Saturday, March 24, 2007

That's why mums shop at Iceland

Thanks to Paul for pointing me to economist Michael Hudson’s webpage by way of a comment on an earlier post.

There is some good stuff on the subject of debt, interest rates and asset price bubbles on that site. Though the page itself has a sort of late 1990’s feel to its layout and style and links to a bewildering minefield of file formats – flash animations, pdfs, mp3s, m3us and shonky html layouts – at least one of which is bound choke a visitor’s browser. Even if what Hudson has to say isn’t of any interest, visiting the site is a good test to see if you are up to date with all your browser plug-ins.

One audio file of Hudson speaking to a group tickled me in particular. It’s on the long side (70 minutes), is of so-so sound quality and includes some waffle. However, aside from that, it serves as a pretty good primer on the mentality and motivations of the people who lend and the people who borrow money in the kind of effervescent, bubbly times through which we are living today. It is recommended if you're into this sort of thing but only as the kind of listening material that is best consumed whilst doing something with your hands, catching up with household chores, something like that – 70 minutes
exclusively spent listening to an economist, however astute, is far too much of anyone’s life to waste.

Hudson makes an interesting observation mid-way through his talk when he points out that the total value of real estate in New York is equal to the total value of all plant and machinery in the entire US. No doubt, the same could be said about London and the UK. Hudson’s point is that the US stopped being an industrial economy long ago and the US economy is now based on property ownership, rent and usury rather than actually making things.

Which is, of course, a throw back to the good old days of feudalism

Which is nice if you either own lots of property, happen to be a money lender, or are an environmentalist who wants everyone to return to a ‘simpler’ way of life, but not so crash hot for the rest of us

HRH Prince Charles - interests include environmentalism, auto mechanics, owning Cornwall and serfing

Hudson does lose the plot at one point a little later in the talk. He explains to his American audience that house prices have become so high in Britain that people no longer invite you round for dinner because their mortgage payments are so high they cannot afford meat (!?) Which is exaggerating the current situation here in Britland just a teensy weensy little bit.

The British can still afford to eat meat. Admittedly, the kind of meat that has children growing breasts and running up the walls after they’ve eaten it but it’s definitely meat. I think...


NB! A much shorter, less technical explanation of how the debt-inflation cycle works can be seen in this Gootube video here...



paul said...

glad you liked it, the meat problem was a bit odd but it's still a good primer on finance. His super imperialism book's good too, though at an eye watering 25 quid for the paperback, maybe only for the hard core financial conspiracy types.

Adhesive X said...


Stef said...

or is it wangernumb?

I reckon the BBC are holding that sketch back for broadcast on the 10 o'clock news when the housing market finally melts...