Broad Oak: your emotional support animal

Sunday, June 07, 2009

It's not going to be over by Christmas

Charles Hugh Smith thinks the current crisis will turn into a worse depression that the one of the Thirties. Citing Galbraith's study of the latter, he thinks inequality is a driving factor:

...the proximate cause was a vast income disparity which placed much of the prosperous era's profits in the hands of a small wealthy class, who then mal-invested the profits...

- in the "non-real" economy:

The financial Plutocracy, observing that actually producing goods is not very profitable unless you can fix prices [...] sinks its capital into the FIRE economy (finance, insurance and real estate), eschewing real-world investments as comparatively unprofitable.

Though rarely noted, this is a longstanding trait of capitalism stretching back to 1400-era Venice. When trade became less profitable than mainland farmimg, the Venetian Elite stopped funding trading and bought farms on the mainland. As a side effect, Venice ceased to be a military and trading power. But the Elite remained immensely wealthy.

Watch that Gini coefficient rise.

4 comments:

James Higham said...

19. With the global media concentrated in a scant few corporate hands (less than 10), this pulling away of the curtain is deleted/excised from media coverage in a ruthless campaign of pure "green shoots" propaganda.

Yes.

Paddington said...

As I have said before on this forum, 14th century Venice is not the modern world. Without a technical class, the rich will suffer greatly as well.

Sackerson said...

... but not as much as the poor, which is what really matters to them.

Paddington said...

S: The rich, by and large, don not understand any of the technology around them. That's why they are destroying the system.