ‘Fresh Coast,’ said Milwaukee Mayor Tom Barrett. “We have allowed outsiders to define us as the Rust Belt.”
Milwaukee officials have been touting “Fresh Coast” as a fresh alternative to “ Rust Belt” or the more common watery moniker “Third Coast,” and while neither Chicago nor Gary have embraced that term, officials from both cities have expressed interest in collaboration.
“The need is so great in our respective communities because we’ve been devastated by the recession and many aspects of our local economy,” said Gary Mayor Karen Freeman-Wilson.
… The Metropolitan Planning Council organized today’s mayoral gathering, titled “The Cities That Work,” on the heels of a review of regional cooperation that MPC President Barrett described as “blistering.”
The review, conducted by the international Organisation for Economic Co-operation and Development, found that governments in “the Chicago Tri-State Metropolitan Area” could do much more to coordinate transportation, innovation, workforce training and sustainable development.
And the smaller cities are eager to respond.
“We want partners,” said Milwaukee Mayor Barrett. “We’d love to have Gary as a partner, we’d love to have Chicago as a partner.”
But 29 minutes into the 30-minute meeting final word came that Emanuel, who had been expected to join the meeting in progress, would not be able to make it.
When voters go to the polls…they will have the opportunity to invest in our roads, bridges and transit systems, strengthen our economy and create a better quality of life for everyone in metropolitan Atlanta. We must tackle our transportation issues now and vote “yes” to make a difference in the lives of citizens across the metropolitan region. We must ask ourselves: Do we really just want to get by with a transportation system that becomes more outdated and congested every day? Or do we want our family members and friends to spend less time in traffic and more time together?
The leaders of cities such as Dallas, Tampa, Charlotte and Orlando use our traffic problems and our perceived inability to work together to solve them as a tool to dissuade potential businesses and industries from moving here. The metropolitan Atlanta region has lost more than 200,000 jobs between 2007 and today, with more than 80,000 jobs in the construction industry alone. If we don’t address this issue right now, we’re going to pay an even greater cost in the future for our failure to act in terms of the jobs we lose and the negative impact on our quality of life. We cannot let naysayers who do not offer other viable solutions prevent us from creating real transportation options that we can implement right away.
For months, 21 elected officials put aside partisan politics to develop a $6.14 billion transportation project list that reflects the needs and wants of local leaders representing the 10-county metropolitan area. …
TVA's top economic developer said Thursday that regionalism will provide the Chattanooga area more product to sell to business prospects.
"That's the key. If you've got product, you've got something to sell," said John Bradley, TVA's senior vice president for economic development, who took part in a panel discussion on regionalism.
Charles Wood, the Chattanooga Area Chamber of Commerce's vice president of economic development, told Chattanooga Rotarians that his biggest fear is that the region sits on its past success.
"My biggest concern is complacency -- that as a community we get fat and happy," he said.
Wood said the area needs to continue to focus on growth. He cited efforts to fashion a 40-year growth plan that are getting under way for the 16-county area around Chattanooga covering Tennessee, Georgia and Alabama.
Georgia State Sen. Jeff Mullis, R-Chickamauga, said the plan has to be "all-inclusive" so it benefits everyone in the region. …
… the Metropolitan Transportation Commission voted 8-7 against providing $4 million in regional transit funds to cover the $9 million cost to SF Muni to provide free service for youth for 22 months. All of San Francisco’s representatives backed the proposal, which failed due to opposition from suburban-oriented East Bay members. The vote mirrors votes by other regional transit agencies like BART, where San Francisco interests are routinely outvoted by the East Bay’s pro-parking lot majority. Many bemoan the Bay Area’s many independent transit agencies, but regional bodies have poorly served public transit. And from Free Muni to once vaunted “regional” plans to end homelessness, such entities diminish San Francisco’s clout and weaken progressive agendas.
Regional “Solutions” to Homelessness
It's not just in transit where regional bodies do not work.
When homelessness became a major Bay Area problem in the 1980’s, there soon was an insistence that a “regional” solution was necessary. The goal was to encourage all Bay Area cities to provide housing, shelter or services, rather than imposing a disproportionate burden on Berkeley, San Francisco and other more progressive cities.
Foundations threw money at this “regional solution” goal, which always had one insurmountable obstacle: there was no regional entity that could compel Walnut Creek, Daly City or San Rafael to do its fair share. …
Progressives need less regional government, not more. I expect San Francisco’s youth activists to eventually turn the tide on free MUNI, but as long as we have regional bodies prioritizing pork barrel projects like the BART connector over improving public transit within cities, such entities should be recognized as obstacles to social justice. …
As the worst drought since 2002 shines a spotlight on the water challenges facing the Colorado River Basin, a group of leading advocacy organizations is launching a new campaign to urge the region’s urban communities to do their part to put the Basin on a sustainable path. Launching this week, the campaign is asking communities from Colorado to Utah to Nevada to Arizona to take the “90 by 20” pledge and commit to using water in smarter, more efficient ways.
Specifically, the 90 by 20 campaign is calling on communities in the region to commit to achieving residential water usage rates of 90 gallons per capita per day (GPCD) by 2020. … this is a level within reach for nearly every major water utility in the region. …
… Western Resource Advocates. “If we’re going to restore balance to the region’s water resources, everyone needs to work together and reach for a common goal. …” Gallons Per Capita Per Day is a common water usage metric used by utilities.…
The Community Foundation of Lorain County has committed $120,000 to a regional economic development plan.
The Fund for Our Economic Future will receive the money over a three-year period.
It is the third contribution from the foundation to the Cleveland-based fund, which has a mission to promote programs that increase jobs, elevate incomes and reduce poverty across northern Ohio, according to futurefundneo.org.
The regional fund has paid for projects that spur economic development and help local governments operate more efficiently, said…communications officer for the Lorain County Foundation.
“Our board of directors feels very strongly that this is an opportunity for Lorain County to play a part in a regional economic development initiative,” she said.
The Community Foundation of Lorain County has been involved with the regional effort since its inception and foundation President and Chief Executive Officer Brian Frederick is vice chairman of the Fund for Our Economic Future, …
The Regional Center for Animal Control and Protection saw its intake of animals go down by 7,000 this past fiscal year compared to the last, the facility's advisory board found out this afternoon.
Some board members speculated that could be a sign that the economy may be improving; a positive indication that more people are holding onto their pets.
Others wondered if it's a sign more people are simply scared to drop off their animals at the regional center for fear of what might happen to them.
The regional center paid the Roanoke Valley SPCA's veterinarian more than $16,000 last fiscal year for treatment of sick or injured animals…four times over the $4,000 allotted budget.
Staff reported to the board there was significant improvement in the facility's "live release rate," up 20 percent for dogs and 18 percent for cats compared to the last fiscal year.
There's also a new liasion between upset pound volunteers, staff at the regional center, and the four localities using it. …
Central Virginians with differing abilities are going to work, whipping up gourmet meals in a new catering business at Region Ten Community Service Board. The agency provides services to people dealing with mental health, intellectual disability, and substance abuse.
Paul Baden is finding his recipe for success through kitchen therapy at Region Ten. He's training to become a chef. …
Baden is one of six employees in the new catering service program called Decidedly Delicious. It was established by seed money from Region Ten's Power of Ten fundraising efforts.
… Baden has a new ambition to take the skills he learned in the catering kitchen to study culinary arts at Piedmont Virginia Community College. …
A grant from the Dave Matthews Band's Bama Works Fund is allowing Region Ten to buy a food truck to take their catering services on the road. That truck should arrive in the next few weeks.
As Spain seems to have wiped anyone else away from eurozone crisis-related headlines, we have published a new briefing looking at how the Spanish crisis could evolve in the near future – focusing our attention on the role of the regions and potential bailout scenarios.
…we have repeatedly stressed the risks involved in Madrid being unable to rein in spending at the regional level (see here and here, for instance). In our new briefing, we argue that, at the end of the day, the regions alone will not make or break Spain financially (more likely, it will be the banking sector, a risk which we also highlighted at length). In fact, if they continue to rely on the central government for funding, this could increase Spain's financing needs for this year by an extra €20bn - not pocket change, but still around only 2% of the country's GDP.
…we believe regional problems combined with banking sector issues and other pressures could ultimately push Spain into a fully-fledged bailout. …
Ten Central African countries…initiative that will help them set up national forest monitoring systems and strengthen cooperation among nations in the region, …
The initiative targets the forests of Africa’s Congo Basin…one of the world’s largest primary rainforests, …region’s forests also support the livelihoods of some 60 million people.
…initiative…will help protect these forests from direct threats such as land-use change and unsustainable logging and mining, and will provide up-to-date and accurate information on the current state of forests that will help countries manage and prevent forest degradation activities.
…Central Africa Forests Commission (COMIFAC)…UN Food and Agriculture Organization (FAO)… collaboration with the Brazilian National Institute for Space Research (INPE).
“Learning from Brazil, the national forest monitoring system is the key element to pave the road for substantive international support to protect forests and promote sustainable forest management”…