Investigative reporter Greg Palast tells Paul Jay that John Paulson made billions in the mortgage market collapse and by holding the auto industry hostage for taxpayer money
Story Transcript
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to the Real News Network. I’m Paul Jay. Last year on CBS Face the Nation, Donald Trump said: The hedge fund guys didn’t build this country. These are guys that shift paper around, and they get lucky. Look, they’re energetic, they’re very smart, but a lot of them it’s like they’re paper pushers. They make a fortune. They pay no tax. It’s ridiculous, okay? Well, today Donald Trump announced his 13 economic advisers, and yeah, most of them are hedge fund guys. Now joining us to talk about this is Greg Palast. Greg joins us from Los Angeles. Greg’s an investigative reporter. You can read his reports at GregPalast.com. He’s the author of all kinds of books, including bestsellers like Billionaires and Ballot Bandits, and The Best Democracy Money Can Buy. He has a 2016 film coming out: The Best Democracy Money Can Buy: A Tale of Billionaires and Ballot Bandits. Thanks very much for joining us, Greg. There’s 13 names. One of the names that jumps off the page, I guess one of the bigger heavyweights there, is John Paulson. You’ve been doing some work investigating John Paulson for your books. What can you tell us about him and why he might be supporting Donald Trump? GREG PALAST: Well, he’s the big heavyweight. His picture is the one that’s put out there. He was the host of Donald Trump’s big fundraiser in New York, which was at Cipriani. I was just at Cipriani. It’s actually in the belly of the stock exchange, with half a dozen monster chandeliers which cost more than the 12 homes on your street, Paul. So JP, John Paulson, is the guy who made more money than anyone on the planet in a single year, $5 billion. Now, sometimes he put it as, they say he got that $5 billion by betting against the mortgage market when the mortgage market collapsed. That’s really the wrong way of putting it. He kicked the mortgage market over the cliff and bet that it would crash when it hit the bottom. There’s a very big difference, okay? He, in fact, most people thought he was going to end up in prison, except he hired the former chair of the SEC, who wrote up the indictment of Goldman Sachs and JP’s assistant, but not JP himself. So JP skipped the prison time, but now I guess he’s Donald Trump’s economic adviser. In fact, if you look at his whole list, they have one big thing in common: except for one guy on the whole list, none of them are economists, whereas–I’m not a big Hillary Clinton fan–but she did speak to dozens of economists, Nobel Prize winners including Joe Stiglitz, Paul Krugman and many others, who’ve never given her a dime for her campaigns. In fact, some opposed her election. There’s no economists on Trump’s whole group. And the rest of them are all his donors. So if you pay enough money you get to run the U.S. economy. That’s a good deal. And you get to set the policy to determine how much you will pay in taxes, et cetera. So Paulson is the guy who crashed the mortgage market in the U.S., he brought the Royal Bank of Scotland to its knees, where it went bankrupt. And the Times of London, hardly a Marxist rag, it’s owned by Murdoch and very right-wing, the Times of London said that JP, John Paulson, should be paraded through the streets of London naked while people throw rotten fruit at him for what he’s done. Just in England. And that was nothing compared to what he’s done in the U.S. JAY: Now, Trump–I read this quote from the CBS show, made a big deal about his independence and how he wasn’t taking a dime from these big hedge fund guys. And I mean, everyone knew at the time if he ever actually got nominated, won the nomination, he’d have to go to these big guys to fund the election campaign. To what extent do you think this kind of hypocrisy’s going to affect him? PALAST: It’s not hypocrisy. Hypocrisy’s when you say one thing and do another. This was a lie that’s been exposed. Donald Trump plays a billionaire on television. There’s no evidence at all that he’s a billionaire that’s credible. He’s got properties worth billions of dollars, but they’re mortgaged up to the hilt, okay, like, 40 Wall Street, the Trump Towers. They’re mortgaged through the eyeballs, as they’ve always been. That’s why Trump’s gone bankrupt four times, because he’s just always on the financial edge. So he needs a real billionaire, not a TV billionaire, to fund him. So that’s why he went to John Paulson at first, and Paulson held a big fundraiser for him at Cipriani. And I just snuck in there through the back security door to get some photos of the operation. And to host the dinner, as Paulson did, you have to put at least $350,000. And people like Steve Mnuchin, these are people who have put up, like, a nearly half-million dollars each. JAY: Steve Mnuchin is the chair of this 13-person economic advisory committee. PALAST: Right. And a former Goldman Sachs–here’s the guy that, all these guys on this committee are, as you say, people that Trump has been urinating on in the public press, saying these guys don’t do anything, they’ve never helped anyone. They don’t know actually how to run an economy. They know how to suck money out of an economy like Paulson, who got a bunch of pension funds in Europe and America and elsewhere, told him that he was selling good mortgage securities, when he himself was betting that those very mortgages would go under. So basically, he got these guys to buy insurance on mortgages, and he was the secret beneficiary. You and I do that, we go to prison. [Inaud.] JAY: Greg, this kind of parasitical finance, and most finance sector is parasitical, and there’s plenty of hedge fund guys on Hillary Clinton’s side, as well. Is there a reason why a certain sector of these hedge fund guys, these parasites, if you will, gravitate towards Trump, and other sections seem to gravitate towards Clinton? PALAST: Well actually, what you have with Clinton is really the commercial banks, like you have JP Morgan, you have CitiBank people like Robert Rubin, Jamie Dimon, who was Chase, the biggest bank in America. Because there’s actually a war between the hedge funds and the commercial banks. For example, the hedge fund guys are trying to destroy our allies like Argentina. They just, you know, they buy old bonds and then they try to bankrupt these guys, and they attack all the attempts to try to work out deals for Greece or other nations in trouble. This also harms the banks. So there’s, right now, there’s kind of a rumble. It’s kind of like the Sharks and the Jets in West Side Story, except it’s commercial versus hedge fund. So the guys who are more invested in commercial banks and straight–and straight investments and bonds, like, for example, Soros, Warren Buffett, a Jamie Dimon, a [Robert]–go with Hillary Clinton. And they’re under attack by the hedge fund billionaires, and those are the guys who are tending now towards Donald Trump. The only thing that was worrying the hedge fund guys is that Trump was actually joining with Bernie Sanders and Hillary Clinton and saying we’re going to close the special loophole that these guys use, Mitt Romney famously used it, called carried interest. But as the Wall Street Journal pointed out, while Trump is going to take, says he’ll take away the special hedge fund billionaires’ special loophole of carried interest, he would knock down their tax rates so far that they wouldn’t need the loophole. The whole point of carried interest is that it drops the tax bracket for your billion-dollar gains. And since Trump would eliminate the higher tax brackets, they don’t need the carried interest. JAY: He made a big deal about that in Detroit again on Monday in his economic message. But as you say, it doesn’t make that difference, much difference, to the billionaires once you take in all his tax policies. PALAST: Yes. And in fact, going to Detroit to make his statement was particularly cruel. Because his main founder JP, John Paulson, was the number one guy, vulture–he’s known as a vulture investor–he’s the number one vulture who attacked Delphi corporation, which used to be the old Delco auto parts devision of General Motors. When the United States government bailed out General Motors–and very few people know this story–the hedge funds, including Paulson, and Paul the vulture [inaud.] the hedge funds took control of Delphi, the Delco auto parts division, refused to give up their auto parts division to the government. And it was a company literally worthless. And they were told, not unless you give us $12.9 billion. And they said, oh, and the Treasury Department and Obama said, what if we don’t give you the $12 billion? And Paulson and his buddies said, well, then we’ll close down the auto parts companies, every single plant we have in the U.S., and General Motors won’t be able to operate for more than 24 hours, or Chrysler will be out of business, too. Now, they’re already in bankruptcy. They would have been liquidated and lose a million jobs. So then they got their $12 billion, and then they moved–and Paulson, Trump’s guy, moved every single job, every single union job, every one, to China. And out of the U.S. He shut every single union plant in the United States. Paulson moved them to China. And now he’s running Trump’s economic advisory council. Not just his big funder. But he’s the guy who’s going to advise Donald Trump, the guy who says he’s going to stand up to the guys who are going to stop sending jobs overseas. These are the guys that sent the jobs overseas. These are the ones. They are his council of economic advisors. And while I will say for Hillary, who again I’m not a big fan of, she has some of these creepy guys, too, but none–she doesn’t have any of the guys that actually moved the auto parts industry to China. That’s a Trump specialty. That’s not hypocrisy, that means government for sale. JAY: All right. Thanks for joining us, Greg. PALAST: You’re welcome. JAY: And thank you for joining us on the Real News Network.
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