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you need to know this after we were all forced into going along with george bush
is seven hundred billion dollar bank bailouts two years ago that we were told
would say their economy
it's beginning to look like a new bailout maybe just around the corner
almost one hundred banks who received over for billion dollars in bailouts
are on the verge of collapse in taking with them our taxpayer loans three
billion dollars were already lost the taxpayers of the banks they bailed out
collapsed soon after getting federal help
many of these banks there on the verge of going under our major institutions
but regional smaller banks it did not have access to the three trillion
top c_e_o_'s three thousand billion top-secret three credit hours
courtesy the federal reserve
chanted out like candy to the too big to fail banks
over the last few years and we only learned about because of barry sanders
is a lot of
specifi smaller banks bilal
not only the taxpayers lose money but even more of the banking market will get
swallowed up by massive banks like citigroup and goldman sachs
now the words the banks that are already too big to fail
will get bigger
so what little the bank crisis due to our economy
it offer some insight on this issue and some of the larger issues around is
michael hudson president of the institute for the study of long-term
economic trends and author of the book super imperialism
economic strategy of american empire michael welcome
thank you
great to have you with us of michael is their first of all is the failure of
american banks a symptom of a larger problem
that's causing other countries to decode pull themselves from us from the dollar
for example
well the reason they're decoupling if the united states posed for a man
trillion dollars foreign central banks is writing a chronic trade deficit
ex-military deficit they spend responsible for much of the balance of
payment since the vietnam war even before and i also money managers on wall
street have taken the six hundred billion dollars of that that is created
and they've moved it out of the country to speculate on foreign currencies and
thereby therefore an asset so you have capital flight by the very people being
bailed out
financed by the federal reserve itself
tampa sounds rather insane
the i'm curious just take to give a little back story to the whole thing
richard nixon
the infamous lee as opposed to this off the gold standard back in the early
seventies
what does that mean for us today
uh... nixon didn't have a choice up the it from the nineteen fifties instead
staged until make the early seventies
the entire balance of payments deficit was military spending
the private sector was just exactly in balance so there was no more cold to
cover the currency
and out there was no choice though but to take up a softball in fact
already in the nineteen sixties when i worked with chase manhattan bank spencer
payments economist every friday we've sent and we look at the federal
reserve's
uh... re reports on the golan cover of the dollar and at this point
down down down down down
and you can see in advance of the dollar is going to have to close
of the cold pool that's what my outbox or about and we're in the same position
today
of the war were spending for us to solve gold in nineteen seventy one and no on
itll we event giving are you used to foreign governments
but our government is saying but is the point of getting more about treasury
bonds when the u_s_ government is never going to have the money to repay us by
the u_s_ government sacrifice the u_s_ economy and virtually destroyed a
december straight
by building up the banks leaving the desks on the books and making the u_s_
so highly embedded in the economy
this very high-cost american saturday other beverage panic but forty percent
of their income for housing mostly for morty trust fifteen percent third the
debt service twelve percent or about financial with social security are
withholding f_i_c_a_
and another what fifteen or twenty percent in texas
so the result is that uh... before they buy any goods and services at all that
american workers have to pay the financial sector
over two-thirds of their entire no matter how a little their pay
uh... an allelic it
they're already priced out of the world market and foreign governments see that
and they say plan expired are we going to take any more i'll use funded by
using the treasury
are mainly appended to the pentagon
twenty has a kind of military bases
all around us and uh... assesses isn't to some extent this this this lacquered
failure of of the united states to generate wealth anymore
as we did from the from the thirties to the eighties
arguably
untreated
be in the manufacturing business actually be producing things
is intellectual are distant that the consequence of this uh... libertarian
conservative notion that when governments invest in infrastructure
whether its intellectual infrastructure like you know northern european
countries eight
actually pay kids to go to college
or whether that's physical infrastructure china the bullet trains
eyes south korea with most advanced internet system in the world you know
for that
that that conservative libertarian ssh green
this is socialism
and so ever since reagan basically we've stopped building the infrastructure
that's the soil in which business grows dust businesses flamed out of their
right is there any deserting reality that
yesterday for a libertarian say country socialist but they need is its low cost
uh... every country that has privatized every single industry railroads the
roads to telephones picked up the water has raised the cost of privatization
very substantial but one thing privatized are industries have to borrow
money and pay interest that pay enormous executive salaries they pay us you'd
chalk textile
stop uh... bonuses that other people in the stock options and that the
government doesn't have these cost so
welcomed the libertarian safe privatize conduct of the country
banning raised the prices for education raised the prices for medicare raised
the prices by selling off your roads and turn them in the toll roads and they're
turning the american economy into a cult click on it
and that's that's at discounted prices more out of the market ob assuming that
we're not going to
e quickly get the investments that we need the the the mixed economy that we
see in the brick countries for example that are all growing like crazy because
they are investing in infrastructure that the republicans will succeed in
blocking this is there any other way that we can make a transition at least
out of an economy that's depend upon war
i don't hear hopper it because we're going to continue throughout the war
spending revenge the republicans are going to block uh... locals spending m
the states and localities in this country
i was so broke that they are selling off their office buildings chicago sold off
of sidewalk stuff
yet to be uh... so likely parking meters have and then i well i a so how how does
the school of what happens to the average american
if the brick countries annual producers the middle east inverting in brazil
russia india china
if these countries the country's the middle east
who are the major accumulator za dollars right now
were dropped a dollar as the currency to trade away elim
to basically with the international exchange at ever up in the dollar
china's trade deals russia and with turkey
to conduct all their trade in their own currency
and he decided what's the point but they haven't dollars excelling academically
ranks and this is a process is going to win a reaches the point where they no
longer need dollars at all to train these commodities
uh... what does that mean the average american in what what's the endgame
scenario here how far out is that
it means the participant brooks is going to go up our prices are going to go up
it means jobs are going to get
your n_p_r_
it means there's going to be unemployment
caught their taxes will go up and the government is going to say uh... we have
to change either paid a very rich people the interest leo them or will have to
cut back social security
a practicing big fish people fish updated creditors are going to be paid
pensioners social security recipients they're not going to be paid
spot at the stage then accept that implement and uh...
you're going to have an economy that looks like inland looked after world war
two is not going to be very good right which was so which is very crucial
recessed irritants in the very least
how does all this interact with this current warning of these hundred or more
bank failures is small and medium-sized banks
um... which is symptom which has caused
uh...
the bank failures are largely a symptom of the real estate bubble uh... right
now if you walk down made broadway in the new yorker other major streets
you're going to find a lot of for rent signs in the stores up and down to the
banks are in trouble with the local community banks in a small dents it'll
end up mainly the small businesses which means realestate
businesses and uh... uh... a is is they're going a bit and there's no way
of bailing them out
under the current uh... economic system of the last few minutes tomorrow
into one gigantic citibank and the obama administration spout principal is we
want to create more dynix too big to fail so that we can ship crocodile tears
and say well we had to bail them out that seems to be the lam
nobody has come up with any up alternative
he writes it and it seems to be you know lawrence summers dream
thank you michael hudson thanks so much for being with us tonight p
if wall street was in calling the shots the bush administration two years ago we
might have ended up
or have broken up me too big to fail banks for good
instead now looks like we're poised for another massive pile-up andrea larger
if we continue these trade monetary policies maven be looking at another
massive crash for bush bainer
here we go again rinse wash
amrit