Once in a century rip-off
Producer: Carlo Basilone
GEORGE W. BUSH, US PRESIDENT: I want to thank the leaders of the House and the Senate for coming. I appreciate our presidential candidates for being here as well.
CARLO BASILONE, TRNN (VOICEOVER): President George Bush pushed for a multi-billion dollar Wall Street bailout plan in an historic meeting attended by the two men fighting to succeed him. But at the end of the meeting, the top Republican on the Senate Banking Committee said that no agreement on the deal had been made.
SEN. RICHARD SHELBY (R-AL), RANKING MEMBER, SENATE BANKING COMMITTEE: We haven’t got an agreement. There’s still a lot of different opinions. Mine is it’s flawed from the beginning. I said that the other day at the banking committee. Secretary Paulson and Chairman Bernanke, had they considered other alternatives? Some of you recall a silence—they hadn’t. But they should.
BASILONE: In a joint statement from the McCain and Obama campaigns, they both agreed that the Bush administration proposal is flawed, but would work together to find a solution. Ripples from the disorder or Wall Street are being felt around the world. Germany’s finance minister said on Thursday that the turmoil could cost the US its status as superpower in the world financial system.
PEER STEINBRUECK, GERMAN FINANCE MINISTER (SUBTITLED TRANSLATION): The long-range effects of this crisis are not foreseeable at the moment, but one thing seems to be very likely to me: the US will lose its status as superpower in the world financial system. The world financial system will become more multi-polar.
BASILONE: French President Nicolas Sarkozy, speaking at a meeting in Toulon, called for capitalism to be more regulated.
NICOLAS SARKOZY, FRENCH PRESIDENT (SUBTITLED TRANSLATON): Self-regulation to sort out each problem is over. Non-interventionism is over. The all-powerful market that is always right is over. We must draw lessons from the crisis so that the crisis doesn’t recur. We just came within a whisker of a catastrophe; the world came within a whisker of a catastrophe. We cannot take the risk of it happening again. If we want to reconstruct a reliable financial system, creating morality in financial capitalism is a priority.
BASILONE: The Real News spoke to economist and author Michael Hudson.
BASILONE: What exactly should people be clamoring for? I mean—.
DR. MICHAEL HUDSON, ECONOMIST AND HISTORIAN: No bailout at all. There’s no need whatsoever for the bailout. They should let—and it’s not a bailout; it’s a giveaway, and it’s a giveaway that’ll create a new kleptocracy of billionaires that lets all of the billionaires who have leveraged their capital cash out, take their cash, and move it all into Euros and the sterling, move it all abroad, and that collapsed the dollar. So they should just say don’t do it, wait till the election takes place, do it over time. Of course you have to protect people’s savings in the banks, you even have to protect the money market funds, but you don’t have to protect all of this money at the very top of this pyramid, because all this money that is being protected are other people’s debts, and the debts have to be let go, the debts cannot be paid. And if the debt can’t be paid, that has to be recognized. The public has to see that the economy’s been on a wrong track for the last three decades or so and that it’s all been a mistake, and you can’t say that.
BASILONE: So this neoliberal economic model, then, is this proof that it doesn’t work? Or are we going to still see more of this?
HUDSON: If [to proponents] it’s not proof, they’ll never admit it. It’s a demonstration of the impossibility of the magic of compound interest doubling and redoubling the volume of debt, and trying to pay retirement savings and pension funds, and making people rich by continually doubling the amount of debt in the economy. This is a crazy way. No other economy in history has ever got rich off debt, and this economy can’t either.
BASILONE: So it’s a pyramid scheme.
BASILONE: Now, what can people do to protect themselves from what’s going on?
HUDSON: The only thing they can do is put their money in short-term Treasury bills, because the Treasury can always print the money. There’s talk in the press, especially foreigners, about can the US government go bankrupt. No government can go bankrupt in its own currency, because it can always print it. The problem is that what will the dollars be worth internationally if the Treasury does save everybody. The dollar’s been plunging because foreign investors, to the tune of hundreds of billions of dollars, don’t trust Wall Street anymore. They are much less trusting of Wall Street than is Congress. While Congress is bailing out Wall Street, the foreign bankers are saying, “These guys are crooks. We don’t believe their Enron-type accounting. We’re getting out of the dollar because we don’t believe the banks are sound. We think they’ve been lying to us along and these guys should be in jail.” And if you read today’s Financial Times of London, the spokesmen for probably worldwide financial sector, they’re all saying America has to let the debts go. If it tries this bailout, the only solution is hyperinflation, and the dollar will be turned into pesos, and there goes the whole economy—it’s the end of an era.
BASILONE: This is weapons of mass destruction in Iraq all over again.
HUDSON: Yes. Panic the people, make them think there’s an emergency. There’s no emergency at all. The debts of the very rich people—you know, it’s just in the last five years that the richest 1 percent of the American population have increased their wealth from 37 percent to 57 percent of all the returns to wealth—dividends, interest, and capital gains in the economy, they vastly increased it. They don’t want it to go back to normal. They’d like to keep on increasing it. And you can only do this kind of a ripoff—this is a once-in-a-century ripoff, and you can only do this kind of thing under emergency conditions, usually with the kind of bloodshed you saw when Pinochet introduced free markets at gunpoint in Chile.
Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.