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Governments Change, the Corporatocracy Endures
Governments Change, the Corporatocracy Endures
Ultimately, the dominance of global capital (the Corporatocracy) is not financial– it’s political.
One little-remarked consequence of the central banks’ policies of near-zero interest rates and quantitative easing is the unrivaled dominance of mobile global capital, i.e. the Corporatocracy. The source of corporate political power is the ability to borrow essentially unlimited sums for next to nothing: what I have long termed free money for financiers.
Armed with central-bank supplied unlimited credit, global capital can outbid local residents and businesses. Over time, profitable enterprises and assets end up in corporate hands.
Consider the typical family farm, not just in America but in Germany, Australia, etc. It’s hard work squeezing a livelihood from the land in a market dominated by a handful of global corporate giants and their state handmaidens, and so unsurprisingly many in the next generation have opted for corporate-state jobs in urban areas rather than shoulder the financial risks of continuing the family farm.
A neighboring farmer might be interested in buying, be he/she will have to borrow the money at (say) 4%.
The global corporation can sell bonds (i.e. borrow money) at less than 1%. The lower cost of capital enables the corporation to outbid local farmers for the land, and this low cost of borrowing also enables the corporation to fund capital-intensive economies of scale that are beyond the reach of family farms.
The net result is the nation’s farmland, its core productive asset, slides inevitably into corporate ownership. Anyone who resists selling out is crushed by low prices (corporate farms can over-produce and survive low prices, family farms cannot), or they are crushed by the disadvantages of being an “outsider” selling to the corporate supply chain, which favors in-house suppliers or large corporate producers.
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IceCap Asset Management: The Third Law Of ‘Stock Market’ Motion | Zero Hedge
IceCap Asset Management: The Third Law Of ‘Stock Market’ Motion | Zero Hedge.
Excerpted from IceCap Asset Management’s Keith Dicker’s latest letter to investors,
Three hundred years ago, physicist Isaac Newton, compiled the Third Law of Motion. Ever since, people everywhere have noticed how every action does indeed have an equal and opposite reaction.
This Third Law of Motion is certainly evident in the music world where The Rolling Stones gathered a lot of moss. The hoodlums of rock & roll seduced the world into sympathizing with the devil as well embracing the emotion of never being satisfied. At the time, the Rolling Stones represented the dark side of music and life.
The Beatles on the other hand represented the opposite reaction – they wanted nothing more than to simply hold your hand. They embraced the rising of the sun and were seemingly always twisting and shouting about love. At the time, the Beatles represented the bright side of music and life.
Of course, as time passed the social infatuation and rejection of each band, swung dramatically and often in opposite directions, just as Newton’s Third Law of Motion predicted it would.
The pendulum of the money world also swings from side to side, yet most of the time, most investors, mostly see what they want to see. The good times are always just around the corner and any bad times were simply the luck of the draw.
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charles hugh smith-Globalization = Permanent Instability
charles hugh smith-Globalization = Permanent Instability.
Globalization continually creates imbalances that fuel a perpetual instability that gradually impoverishes every sector other than global capital.
Globalization has two guaranteed consequences: permanent instability and endless boom-and-bust cycles. As noted in Forget “Free Trade”–Focus on Capital Flows, the key engine of globalization is mobile capital: capital that can borrow money for next to nothing in one nation and then move that capital to other nations where yields are higher and opportunities for exploitation riper.
This mobility of capital is an enormous benefit to the owners of the capital, but it creates extraordinary instability for those who are not as mobile. When mobile capital encounters anything that reduces profits–higher taxes and rising labor costs, competition or restrictive regulations–it closes factories and fires its workers in that locale and shifts to another locale with greater opportunities for high returns.
The workers left behind have limited means to replace the lost wages, and the local government often has few resources to repair any damage left by the exploitation of resources. The advantage of mobility is reserved for capital, and to the relatively limited cohort of workers who can immigrate to other nations to find work.
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