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. Iām Paul Jay. Last year on CBS Face the Nation, Donald Trump said: The hedge fund guys didnāt build this country. These are guys that shift paper around, and they get lucky. Look, theyāre energetic, theyāre very smart, but a lot of them itās like theyāre paper pushers. They make a fortune. They pay no tax. Itās 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. Gregās an investigative reporter. You can read his reports at GregPalast.com. Heās 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. Thereās 13 names. One of the names that jumps off the page, I guess one of the bigger heavyweights there, is John Paulson. Youāve 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, heās the big heavyweight. His picture is the one thatās put out there. He was the host of Donald Trumpās big fundraiser in New York, which was at Cipriani. I was just at Cipriani. Itās 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. Thatās 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. Thereās 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 JPās assistant, but not JP himself. So JP skipped the prison time, but now I guess heās Donald Trumpās 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, whereasāIām not a big Hillary Clinton fanābut she did speak to dozens of economists, Nobel Prize winners including Joe Stiglitz, Paul Krugman and many others, whoāve never given her a dime for her campaigns. In fact, some opposed her election. Thereās no economists on Trumpās 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. Thatās 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, itās 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 heās done. Just in England. And that was nothing compared to what heās done in the U.S. JAY: Now, TrumpāI read this quote from the CBS show, made a big deal about his independence and how he wasnāt 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, heād have to go to these big guys to fund the election campaign. To what extent do you think this kind of hypocrisyās going to affect him? PALAST: Itās not hypocrisy. Hypocrisyās when you say one thing and do another. This was a lie thatās been exposed. Donald Trump plays a billionaire on television. Thereās no evidence at all that heās a billionaire thatās credible. Heās got properties worth billions of dollars, but theyāre mortgaged up to the hilt, okay, like, 40 Wall Street, the Trump Towers. Theyāre mortgaged through the eyeballs, as theyāve always been. Thatās why Trumpās gone bankrupt four times, because heās just always on the financial edge. So he needs a real billionaire, not a TV billionaire, to fund him. So thatās 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 Sachsāhereās 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 donāt do anything, theyāve never helped anyone. They donāt 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 thereās plenty of hedge fund guys on Hillary Clintonās 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 thereās 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 thereās, right now, thereās kind of a rumble. Itās kind of like the Sharks and the Jets in West Side Story, except itās commercial versus hedge fund. So the guys who are more invested in commercial banks and straightāand straight investments and bonds, like, for example, Soros, Warren Buffett, a Jamie Dimon, a [Robert]āgo with Hillary Clinton. And theyāre 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 weāre 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 heāll take away the special hedge fund billionairesā special loophole of carried interest, he would knock down their tax rates so far that they wouldnāt 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 donāt 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 doesnāt 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, vultureāheās known as a vulture investorāheās 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 Motorsāand very few people know this storyāthe 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 donāt give you the $12 billion? And Paulson and his buddies said, well, then weāll close down the auto parts companies, every single plant we have in the U.S., and General Motors wonāt be able to operate for more than 24 hours, or Chrysler will be out of business, too. Now, theyāre already in bankruptcy. They would have been liquidated and lose a million jobs. So then they got their $12 billion, and then they movedāand Paulson, Trumpās 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 heās running Trumpās economic advisory council. Not just his big funder. But heās the guy whoās going to advise Donald Trump, the guy who says heās 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 Iām not a big fan of, she has some of these creepy guys, too, but noneāshe doesnāt have any of the guys that actually moved the auto parts industry to China. Thatās a Trump specialty. Thatās not hypocrisy, that means government for sale. JAY: All right. Thanks for joining us, Greg. PALAST: Youāre welcome. JAY: And thank you for joining us on the Real News Network.
End
DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.