Cory Doctorow: America's economy is cooked

In times of crisis, governments usually keep the economy afloat by offering financial relief to the people, including wage assistance and debt forgiveness. Not so in the United States, which focuses on bailing out the financial sector so it can continue to lend money to people and drive up consumer debt.

On his excellent Pluralistic website, Cory explains why this is disastrous:

The decision to to force businesses to pay rent during the shutdown led mass bankruptcies: a business that closed for months while accruing a rent buildup cannot recover – even a year of normal takings will leave it with no profits, every penny diverted to the landlord.

19% of hotel mortgages are in arrears, 10% of retailers – commercial real-estate mortgages stand at $2.4T. 40% of retail tenants are not currently paying rent – building up more indebtedness that can't be paid (debts that can't be paid won't be paid).

And while the US government can conjure money into existence by typing numbers into a spreadsheet at the central bank, states and cities (now starved of sales/property tax) cannot, and many are also bound by "balanced budget" rules.

Neither the GOP nor the Dems are willing to confront this. McConnell has advised states to meet bond obligations by raiding their pensions. Dems have abandoned efforts to provide relief to working people.

It's a very different story in China: "China can recover financially and fiscally from the virus disruption because most debts ultimately are owned to the government-based banking system. Money can be created to finance the material economy, labor and industry, construction and agriculture. When a company is unable to pay its bills and rent, the government doesn't stand by and let it be closed down and sold at a distressed price to a vulture investor."

For thousands of years, governments have understood that crises can only be weathered through debt forgiveness. The Anglo-American madness that insists that debts that can't be paid will someday be paid has hit bottom.