“We have powerful corporate interests that have commodified everything,” he told me, including human labor, which means, according to Hedges, “human beings no longer have any intrinsic value in the ethics of corporations.”
He added, “They are commodities to exploit until exhaustion or collapse. The same is true of the natural world—we exploit the natural world until exhaustion or collapse.”
In the next section, we’ll see exactly what collapse looks like.
PART 4
The Great Crash
CHAPTER 11
This Is the End
I think historians when they look at this time, they’re going to wonder why the wealthy overplayed their hand like this. Why would they, when they had it so good? They had the middle class voting for the politicians that the wealthy bought, everything was running just fine, they were posting profits of a billion a year, but that wasn’t enough for them. What they did was started to ruin the lives of the very people who voted for their politicians and supported them all these years, the middle class.
If you want to know which way the wind is blowing, keep an eye on the billionaires.
So what are the billionaires telling us just ahead of the Crash of 2016?
Well, in 2012, four years before the Crash of 2016, Moody’s Investors Service noted something peculiar. It noticed American companies are hoarding record amounts of cash.
For example, in 2012 Apple was discovered to be sitting on $137 billion worth of cash. Investors actually sued the company to make it pass some of that wealth down to shareholders.
But what Apple was doing was comparatively minor. Altogether, US companies stashed away $1.45 trillion in cash in 2012, a 10 percent increase from 2011.
They aren’t investing it, they aren’t expanding their businesses with it, they aren’t hiring more workers. They’re just sitting on it. They aren’t even paying taxes on it, since, as Moody’s discovered, 68 percent of all that cash is stashed overseas.
Wall Street is also hoarding enormous amounts of money. Dan Froomkin at the Huffington Post explained in July 2012, “The latest report from the Federal Reserve shows that big banks’ cash reserves peaked in the third quarter of 2011, but are still near their all-time high at just under $1.6 trillion—an astonishing 80 times the $20 billion they held in reserve in 2007.”154
But it’s not just in the United States; it’s all around the world.
The Wall Street Journal wrote on Europe’s banks holding cash at the end of 2012: “A dozen of Europe’s largest banks reported holding a total of $1.43 trillion of cash on deposit at various central banks.”
It adds, “That represents at least the sixth consecutive quarter that the banks have increased their overall central-bank deposits. Since the end of 2010, the banks have boosted the amount they are stockpiling at central banks by 84%.”155
The Institute of International Finance, a Washington-based organization, calculated that companies in the United States, United Kingdom, Eurozone, and Japan were sitting on nearly $8 trillion worth of cash.156
Altogether, the wealthiest people on the planet have as much as $32 trillion stashed away in overseas financial institutions, according to a study by the Tax Justice Center in 2012.
All of this is taking place just as the stock market was reaching historic new levels, and profits in corporate America reached the highest levels as a percent-of-GDP ever recorded. Yet, in early 2013, Money News reported that “a handful of billionaires are quietly dumping their American stocks,” including Warren Buffett, John Paulson, and George Soros.
Senator Elizabeth Warren spoke about another Wall Street quirk during a 2013 Senate Banking Committee meeting.
She noted that while most major corporations trade well above book value, all the large banks are actually being traded well below book value. She concluded there are two possible explanations for this.
“One,” she said, “because nobody believes that the banks’ books are honest.” In other words, the banks are actually still teetering on the edge, and the banks themselves know it.
“Or the second,” she added, “nobody believes that the banks are really manageable. They are too complex for their own institutions or the regulators to manage them.”157
If the economy really is doing so well, then why are the wealthy giving signs of the opposite, quietly leaving markets and just sitting on the sidelines?
The answer is they know what’s coming. They know 2008 was just the precursor, and 2016 will be the real catastrophe.
The billionaires are preparing for a series of economic shocks on the horizon, probably beginning in Europe and spreading across the planet, eventually toppling the United States.
Germany Finally Wins World War II
After the 2007–08 global financial panic, the three main monetary institutions of Europe: the European Central Bank, the European Commission, and the International Monetary Fund—together known as the “Troika”—imposed a strict austerity regime on debt-saddled nations such as Greece, Ireland, Spain, and Portugal, nations that suddenly found themselves in a fiscal crisis and yet had no control over their own money supplies thanks to the structural flaws of the Eurozone.
This austerity has produced devastating effects.
Since the Troika’s takeover of Greece began in 2009, a quarter of all Greek businesses have closed their doors, half of all small businesses can’t meet their payroll, nearly half of all young workers under twenty-five are unemployed, the total unemployment rate is around 20 percent, suicide rates have shot up 40 percent, radical political parties gain traction, and the streets of Athens are routinely set on fire in violent riots.158
This is what the Crash of 2016, in its early stages, looks like.
Driving the Troika’s austerity agenda is Germany, one of the few nations in Europe that found itself on the other side of the financial panic and not in a debt crisis.
That’s because Germany acted like America did after World War II (and even outdid us). They built up an enormous manufacturing base, shielded it from low-wage nations, and nurtured a strong middle class with labor protections and a social safety net guaranteeing health care as a basic human right.
They became an export machine. In 2011, they held the second largest trade surplus in the world, over $200 billion (the United States was in debt $800 billion). And they turned into Europe’s primary manufacturing plant, supplying most of the European continent with its goods.
While Germany boasted one of the largest trade surpluses in the world, other European nations were driven into trade deficits. The United Kingdom, France, Spain, Italy, Greece, and Portugal all have some of the largest trade deficits in the world.
Greece’s trade deficit with Germany is startling. In 2009, Greece sold 1.8 billion euros of exports to Germany. But that same year, it bought 6.7 billion euros of imports from Germany.
What all of this meant is that wealth was flying out of indebted European nations such as Greece, Italy, and Spain and accumulating in German banks. And those German banks, flush with cash, became epicenters of lending throughout Europe, since they were able to offer better interest rates than most other nations.
This export machine makes up 40 percent of the German economy today, and has catapulted them to the fourth largest economy in the world in terms of nominal dollars, despite having a significantly smaller population than the top three nations of Japan, China, and the United States.