Here’s an interview with Dr. Michael Hudson which is well worth taking the time to listen.
On Obama Lying to Shiela Bair (former head of the FDIC):
Now, over the weekend, yesterday in the New York Times, there was an interview with the head of the FDIC, Sheila Bair, whose five-year term just expired last week. Now that it’s expired she can begin to tell the stories. And she told the story of how one meeting with Obama after another he’d make promises to her, promises that he would try to prevent the mortgage crime that was occurring, to prevent the fraudulent subprime mortgages, to make a bank regulation to prevent criminal activities. She said in every case she’d go to his big speeches and an hour before the speech she’d be given a copy of it and he took out everything that he’d promised her and it was all rewritten by the big bank contributors.
On Wall Street and the Economy:
Well, you asked about the economy. The economy’s going under because Wall Street and investors realize that it’s a done deal. That Mr. Obama is going to succeed in pushing the economy much further into a depression. We need the depression in order to cut living standards and labor by 30 percent. We need a depression in order just to lower the wages of America and to have an excuse – of course, a depression is going to make the budget deficit even larger and the solution to the depression has already been written up just like the invasion of Iraq was all written up before 9/11 the solution is going to be that the government is going to sell off its land, whatever is in the public domain.
The American government is going to look just like Greece and just like Ireland. They’re going to be told, ‘The states can’t pay, there’s no federal revenue to share with Minnesota or Wisconsin or the city of Chicago. They’re going to have to sell off their roads, sell off their streets, sell off their infrastructure, sell off their public utilities, sell off their business. The government will sell whatever it has, the Postal Service, to essentially buyers who will now borrow the money from the banks making a huge new market for banks and investment bankers, in privatizing and cutting up what used to be the public domain and turning it over to the wealthiest 10 percent of the economy. So people realize yes, the class war’s back in business. We’re going into a depression. We’ll buy back all these stocks after they go but meanwhile, the game’s over. Let’s grab what we can and just bail out. And that’s what’s happening now.
On the Class War of the Banks Against Everybody Else:
All over Europe the Socialists are now on the right wing of the political spectrum.
Now the politics is all about finance. And the fact is that finance has nothing to do with the right or the left wing of the political spectrum. It spans the whole spectrum. And the terminology and the political concepts that existed a century ago when the Social Democratic and the Labour parties were being formed were basically concerned with employer/employee relations, labor unionization vis-à-vis heavy industry. That’s not the case today. Today you have a war of finance not only against consumers and employees, but against industry. You have industries being financialized. That’s what they talk about in business schools.
So almost without anybody preparing a political alternative you’ve had a transformation of what began as an economic democracy into a financial oligarchy. This is going to be the main problem for the next century – how to cope with the emerging financial oligarchy that has been empowered by the financial bubble and most of all, by the bailout.
When Bush and Obama gave $13 trillion to Wall Street’s managers they’ve empowered a whole century of ruling class people, much as the 19th century railroad barons were empowered by giving them the western lands and all the money for the railroads and much of the great land barons and real estate interests were created in much of the third world. So you’ve created a rentier oligarchy that is exactly the opposite of everything that was expected at the early 19th century and into the 1930s.
So there’s a financial dynamic of compound interest, a financial dynamic of banks and the financial sector getting the rest of society into debt that now can be created on a computer keyboard without limit, and then essentially getting rich by pushing the rest of society into debt up to the point where the entire economic surplus is being used not to raise living standards, not to invest in tangible industrial capital formation, not to pay taxes to government, but to pay interest and financial fees to the financial sector. So I guess instead of a class I should refer to what national income economists call the FIRE sector – finance, insurance and real estate. And it’s a symbiotic sector that’s emerged to become the characteristic central planners of the economic.
A hundred years ago people thought well, right now we have the big corporations, heavy industry, the steel companies, the railroads doing the planning. We think government should be doing the planning. That was the socialist planning. But now you don’t have government doing the planning, you don’t have industry doing the planning, you have Wall Street and the financial sector doing the planning. Nobody a hundred years ago expected anything like this so you have essentially a new class, a new bureaucracy – not the bureaucracy that Hayek warned about in The Road to Serfdom doing the planning, but a much more centralized planning bureaucracy on Wall Street in America, the city of London in England, the Bourse in France, Frankfurt in Germany, Shanghai in China. You have financial interests that are somehow centralizing all of the planning power and all of the economic surplus in their own hands in a way that’s impoverishing the rest of society. This is something entirely new and the political system has not come to terms with it.
Listen to the Full Interview:
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