The effect of metals speculation was to push up the prices that China had to pay to countries like Australia. This squeezed China. Once the speculative demand ended, all of a sudden the added production facilities that had been brought into production by the high prices went out of production again, and there was a glut.
Michael HudsonAs you have to pay more interest and amortization on what you owe, you're left with less and less money to buy goods and services - unless you borrow even more and go further into debt.
Michael HudsonThat's the "magic" of double-taxation treaties: you can shop around for the lowest taxer.
Michael HudsonThat's the problem with the financial sector. Banks and the financial sector live in the short run, not the long run. In principle the government is supposed to make regulations that help the economy over time. But once it's taken over by the financial sector, the government lives in the short run too.
Michael HudsonEurope is creating the flight of refugees that's tearing it apart politically, and leading rightwing nationalist parties to gain power to withdraw from the Eurozone.
Michael HudsonToday, people are having to spend so much of their money, to acquire a house and to get an education that they don't have enough to spend on goods and services, except by running into yet more debt on their credit cards and other borrowings.
Michael HudsonThe other dynamic keeping the stock market up - both for technology stocks and others - is that companies are using a lot of their income for stock buybacks and to pay out higher dividends, not make new investment,. So to the extent that companies use financial engineering rather than industrial engineering to increase the price of their stock you're going to have a bubble. But it's not considered a bubble, because the government is behind it, and it hasn't burst yet.
Michael Hudson