Published 22 August 2016, Telesur English Edition, as ‘Who Profited from the $440 Billion Bailout?’, by Jack Rasmus

This week marks the first anniversary of the 2015 Greek debt crisis, the third in that country’s recent history since 2010. Last Aug. 20-21, 2015, the ‘Troika’—i.e., the pan-European institutions of the European Commission (EC), the European Central Bank (ECB), plus the IMF-imposed a third debt deal on Greece. Greece was given US$98 billion in loans from the Troika. A previous 2012 Troika imposed debt deal had added nearly US$200 billion to an initial 2010 debt deal of US$140 billion.

That’s approximately US$440 billion in Troika loans over a five year period, 2010-2015. The question is: who is beneftting from the US$440 billion? It’s not Greece. If not the Greek economy and its people, then who? And have we seen the last of Greek debt crises?

One might think that US$440 billion in loans would have helped Greece recover from the global recession of 2008-09, the second European recession of 2011-13 that followed, and the Europe-wide chronic, stagnant economic growth ever since. But no, the US$440 billion in debt the Troika piled on Greece has actually impoverished Greece even further, condemning it to eight years of economic depression with no end in sight.

To pay for the US$440 billion, in three successive debt agreements the Troika has required Greece to cut government spending on social services, eliminate hundreds of thousands of government jobs, lower wages for public and private sector workers, reduce the minimum wage, cut and eliminate pensions, raise the cost of workers’ health care contributions, and pay higher sales and local property taxes. As part of austerity, the Troika has also required Greece to sell off its government owned utilities, ports, and transport systems at ‘firesale’ (i.e. below) market prices.

Europe’s Bankers Got 95 Percent of Greek Debt Payments

The US$440 billion in Troika loans—and thus Greek debt—has not been employed to benefit the Greek people, or to help the Greek economy recover from its eight years of depression; it has gone to pay the principle and interest on previous Troika debt, as that debt has been piled on prior debt in order to pay for previous debt
A recent 2016 released study has revealed conclusively where all the interest and principal payments on the US$440 billion debt has gone. It has gone directly to European bankers and investors, and to the Troika institutions of the EC, ECB, and IMF, who indirectly in turn recycle it back to private bankers and investors.

According to the White Paper (WP-16-02) published by the European School of Management and Technology, ESMT, this past spring 2016, entitled “Where Did the Greek Bailout Money Go?”, more than 95 percent initial Troika loans to Greece went to pay principal and interest on prior Troika loans, or to bailout Greek private banks (owned by other Euro banks or indebted to them), or to pay off European private investors and speculators. Less than 10 billion euros was actually spent in Greece.

The ESMT study further estimates the most recent, third Greek debt deal of last Aug. 2015 will result in more of the same: Of the US$98 billion loaned to Greece last year, the study projects that barely US$8 billion will find their way to Greek households.

The Cost to Greece Eight Years Later

In exchange for the 95 percent paid to the Troika and banker-investor friends, the austerity measures accompanying the Troika loans has meant the following: Greece’s unemployment rate today, in 2016, after eight years is still 24 percent. The youth jobless rate still hovers above 50 percent. Wages have fallen 24 percent for those fortunate enough to still have work. The collapse of wages is due not just to layoffs or government and private business wage cutting, both of which have occurred since 2010, but is due also to the shifting of full time to part time work. Full time jobs have collapsed 27 percent, the lowest ever, while part time jobs have risen 56 percent, to the highest ever. The poorest and most vulnerable Greek workers and households have seen their minimum wages reduced by 22 percent since 2012, on orders of the Troika. And pensions for the poorest have been reduced by approximately the same. All that to squeeze Greek workers, households and small businesses in order to repay interest on debt to the Troika, to Europe’s bankers, and private investors.

None of the debt, austerity, depression, and collapse of incomes existed before the Troika intervened in Greece starting in 2010. Greece’s debt to GDP was around 100 percent in 2007, about where it had been every year for the entire preceding decade, 1997-2007. It was no worse than any other Eurozone economy, and better than most. Greek debt rose in 2008 to 109 percent due to the global recession, accelerating to 146 percent of GDP in 2010 with the first Troika debt deal of US$140 billion. It then surged to more than 170 percent in 2011, where it has remained ever since as another US$300 billion was added in Troika loans in 2012 and 2015.

Greece’s debt since 2010 is certainly not a result of Greek government spending, which has fallen from roughly 14 billion euros to 9.5 billion in 2015, reflecting Greece’s deep austerity cuts demanded by the Troika. Nor can it be attributed to excessive wages and too many public jobs, as both these have declined by a fourth as debt has accelerated. The debt is Troika loans forced on Greece in order for Greece to pay principal and interest on previous loans forced on Greece.

And Still No Relief 2015-16

What happened a year ago, in the third Troika debt deal of Aug. 2015, was the same that happened in 2012 and 2010: US$98 bill more debt was added to Greece’s already unsustainable US$340 or so billion. In exchange, last August Greece had to implement the following even more severe austerity measures:

Generate a budget surplus of 3.5 percent of GDP from which to repay Troika debt-i.e. around US$8 billion a year. Raise sales taxes to 24 percent, plus more tax hikes on “a widening tax base” (i.e. higher taxes for lower income households). Introduce what the Troika calls “holistic pension reform”—i.e., cut pensions up to 2.5 percent of GDP, or around US$5 billion a year, and abolish minimum pensions for the lowest paid and the annual supplemental pension grants. Introduce a “wide range” of labor market reforms, including “more flexible” wage bargaining, easier mass layoffs, new limits on worker strikes, and thousands more teacher layoffs as part of “education reform”. Cut health care services and convert 52,000 more jobs to part time. And introduce what the Troika called a more “ambitious” privatization program. And this is just a short list.

And How Has Greece’s Economy Actually Performed over the Past Year?
Greek government spending since Aug. 2015 has further declined by 30 percent as of mid-year 2016, except for military spending that has risen by US$600 million. Since Aug. 2015, quarterly Greek GDP has continued to contract on a net basis. Greek debt as a percent of GDP has risen further.

There are 83,000 fewer full time jobs. (But 28,000 more part time jobs). Youth unemployment rates have risen from 48.8 to 50.3 percent. Consumer spending has dropped by almost 10 percent, as consumer confidence continues to plummet, home prices deflate, and business investment, exports, and imports all slow. In other words, the Greek economy continues to worsen despite the added US$98 billion Troika debt and the more extreme austerity measures imposed a year ago.
Is Another Fourth Greek Debt Crisis Inevitable?

The answer is “Yes.” Greece cannot generate a 3.5 percent surplus from which to pay the mountain of principal and interest on its debt. Debt repayments in 2016 to the Troika were relatively minimal in 2016. In 2017-18, however, greater debt repayments will come due as Greece’s inability to repay will no doubt worsen, when the next Europe-wide recession hits, which is likely in 2017-18 as well. The next Greek debt crisis may erupt even before, as a consequence of the current deterioration in Europe’s banking system in the wake of Brexit and the deepening problems in Italy’s and Portugal’s banking systems. Contagion elsewhere could quickly spill over to Greece, precipitating another fourth Greek banking and debt crisis.

An Emerging New Financial Imperialism?

By imposing austerity to pay for the debt the Troika since 2010 has forced the Greek government to extract income and wealth from its workers and small businesses-i.e. to exploit its own citizens on the Troika’s behalf-and then transfer that income to the Troika and Europe bankers and investors. That’s imperialism pure and simple-albeit a new kind, now arranged by State to State (Troika-Greece) financial transfers instead of exploitation company by company at the point of production. The magnitude of exploitation is greater and far more efficient.

What’s happened, and continues to happen in Greece, is the emergence of a new form of financial imperialism that smaller states and economies, planning to join larger free trade zones and ‘currency’ unions, or to tie their currencies to the dollar, the euro, or other need to avoid at all cost, less they too become ‘Greece-like’ and increasingly debt-dependent on more powerful capitalist states to which they decide to integrate economically.

Neoliberalism is constantly evolving and with it forms of imperialist exploitation as well. It starts as a free trade zone or ‘customs’ union. A single currency is then added, or comes to dominate, within the free trade customs union. A currency union eventually leads to the need for a single banking union within the region. Central bank monetary policy ends up determined by the dominant economy and state. The smaller economy loses control of its currency, banking, and monetary policies. Banking union leads, of necessity, to a form of fiscal union. Smaller member states now lose control not only of their currency and banking systems, but eventually tax and spending as well. They then become ‘economic protectorates’ of the dominant economy and State-such as Greece has now become.

For a deeper analysis of Greek debt and the emerging new financial imperialism, see Dr. Jack Rasmus, “Looting Greece: An Emerging New Financial Imperialism,” by Clarity Press, September 2016.

To listen to the part 1 overview of my forthcoming book, ‘Looting Greece: An Emerging New Financial Imperialism’, by Clarity Press, September 2016, on the Euro neoliberal and German origins of Greek debt crises 2010-2016, listen to my August 19, Alternative Visions radio show. Go to:




(Next week’s August 26 show: ‘Greek Debt Crises, Part 2: Syriza’s strategic and tactical errors, why the Troika prevailed, and why another Greek crisis is inevitable; plus what is ‘Financial Imperialism’.)


Dr. Rasmus discusses the first of a two part series on Alternative Visions radio, Progressive Radio Network, on the nature of Greek debt crises, and how they are the consequence of Euro neoliberalism, dominance of the Eurozone’s ‘Troika’ (European Commission, European Central Bank, IMF) by German bankers, allies and politicians, and the continuing insolvency of European private banks. Citing recent studies that show 95% of Greece’s debt payment to the Troika since 2010 have gone to European bankers, Rasmus argues the recycling of debt and interest payments represents an emerging new form of financial imperialism that is built into the Eurozone’s very structure since 1999. The deeper analysis is available in Dr. Rasmus’s new book, to be released in September, ‘Looting Greece: An Emerging New Financial Imperialism’, by Clarity Press. Rasmus discusses the origins of the 2010, 2012, 2015 (and April 2016 mini) debt crises in Greece, and concludes with the Greek Syriza party’s main strategic error. Next week, Part 2: ‘Why Syriza’s strategy (and tactics) failed and why the Troika’s prevailed’—plus more on the new financial imperialism taking form in the Eurozone periphery and its prospects globally elsewhere.

Jack Rasmus
Systemic Fragility in the Global Economy, Atlanta, GA: Clarity Press, pp 490, GBP
17.51, USD 29.95; 978-0-9860769-4-7
Reviewed by Bob Jessop, Lancaster University

Jack Rasmus studied economics at Berkeley, took his doctorate in the University ofToronto (1977), and worked for many years as a union organizer and labour contract negotiator. Then, after working as an international economist for global companies(such as Siemens) and an international strategic analyst for some Silicon Valley start-ups, he became a full-time independent economic researcher, author, journalist, radio host, playwright, poet, lyricist, and activist. He also established Kyklos Productions and Jack Rasmus Productions, which use different media, including stage plays and musicals, to explain the long run changes in the USA and its future trajectory. He is currently Federal Reserve Bank chair of the Green Party Shadow Cabinet and economic advisor to Jill Stein, the party’s presidential candidate. This background is important for understanding the theoretical novelty, persuasive power, political passion, and programmatic significance of this book.

Systemic Fragility in the Global Economy (2015) is the fourth in a series that Rasmus has produced within this broad intellectual and activist project. Each work not only provides a theoretically-informed, empirically-grounded diagnosis but also offers a wide-ranging set of policy recommendations aimed at progressive movements.

The first work was a detailed critique of the diverse upward wealth transfer mechanisms employed in the corporate-government class struggle against subaltern classes and groups in the Reagan-Bush-Clinton-Bush era (Rasmus 2006). The second, based in part on major journal articles, was Epic Recession: Prelude to Global Depression (2008).

This also provides the theoretical foundations for his analysis of systemic fragility. Its two main claims are that, first, the North Atlantic Financial Crisis (my term) is more comparable to the recessions followed by stagnation that occurred in the USA in 1907-1914 and 1929-31 than it is to normal cyclical recessions (marked by a brief contraction followed by a swift return to growth) or a classic depression; and, second, that the explanation for epic recessions can be found in the interaction of debt-default-deflation dynamics across the corporate, household, and government sectors.

This work was followed by detailed critique of the current and future policy failures of the Obama Presidency and the presentation of an alternative policy programme and reform agenda (2012). The fifth is concerned with the Greek crisis and the rise of financial imperialism (2016).

The book reviewed here extends the analysis of epic recession dynamics, with declining growth, increasing fragility, and worsening instability, to the global economy. In particular, Rasmus argues that the epic recession has been mutating as the financial crisis becomes more general and directly weakens the ‘real economy’, generates secular stagnation, and produces ricocheting contagion effects around the world economy exacerbating weaknesses in each economy and giving rise to distinct crisis symptoms in different regions. Starting in the neoliberal, finance-dominated US-UK economies in 2007-2008, in 2010-14 it affected the weak regional links in the advanced economies the Eurozone and Japan before shaking China and emerging markets. Despite their different forms of appearance (real estate, stocks, currency markets, government bonds), the underlying causes remain excessive liquidity that fuel different kinds of speculative financial bubbles and growing debt. The resulting crises cannot be tamed by fiscal or monetary means.

Indeed central bank liquidity injection and government fiscal policies exacerbate the crises. Central bank responses have boosted liquidity, which has flowed into further asset speculation rather than productive investment and is creating the basis for an even bigger economic crisis. The detailed empirical analysis is backed by a sustained critique of inter-national financial institutions, Wall Street shills and regulators, economic statistics and statisticians, and, more importantly, mainstream economics, especially neoclassical economists and hybrid Keynesians (who seek to integrate Keynesian insights into neoclassical economics), mechanical Marxists (who invoke the falling rate of profit to explain crises), and the significant but now outdated contributions of Hyman Minsky to the analysis of financial instability.

The theoretical novelty in this text compared with the author’s Epic Recession is a more systematic presentation of systemic fragility. The possibility of recession, crisis, and depression is given in the price system in general and the dynamics of financial asset prices in particular, which differ in several ways from those of real asset prices and can become fundamentally destabilizing under conditions of systemic fragility. For Rasmus, this phenomenon is rooted in nine key empirical trends: slowing real investment; deflation; an explosive growth in money, credit and liquidity; rising levels of global debt; a shift to speculative financial investing; the restructuring of financial markets to reward
capital incomes; downward pressure on wages; the failure of Central Bank monetary policies; and ineffective fiscal policies.

The case studies of the USA, Europe, Japan and China are excellent, typically contrarian, and highly teachable. Many important and provocative arguments and points are made in passing in these studies and they are strengthened by the more sustained theoretical analyses that follow. A major contribution is the analysis of the complexity of shadow banking, an ill-defined term of art in most of the literature. I have found the analysis of debt-default-deflation dynamics very helpful in my own research on crises and the elaboration here is more detailed than in Epic Recession.

Nonetheless there are also three unresolved issues that will interest readers of Capital & Class and are unlikely to be solved through Rasmus’s promised next iteration of the analysis. First, perhaps reflecting his economic training and labour activism in the USA and Canada, the critique of official dogma, orthodox economics and Keynesianism is well-developed but the presentation and critique of Marxist theories leads much to be desired, especially the critique of “mechanical Marxism”, and, compared with his biting criticisms of other theorists, his grasp of Marx’s method and arguments is disappointing. Second, relatedly, while the analysis of financial asset price formation and debt-default-deflation dynamics is innovative, the articulation of this analysis with the contradictions and crisis-tendencies in the circuits of productive capital is weak. This matters insofar as the crisis of Atlantic Fordism in the 1970s and 1980s has a strong bearing on the rise of financialization and finance-dominated accumulation in the USA and UK. And, third, the institutional mediation of crisis dynamics in the political system, the influence of neoliberalism broadly considered, and the specificities of political and ideological struggles that have shaped the rise of finance-dominated accumulation, all deserve far more attention than they receive in this text. The analysis seems at times to move uneasily between detailed empirical description of crisis symptoms and dynamics, a general middle range theory of debt, liquidity, and financial asset price formation, and a potentially class-reductionist account of the social forces behind the rise of financialized capitalism.

Paradoxically this makes this book an excellent and cathartic text for teaching and activism but leaves much unfinished business for those who want to relate this analysis to broader questions of international political economy and political strategies that look beyond the labour and green movements.


Rasmus J (1977) The Political Economy of Wage-Price Controls in the U.S., 1971–74. Ph.D. thesis, University of Toronto.
Rasmus J (2006) The War At Home: The Corporate Offensive from Ronald Reagan to George W. Bush. San Ramon, CA: Kyklos Productions.
Rasmus J (2010) Epic Recession: Prelude to Global Depression. London: Pluto.
Rasmus J (2012) Obama’s Economy: An Alternative Program for Economic Recovery. London: Pluto.
Rasmus J (2016) Looting Greece: a New Financial Imperialism Emerges. Atlanta, GA: Clarity Press.

Author biography
Bob Jessop is Distinguished Professor in the Department of Sociology, Lancaster University

Advanced economies are in a rut of slow growth, the new normal (El-Erian), or is it the end of normal (Galbraith 2014)? Growth was slim before the 2008 crisis and recovery after crisis has been sluggish as well, with growth around 2% in the US (2.2% in 2017, according to IMF estimates), 0.6% in the EU (2016), 0.7% in Japan (2016). An ordinary period headline is, ‘U.S. in weakest recovery since ‘49’ (Morath 2016).

Emerging economies and developing countries (EMDC) face a ‘middle-income trap’ and‘premature deindustrialization’; energy exporters see oil prices collapse from above $100 per barrel to below $50 (2014) and advanced economies are in a ‘stagnation trap’.

Explanations of the conundrum are perplexingly meager. Many accounts are merely descriptive, such as secular stagnation (Summers 2013)—noted, but why? Or, uncertainty—which is odd because policies haven’t changed for years. Or, corporate hoarding—corporations, particularly in the US, are sitting on mounds of cash, buy back their own stock, buy other companies and reshuffle, but are not investing—noted, but why? Or, a general account is that advanced economies are on a technological plateau, broadly since the 1970s (Cowen 2011,Gordon 2016). With the rise of the knowledge economy and the digital economy (along with the gig economy as in Uber, Airbnb and freelance telework), contributions of Silicon Valley (Apple, Google, etc.), innovations in pharma and military industries, also in emerging economies,innovations abound. However, as Martin Wolf (2016) notes, ‘today’s innovations are narrower in effect than those of the past’. Besides, the shift to services in postindustrial societies means a shift toward sectors (such as healthcare, education, personal care) where it is hard to raise

If we consider policies, the picture gets worse because a) implemented year after year,they clearly don’t work, b) indications are they make things worse.

Fiscal policy is generally ruled out because of fear of deficits. The policy instrument that remains is monetary—low interest rates and quantitative easing (QE), implemented in the US, UK, EU and Japan. Other standard policies are, in the EU, austerity—which may cut deficits but obviously doesn’t generate growth (and by depressing tax revenues over time worsens deficits)—and structural reform. Besides privatization, the major component of reform is labor market flexibilization, in other words depressing wages and incomes. This has been implemented in the US since the 1970s and 80s, in the UK in the 90s, in Germany in the 00s, and is now on the scaffolds in Japan and France (and possibly Spain and Italy). The objective is to boost international competitiveness by depressing wages and benefits, which a) ceases to have effect when every country is doing the same, b) assumes the key problem is cheap supply, whereas supply is actually abundant and what is lacking is demand, c) by depressing wage incomes it further reduces domestic demand. No wonder these policies make matters worse.

Thus, explanations of slow growth fall short and policies have been counterproductive.This is where Jack Rasmus’s book comes in. It offers the most pertinent analysis of the stagnation trap I have seen. There are many steps to the analysis but it boils down to his Theory of Systemic Fragility. I review the main points of his approach, for brevity’s sake in bullet form.

o Taking finance seriously, not just as an intermediary between stations of the ‘real economy’ (as in most mainstream economics) but with feedback loops and transmission mechanisms that affect the real economy of goods directly and indirectly
o A three-price analysis—beyond the single price of neoclassical economics (the price of goods), the two-price theory of Keynes and Minsky (goods prices and capital assets prices), Rasmus adds financial assets and securities prices (408).

o The long-term, secular slowdown of investment in the real economy (chapter 7) and the shift to investment in financial assets (chapter 11). This has been occurring because financial asset prices rise faster than the prices of goods; their production cost is lower; their supply can be increased at will; the markets are highly liquid so entry and exit are rapid; new institutional and agent structures are available; financial securities are taxed lower than goods; in sum, they yield easier and higher profits. Financial asset investment has been on the increase for decades, has expanded rapidly since 2000 and ‘from less than $100 trillion in 2007 to more than $200 in just the past 8 years’ (212).

o In government policy there has been a shift from fiscal policy to monetary policy. ‘Central banks in the advanced economies have kept interest rates at near zero for more than five years, providing tens of trillions of dollars to traditional banks almost cost free’

Low interest rates and zero interest rate policies (ZIRP) benefit governments (it lowers their debt and interest payments) and banks (affords easy money) while they lower household income (lower return on savings and lower value of pensions), so in effect households subsidize banks (471).

o Quantitative easing (QE) policies, massive injections of money capital by the US ($4tr), UK ($1tr), EU ($1.4tr) and Japan ($1.7tr) since 2008, or ‘about $9 trillion in just five years’ (185, 262). Add China ($1-4tr) and add government bank bailouts over time and, according to Rasmus, the total global liquidity injected by states and central banks is in the order of $25 trillion (263). The injections of liquidity into the system allegedly aim to stimulate investment in the real economy (by raising stock and bond prices), which raises several problems:

a Investment in the real economy isn’t determined by liquidity but by expectations of profit.
b Funds that are invested in the goods economy leak overseas via MNCs investing in EMDC, where returns are higher (and more volatile).
c Most additional liquidity goes into financial assets, boosting commodities, stocks and real estate, and leading to price bubbles (177). ‘The sea of liquid capital awash in the global economy sloshes around from one highly liquid financial market to another, driving up asset prices as a tsunami of investor demand rushes in, taking profit as the price surge is about to ebb, leaving a field of economic destruction of the real economy in its wake’ (473).

The post-crisis attempts at bank regulation overlook the shadow banks, even though the 2007-2008 crisis originated in the shadow banks rather than the banks. (Shadow banks include hedge funds, private equity firms, investment banks, broker-dealers, pension funds, insurance companies, mortgage companies, venture capitalists, mutual funds, sovereign wealth funds, peer-to-peer lending groups, the financial departments of corporations, etc.; a typology is on 224.) The integration of commercial and shadow banks is another variable. Shadow banks control in the order of $100 trillion in liquid or near liquid investible assets (2016, p. 446).

Add up these trends and policies and they contribute to several forms of fragility, which is the culmination of Rasmus’s argument. Rasmus distinguishes fundamental, enabling and precipitating trends that contribute to fragility (457).

The explosion of excess liquidity goes back to the 1970s and has taken many forms since then. QE policies amplify this liquidity and have led to financial sector fragility, which has been passed on to government balance sheet fragility (via bank bailouts, low interest rates, and QE), which have been passed on household debt and fragility (via austerity policies). ‘Austerity tax policy amounts to a transfer of debt/income and fragility from banks and nonbanks to households and consumers, through the medium of government’ (472). This in turn leads to growing overall system fragility.

While Rasmus aims to provide a theory of system fragility, in the process his analysis gives an incisive account of the stagnation trap. Many elements aren’t new. Note work on austerity (Blyth 2013) and finance (Goetzmann 2016) and note, for instance: ‘The world has turned into Japan,’ according to the head of a Hong Kong-based hedge fund. ‘When rates are this low, returns are low. There is too much money and too few opportunities’ (Sender 2016).

However, by providing an organized and systemic focus on finance and liquidity, Rasmus makes clear that the policies that aim to remedy stagnation (low interest rates, QE, competitive devaluation, bank bailouts) and provide stability are destabilizing, act as a break on growth and aggravate the problem. According to Karl Kraus, psychoanalysis is a symptom of the disease that it claims to be the remedy of, and the same principle holds for the central bank policies of financial crisis management.

This doesn’t mean the usual arguments for stimulating growth (spend on infrastructure, green innovation, etc.) are wrong, but they look in the wrong direction. For one thing, the money isn’t there. Courtesy of central banks, the money has gone by billions and trillions to banks, shadow banks and thus to financial elites and the 1%. Surprise at corporations not investing is also beside the point when government policies at the same time are undercutting household income and consumer demand, reproducing an environment of low expectations.

Criticism of QE has been mounting, even in bank circles (‘it’s the real economy, stupid’). Yet the role of finance remains generally underestimated. Rasmus’s analysis of central bank policies overlaps with that of El-Erian (2016), but his critique of economics is more fundamental and his theory of fragility and its policy implications are more radical. A turnaround would require fundamentally different policies and, in turn, different economic analytics.

Let me note some reservations about Rasmus’s approach. One concerns the unit of analysis—the global economy. His analysis overlooks or underestimates the extent to which East Asian countries stand apart from general financial fragility. They have been less dependent on western finance than Latin America and Africa and having learned from the Asian crisis of 1997, they have built buffer funds against financial turbulence and tend to ring-fence their economies from Wall Street operations. But, of course, this remains work in progress. Second, Rasmus adds China’s stimulus spending to the liquidity injections of western central banks. However, the bulk of China’s stimulus funding has been invested in the real economy of infrastructure, productive assets and urbanization, which has led to over-investment, but which has next led to major initiatives of externalizing investment-led growth in new Silk Road projects in Asia and beyond (One Belt One Road, Maritime Silk Road, Asian Infrastructure Investment Bank, Silk Road Fund, etc.). Meanwhile, Rasmus has made a signal contribution to contemporary economics and provided a vitally important X-ray of the political economy of stagnation.

Jan Nederveen Pieterse, University of California Santa Barbara


Blyth, Mark 2013 Austerity: the history of a dangerous idea. New York, Oxford University Press
Cowen, Tyler 2011 The Great Stagnation. New York, Dutton
El-Erian, Mohamed A. 2016 The only game in town: central banks, instability, and avoiding the next collapse. New York, Random House
Galbraith, James K. 2012 The end of normal. New York, Simon and Schuster
Goetzmann, William N. 2016 Money changes everything. Princeton University Press
Gordon, Robert J. 2016 The rise and fall of American growth. Princeton University Press
Morath, E., U.S. in weakest recovery since ’49, Wall Street Journal 7/30-31/2016: A1-2
Rodrik, Dani 2015 Premature Deindustrialization, NBER Working Paper No. 20935, http://www.nber.org/papers/w20935.pdf
Sender, H., Short-term relief for hedge funds belies tough search for yield, Financial Times 7/12/16: 22
Summers, Lawrence, Why stagnation might prove to be the new normal, Financial Times 12/15/2
Wolf, Martin, An end to facile optimism about the future, Financial Times 7/13/2016: 9.

Japan as worst-case example of failure of central banks monetary policies. Why central banks’ policies are collapsing worldwide. To listen to my August 12, 2016 radio show at:


or go to:



Jack reviews the current condition of Japan’s economy, after 8 years of virtual perpetual recession despite record QE central bank injections, negative interest rates, and talk of helicopter money. The Central Bank of Japan as harbinger of global capitalist central banks policy direction and innovation. How central banks-bank of japan free money policies are not only no longer working, but are now having contrary negative effects on the global economy. Japan’s history of monetary policy first, plus austerity, since 1991 has doomed it to perpetual recessions—8 since 1991 and 5 since 2008. Japan as innovator of QE and negative rate policies. The results in creating trillions of non-performing bank loans (NPLs) and more than $13 trillion in negative bond rates since 2014 are reviewed. Growing NPLs and negative rates as indicators of failing capitalist monetary policies as investment slows, productivity declines, wages stagnate and real consumption falters worldwide. Why global economies are about to shift in 2017 to more fiscal infrastructure spending—but will do so ‘too little and too late’ to prevent recessions in 2017.

Listen to my radio show of August 5 on growing criticism of central bank QE policies and their contribution to financial instability, the coming shift to fiscal stimulus in 2017, and debates about ‘helicopter money’.

To listen to the show go to:


or go to:



Alternative Visions – Why QE Policy is ‘Dead and Dying’ and ‘Helicopter Money’ Is An Alternative -Aug 5th, 2016 by progressiveradionetwork

“Jack Rasmus explains why all economic indicators for the US economy are ‘flashing red’ except for consumer spending, driven mostly by surging household debt again in credit cards, mortgages, auto loans and student loans. Meanwhile, 7 1/2 years of continued low interest rates created by the Federal Reserve (and other central banks) are creating a crisis in pensions, insurance, and sectors of banking. Jack explains why global central banks continue the massive free money injections for investors and why it is now destabilizing the global economy. The UK central bank’s just announced new QE2 program is described and critiqued, as the European Central Bank continues to expand its QE, and the Bank of Japan does the same. Why Global capitalists are beginning to rethink the reliance on free money via QEs and reconsider some form of fiscal stimulus, which Jack predicts is coming in 2017 as interest rates rise. What form will the new fiscal stimulus take? One discussed is ‘helicopter money’—i.e. QE for Main St. Jack concludes with explaining helicopter money and his recent proposal to US Green party presidential candidate, Jill Stein, to use it to expunge most of the US $1.3 trillion student debt. “

Growing problems in Europe banks, especially Italy, with $2 trillion and $400 billion in non-performing loans, respectively, is about to worsen as Brexit effects slowly take hold. Europe’s recent phony bank ‘stress tests’, underestimate the problem, but still show not only Italian banks, but UK (Barclays, RBS), France (SocGen), Ireland (Allied Irish), and even German (Deutsche, Commerz) all in increasing trouble. Stress tests are designed not to show full problem (Portugal, Greek and Cyprus banks are excluded, as just one example) so the problem is even worse than reported.

Listen to my radio show, Alternative Visions, of July 29 and discussion of the Euro banking crisis emerging. The show also includes my preview of the US recession coming in 2017 and comments assessing the Trump and Clinton convention speeches. (Trump’s focus on lack of wage and income growth hits voters’ concerns more than Hillary-Obama’s claim of 12 million mostly low paid, part-time, temp jobs created since 2010).

TO listen to the show go to:



Jack Rasmus looks at the growing crisis in Italy’s banking system, with its $400 billion in non-performing loans, and the Eurozone’s policy of driving interest rates into negative territory despite more than $2 trillion in Euro-wide NPLs. How global central bank monetary policies of more and more QE, negative interest rates, and now talk of ‘helicopter money’ to follow are wrecking the global capitalist financial system. Bank earnings, pension funds, insurance companies, junk bond markets are all flashing ‘red’ in the wake of central bank zero and negative interest rates. Meanwhile oil prices have begun a new ‘leg down’ in price. China continues to struggle with its ‘rotating financial bubbles’ in stocks, wealth management and property markets. And Italian-Europe banks grow increasingly fragile. Given this scenario, Jack predicts a coming inverting of policy in 2017, as the US economy slips into recession, the UK and Italian banks pull Europe into recession, and Japan continues its contraction. Interest rates will be raised by central banks to prevent a financial crisis. That means a further slowing in the real economy—requiring fiscal austerity policies to give way to fiscal stimulus to offset the effect of interest rate rises by the Fed and other central banks.


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