Dress Rehearsal For Debt Peonage, A Guns & Butter Interview with Dr. Michael Hudson
Transcript of a Bonnie Faulkner Guns & Butter Radio interview with Dr. Michael Hudson
Dr. Michael Hudson is a real economist, one of those who not only accurately predicted the current economic downturn well in advance, but explains its causes and consequences in plain understandable language. According to Dr. Hudson, the federal government, mostly under Barack Obama, has given the financial sector $13 trillion, the most massive transfer of wealth to Wall Street in history. The financial sector is poised, Dr. Hudson asserts, to bleed the US economy dry.
“…the government made a charade, pretending that it was going to get some of the benefit from the bailout of Wall Street…“
Bonnie Faulkner: Dr. Michael Hudson is a financial economist and historian. He is president of the Institute for the Study of Long Term Economic Trends, a Wall Street financial analyst and professor of economics at the University of Missouri Kansas City. His 1972 book, SuperImperialism, the Economic Strategy of American Empire, is a critique of how the United States exploited foreign economies through the IMF and the World Bank. He is also the author of The Myth of Aid, and Global Fracture, the New Economic Order. Dr. Hudson has written many articles on the current global financial crisis. A few of his most recent articles that we discuss today are “Instead of Real Financial Reform, Obama Capitulates to Wall Street“ “Bogus Solutions To The Financial Crisis: The Latest in Junk Economics” and “The IMF Collects Debt On Behalf of the World’s Largest Banks.”
Michael Hudson, welcome.
Michael Hudson: Thank you very much, Bonnie.
Bonnie Faulkner: The stock market is back up over 9,000, the Dow Jones Industrials, that is, are over 9,000. To what do you attribute this?
Michael Hudson: The government has given $13 trillion dollars to the financial sector. Now if you’re going to give $13 trillion to the financial sector, and flood the economy with money, obviously this is worth something. Essentially the stock market is rising to reflect the government giveaway.
Bonnie Faulkner: We’re reading that the banks that took the bailout money, that some of them are returning the bailout money, what’s with this?
Michael Hudson: When they originally got the giveaway from the government, the government made a charade, pretending that it was going to get some of the benefit from the bailout of Wall Street. You had Warren Buffet, for instance, make a loan to a number of Wall Street institutions and make a huge killing on it. The government also said “we have stock warrants that say that if your stock recovers and you don’t go bankrupt, since we rescued you, we want to get something like what Warren Buffet did.” But what they’re getting is about one tenth of what Warren Buffet did. The government has been utterly misleading and deceptive in terms of saying what it’s got. It says well “we’ve just been reimbursed by Goldman Sachs and we made an annualized return of 23%.” The average reader will say, 23%, that’s a lot of money. They don’t realize that not even a year has gone by, and the companies are saying wait a minute, instead of giving you a share of our profits and a share of the capital gains we’re getting, we want to repay you now at a very low price… so you will not get a share of the gains we have.
So they’re paying the government way ahead of schedule. The government is not using its option to hold the loan and get much more later. It’s essentially doing a giveaway to Wall Street in letting Wall Street buy shares on the cheap in itself… enabling the large companies to pay much larger bonuses. The administration’s aim is to increase, probably to double the size of the bonuses they can pay on Wall Street by giving a windfall gain to Goldman Sachs and Chase Manhattan and other firms by letting them cash in. letting their expenses stop now. In fact the most recent cash-in was saying well wait a minute, under th terms we negotiated which were so much better than the terms that Warren Buffet negotiated, if we go out and get private capital, and we can get private capital because you’ve given us $13 trillion dollars, of course we’re worth more, well you’re crowded out and you don’t get anything.
So it turns out that the money being repaid to the government shows how utterly corrupt the bailout money to these private companies was. There’s been a huge transfer of resources to Wall Street, and Wall Street wants to make sure it doesn’t have to repay the government for the gift that it’s got.
