bacasper
Joined: 26 Mar 2007
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 Posted: Sat Oct 11, 2008 7:35 am Post subject: "Americans willing to screw the foreigner" |
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From the Democracy Now! interview with Michael Hudson, President of the Institute for the Study of Long-Term Economic Trends, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and author of Super-Imperialism: The Economic Strategy of American Empire. He is the chief economic adviser to Rep. Dennis Kucinich:
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Welcome to Democracy Now! What about this latest news?
MICHAEL HUDSON: Well, what upsets the Europeans and the foreigners is that the US plan has done nothing at all about the debt crisis itself. It�s bailed out the creditors, but not a penny of the actual debts, the subprime mortgage debts, are addressed. Without any of the media knowing, the Federal Reserve over the last few months has given $850 billion of cash for trash already. This is what the $700 billion discussion in Congress was supposed to be about, but the Fed, without anyone knowing, has already been exchanging these securities. And the securities essentially have been swapped by the US bankers to their pals and not done anything at all to write down the actual subprime debts. There�s a big attempt to blame the victim now. And if you add up all of the subprime bad loans and defaults, that�s altogether $1 trillion. So far, the government has given away $6 trillion already to Wall Street. That�s much more than any of the subprime debt. And the volume of derivative trade has been estimated at $450 trillion, an unbelievable amount. So nobody has any idea about how much money is at stake.
And what really triggered a lot of this was the way in which Lehman went bankrupt. The day�and this has not been discussed either in America, but it�s all over the European press. The day before Lehman went bankrupt, it basically looted all of its foreign offices. For instance, in England, it emptied out the English account of a few billion dollars, leaving the English employees only with the money they�the little cards they had to use in the vending machines. No salaries were paid. The London office was closed down immediately. And the next day, Lehman used the money that it took from London to pay its closest associates to redeem the derivative trades that it had done. So the English bankers came out and said, in England, we have an ethic: it�s lend to the person, not against the asset. And they�ve come to the conclusion that the American bankers�well, we won�t say �crooks,� but let�s say they�re cronies who deal among themselves and are willing to screw the foreigner.
And this has created such a mistrust abroad that Europeans and Asians and OPEC country investors are simply pulling their money out of the US, because they don�t have a clue as to the solvency of the banks. We�re seeing the end result of the Alan Greenspan deregulatory revolution, where he said markets are all self-regulating. Right now, you�re seeing the markets self-regulate themselves. And the result is a wipeout of the American pyramiding. |
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