Forum Post: A DC Insider Explains How the Wall Street Lobby Owns DC: Crony Capitalism Prevails at Every Turn
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A DC Insider Explains How the Wall Street Lobby Owns DC: Crony Capitalism Prevails at Every Turn
Wednesday, 27 March 2013 09:51 By Jeff Connaughton, Prospecta Press | Book Excerpt
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TransPacific Partnership Will Undermine Democracy, Empower Transnational Corporations
Wednesday, 27 March 2013 09:12 By Margaret Flowers and Kevin Zeese, Truthout | News Analysis
Our country's democratic values could be under threat if President Obama fast tracks the Trans-Pacific Partnership.
On critical issues, the massive Trans-Pacific Partnership (TPP) being negotiated in secret by the Obama administration will undermine democracy in the United States and around the world and further empower transnational corporations. It will circumvent protections for health care, wages, labor rights, consumers' rights and the environment, and decrease regulation of big finance and risky investment practices.
The only way this treaty, which will be very unpopular with the American people once they are aware of it, can be approved is if the Obama administration avoids the democratic process by using an authority known as "Fast Track," which limits the constitutional checks and balances of Congress.
If the TPP is approved, the sovereignty of the United States and other member nations will be dissipated by trade tribunals that favor corporate power and force national laws to be subservient to corporate interests.
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Imperial Germany and the Pillage of Europe's Indebted Mediterranean Region
Wednesday, 27 March 2013 09:41 By CJ Polychroniou, Truthout | Op-Ed
To read other articles by CJ Polychroniou or other author in the Public Intellectual Project, click here http://truth-out.org/index.php?option=com_k2&view=item&id=4345:the-public-intellectual-chronis-polychroniou .
Not so long ago, imperial nations bent on punishing or destroying their economic rivals or pillaging other countries' resources did it the "natural" way: They engaged in naval blockades, ordered the landing of marines, or proceeded with the declaration of a war and then an outright invasion. The Muslim rulers of the North African Ottoman provinces had their wealth increased through attacks led by Barbary corsairs upon merchant shipping.
In today's neoliberal, antidemocratic and German-dominated European Union (EU), the pillage of wealth from the periphery to the core of the euro zone takes place in a physically nonviolent manner through "bailouts" and "bail-ins."
Following the outbreak of the euro zone debt crisis, an outcome caused primarily by the flawed architectural design of the European Monetary Union and intensified in turn by the uninspired policies implemented by the European leaders, Germany seized the opportunity to extend its economic domination over the euro zone. It adopted the same policy it had carried out toward East Germany after unification: the destruction of its industrial base and the conversion of the former communist nation into Berlin's satellite under a united Germany.
In our day, bank rescues masquerade as the rescue of nations, followed by the enforcement of unbearable austerity measures for the repayment of the "rescue" loans. Then comes the implementation of strategic economic policies aiming at reducing the standard of living for the working population and the shrinking of the welfare state, complete labor flexibility and the sale of public assets, including state-controlled energy companies and ports. This constitutes the context of a unified Germany strategy for the pillage of the economies of the Mediterranean region facing staggering debts.
After Greece, Portugal and Spain, it is now Cyprus' turn to take a dive into the abyss, courtesy of German solidarity to indebted euro zone member states. Faced with the dismal scenario of disorderly bankruptcy and the possibility of an exit from the euro zone because of its collapsed banking system, the Cypriot government accepted a few days ago an EU bailout deal which is essentially a German neocolonialist policy in action. In exchange for a 10 billion euro loan, Cyprus must raid depositors' bank accounts (a proposed 50% or even 60% "haircut" on deposits of more than 100,000 euros), shrink drastically its banking sector, reduce its budget, impose austerity measures, cut wages and pensions, and privatize public assets.
Following this deal, the small but until recently prosperous island at the edge of the Mediterranean basin will sink into a deep recession and will be condemned to long-term unemployment and growing poverty levels, while the prospects of reunification with the northern part of the island (which has been illegally occupied by Turkish forces since 1974) will simply be pushed away into the indefinite future. In addition, it will lose its status as a banking model for Russia and the rest of Europe. In this context, no matter how much recapitalization takes place, Cyprus' banks will fade into oblivion by virtue of having lost the confidence of their depositors.
While the bailout plan is simply catastrophic for Cyprus, it is quite advantageous for Germany and its banks and the treasuries of the core euro zone nations. First, as with the case of the four previous euro zone bailouts (Greece, Portugal, Spain and Ireland), the euro game goes on since so many vested interests are at stake and a chaotic dissolution of the euro zone might have apocalyptic consequences. Indeed, in spite of claims by the German ministry of finance to the contrary, even Cyprus' exit from the euro (Cyprus' economyamounts only 0.2% of the EU GDP)might have unintended consequences such as contagion.
Second, the "rescue" loans are quite secured, thanks to the implementation of extreme fiscal consolidation programs: They are paid back promptly by the indebted countries and with hefty interest. At the same time, the austerity and fiscal adjustment policies imposed by the international lenders actually increase rather than decrease the debt-to-GDP ratios for the indebted countries as they shrink economic activity and thus reduce state revenues, thereby keeping them in a vicious cycle of dependency.
Third, the collapse of the economies of the indebted nations produces a flight of capital that ends up mostly in Germany, which is increasingly seen as the safest place to park euros while the crisis in the euro zone rages on. (The net destruction of wealth in the euro zone is actually an ongoing process due to the distortions of the use of the euro as a single currency in a non-optimal currency zone: The euro is an undervalued currency for Germany, which allows it to have a comparative edge in the price of exports, while it is an overvalued currency for all other nations in the periphery, which cripples their export industries, making them overall highly noncompetitive.) The loss of funding for banks in Spain, Italy, Greece, Portugal and Ireland is astonishingly high, amounting to hundreds of billions of euros (which means those countries are net debtors to the European Central Bank), while Deutsche Bank and most other German banks are awash in cash.
Fourth, under the bailout schemes, the indebted countries surrender national sovereignty and are forced to sell public assets (mostly to northern invaders) at bargain-basement prices, while the reduction in labor costs because of suppressed wages opens up new opportunities for an increase in the rate of labor exploitation and speeds the process of the countries' conversion into banana republics.
It is clear that Germany is bent on imperial domination in the euro zone and that the euro has become an albatross around the neck of the southern Mediterranean economies. The only question now is how much longer will the political leaders and the citizens of the periphery of the EU tolerate Germany's imperial pursuits and the antidemocratic nature of the EE as they watch the economic and social devastation of their nations unfold.
If history is any guide, this whole euro zone business could end very badly.
Copyright, Truthout.
The Great Cyprus Bank Robbery
Friday, 29 March 2013 09:28 By Salvatore Babones, Inequality.org | Op-Ed
http://truth-out.org/opinion/item/15403-the-great-cyprus-bank-robbery
Cyprus is the latest European country to face a budget and banking crisis. Its deregulated banks have accumulated huge losses and now face imminent bankruptcy. Like the United States government, the government of Cyprus guarantees most bank deposits against losses. So a failure of Cyrpus’s banks would result in a budget crisis for the government as well.
While it is easy to fault Cyprus for its failed policies, let’s not forget that the banking system of the United States of America collapsed five years ago. Little Cyprus (population 840,000) held out five years longer than the richest and most powerful country in the world.
To read more articles by Salvatore Babones and other authors in the Public Intellectual Project, click here http://truth-out.org/public-intellectual-project .
What’s more, Cypriot banks have failed because they have engaged in all the risky business practices that US banks taught them. On top of that they implemented a US-style regime of self-regulation.
As a result, it’s no surprise that Bank of Cyprus is now going the way of Citibank. The surprise is that it took so long.
Unfortunately, the Cypriot government and the European Union are also following the US policy of bailing out their banks, letting managers and bondholders get off scott free.
In the US it was the taxpayers who paid the bill. In Cyprus, though, many of the bank depositors are actually foreign (rumored to be Russian). So in Cyprus they plan to make the depositors pay. Like the United States, European Union countries provide guarantees to bank depositors. In Cyprus your first 100,000 Euros are guaranteed against losses if your bank goes bankrupt.
Any deposits over 100,000 Euros are theoretically at risk, but there’s a clear legal hierarchy of who takes losses and who gets paid. First the bank’s owners get wiped out. After all, they’re the ones who racked up the losses that bust the bank.
Next the bondholders — the professional investors who lent money to the bank itself — take their losses. Then, only after the pros have been wiped out, do the amateurs — the depositors — lose any money.
That’s the theory of what happens when a bank goes bankrupt. Except that Cyprus’s banks are not going bankrupt. To prevent a bankruptcy, the European Union wants the government of Cyprus to declare a one-time tax on bank deposits.
That’s right. If the government takes 20% of your deposited funds and uses the money to bail out your bank, your bank won’t go bankrupt and your deposits won’t be at risk. Of course, you’ll have only 80% of your money, but technically your 80% is still perfectly safe and guaranteed by government deposit insurance.
In other words, it’s the Great Cyprus Bank Robbery.
No doubt Cyprus has made many mistakes in its bank regulations and policies. But anyone who thinks that a country of 840,000 is making up its own policies is crazy. Cyprus has implemented the policies that the US and EU have recommended for it.
Now that Cyprus’s banks are in trouble, the EU is demanding that Cyprus bail out its banks — and make the depositors pay for the bailout. It’s no mystery why. Most of the bondholders who lent to Cyprus’s banks are banks in other European countries.
Cyprus should let its banks fail, then see where the chips fall. Depositors should be protected as much as possible. Ultimately, if there are deposit insurance bills to pay, the government should pay for them. If that means higher taxes, so be it.
But to make bank depositors pay for a bank bailout is sheer robbery. There is no other word for it. A lawyer may argue that legally it is a preemptive tax, but morally it is robbery all the same.
This piece was reprinted by Truthout with permission or license.
It Can Happen Here: The Confiscation Scheme Planned for US and UK Depositors
Friday, 29 March 2013 09:04 By Ellen Brown, Web of Debt | News Analysis
http://truth-out.org/news/item/15401-it-can-happen-here-the-confiscation-scheme-planned-for-us-and-uk-depositors
Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds. New Zealand has a similar directive, discussed in my last article here, indicating that this isn’t just an emergency measure for troubled Eurozone countries. New Zealand’s Voxy reported on March 19th:
The National Government [is] pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts . . . . Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.
Can They Do That?
Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay. (See here and here.) But until now the bank has been obligated to pay the money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be converted into “bank equity.” The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price? Most people keep a deposit account so they can have ready cash to pay the bills. The 15-page FDIC-BOE document is called “Resolving Globally Active, Systemically Important, Financial Institutions.” It begins by explaining that the 2008 banking crisis has made it clear that some other way besides taxpayer bailouts is needed to maintain “financial stability.” Evidently anticipating that the next financial collapse will be on a grander scale than either the taxpayers or Congress is willing to underwrite, the authors state:
An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company [meaning the depositors] into equity [or stock]. In the U.S., the new equity would become capital in one or more newly formed operating entities. In the U.K., the same approach could be used, or the equity could be used to recapitalize the failing financial company itself—thus, the highest layer of surviving bailed-in creditors would become the owners of the resolved firm. In either country, the new equity holders would take on the corresponding risk of being shareholders in a financial institution.
No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive. The FDIC is an insurance company funded by premiums paid by private banks. The directive is called a “resolution process,” defined elsewhere as a plan that “would be triggered in the event of the failure of an insurer . . . .” The only mention of “insured deposits” is in connection with existing UK legislation, which the FDIC-BOE directive goes on to say is inadequate, implying that it needs to be modified or overridden.
An Imminent Risk
If our IOUs are converted to bank stock, they will no longer be subject to insurance protection but will be “at risk” and vulnerable to being wiped out, just as the Lehman Brothers shareholders were in 2008. That this dire scenario could actually materialize was underscored by Yves Smith in a March 19th post titled When You Weren’t Looking, Democrat Bank Stooges Launch Bills to Permit Bailouts, Deregulate Derivatives. She writes:
In the US, depositors have actually been put in a worse position than Cyprus deposit-holders, at least if they are at the big banks that play in the derivatives casino. The regulators have turned a blind eye as banks use their depositaries to fund derivatives exposures. And as bad as that is, the depositors, unlike their Cypriot confreres, aren’t even senior creditors. Remember Lehman? When the investment bank failed, unsecured creditors (and remember, depositors are unsecured creditors) got eight cents on the dollar. One big reason was that derivatives counterparties require collateral for any exposures, meaning they are secured creditors. The 2005 bankruptcy reforms made derivatives counterparties senior to unsecured lenders.
One might wonder why the posting of collateral by a derivative counterparty, at some percentage of full exposure, makes the creditor “secured,” while the depositor who puts up 100 cents on the dollar is “unsecured.” But moving on – Smith writes:
Lehman had only two itty bitty banking subsidiaries, and to my knowledge, was not gathering retail deposits. But as readers may recall, Bank of America moved most of its derivatives from its Merrill Lynch operation [to] its depositary in late 2011.
Its “depositary” is the arm of the bank that takes deposits; and at B of A, that means lots and lots of deposits. The deposits are now subject to being wiped out by a major derivatives loss. How bad could that be? Smith quotes Bloomberg:
. . . Bank of America’s holding company . . . held almost $75 trillion of derivatives at the end of June . . . . That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show.
$75 trillion and $79 trillion in derivatives! These two mega-banks alone hold more in notional derivatives each than the entire global GDP (at $70 trillion). The “notional value” of derivatives is not the same as cash at risk, but according to a cross-post on Smith’s site: By at least one estimate, in 2010 there was a total of $12 trillion in cash tied up (at risk) in derivatives . . . . $12 trillion is close to the US GDP. Smith goes on:
. . . Remember the effect of the 2005 bankruptcy law revisions: derivatives counterparties are first in line, they get to grab assets first and leave everyone else to scramble for crumbs. . . . Lehman failed over a weekend after JP Morgan grabbed collateral.
But it’s even worse than that. During the savings & loan crisis, the FDIC did not have enough in deposit insurance receipts to pay for the Resolution Trust Corporation wind-down vehicle. It had to get more funding from Congress. This move paves the way for another TARP-style shakedown of taxpayers, this time to save depositors.
Perhaps, but Congress has already been burned and is liable to balk a second time. Section 716 of the Dodd-Frank Act specifically prohibits public support for speculative derivatives activities. And in the Eurozone, while the European Stability Mechanism committed Eurozone countries to bail out failed banks, they are apparently having second thoughts there as well. On March 25th, Dutch Finance Minister Jeroen Dijsselbloem, who played a leading role in imposing the deposit confiscation plan on Cyprus, told reporters that it would be the template for any future bank bailouts, and that “the aim is for the ESM never to have to be used.”
That explains the need for the FDIC-BOE resolution. If the anticipated enabling legislation is passed, the FDIC will no longer need to protect depositor funds; it can just confiscate them.
Worse Than a Tax
An FDIC confiscation of deposits to recapitalize the banks is far different from a simple tax on taxpayers to pay government expenses. The government’s debt is at least arguably the people’s debt, since the government is there to provide services for the people. But when the banks get into trouble with their derivative schemes, they are not serving depositors, who are not getting a cut of the profits. Taking depositor funds is simply theft.
What should be done is to raise FDIC insurance premiums and make the banks pay to keep their depositors whole, but premiums are already high; and the FDIC, like other government regulatory agencies, is subject to regulatory capture. Deposit insurance has failed, and so has the private banking system that has depended on it for the trust that makes banking work.
The Cyprus haircut on depositors was called a “wealth tax” and was written off by commentators as “deserved,” because much of the money in Cypriot accounts belongs to foreign oligarchs, tax dodgers and money launderers. But if that template is applied in the US, it will be a tax on the poor and middle class. Wealthy Americans don’t keep most of their money in bank accounts. They keep it in the stock market, in real estate, in over-the-counter derivatives, in gold and silver, and so forth.
Are you safe, then, if your money is in gold and silver? Apparently not – if it’s stored in a safety deposit box in the bank. Homeland Security has reportedly told banks that it has authority to seize the contents of safety deposit boxes without a warrant when it’s a matter of “national security,” which a major bank crisis no doubt will be.
The Swedish Alternative: Nationalize the Banks
Another alternative was considered but rejected by President Obama in 2009: nationalize mega-banks that fail. In a February 2009 article titled “Are Uninsured Bank Depositors in Danger?“, Felix Salmon discussed a newsletter by Asia-based investment strategist Christopher Wood, in which Wood wrote:
It is . . . amazing that Obama does not understand the political appeal of the nationalization option. . . . [D]espite this latest setback nationalization of the banks is coming sooner or later because the realities of the situation will demand it. The result will be shareholders wiped out and bondholders forced to take debt-for-equity swaps, if not hopefully depositors.
On whether depositors could indeed be forced to become equity holders, Salmon commented:
It’s worth remembering that depositors are unsecured creditors of any bank; usually, indeed, they’re by far the largest class of unsecured creditors.
President Obama acknowledged that bank nationalization had worked in Sweden, and that the course pursued by the US Fed had not worked in Japan, which wound up instead in a “lost decade.” But Obama opted for the Japanese approach because, according to Ed Harrison, “Americans will not tolerate nationalization.”
But that was four years ago. When Americans realize that the alternative is to have their ready cash transformed into “bank stock” of questionable marketability, moving failed mega-banks into the public sector may start to have more appeal.
This piece was reprinted by Truthout with permission or license.
Public Banking Needed to Stop "Cannibalization" of the Economy
Friday, 29 March 2013 10:16 By Paul Jay, The Real News Network | Interview and Video
http://truth-out.org/news/item/15408-public-banking-needed-to-stop-cannibalization-of-the-economy
Michael Hudson: As long as finance is left in private hands, you're going to have austerity and America ending up looking like Greece and Ireland.
TRANSCRIPT:
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Baltimore.
There's been a debate about what to do about banks that are too big to fail, too big to prosecute, too big to regulate. And the debate goes that the big banks should be broken up, or some people are suggesting the only real solution is public banking, banks that are big, of scale, and have public interest mandates, publicly owned. Now weighing in on this debate and joining us in the studio is Michael Hudson. Michael was a Wall Street financial analyst, and he's now a distinguished research professor of economics at the University of Missouri-Kansas City. His recent books are The Bubble and Beyond and Finance Capitalism and Its Discontents.
Thanks for joining us again.
MICHAEL HUDSON, RESEARCH PROF., UMKC: Thank you.
JAY: So what's your take? Break up the banks vs. public banking.
HUDSON: Well, for one thing, in your very first question you left out the point that Elizabeth Warren has made earlier this week: too big to fail means too big to jail.
JAY: I said too big to prosecute, but yeah.
HUDSON: Okay. Too big to jail. When you had the head of the Justice Department for finance last week saying, well, we can't prosecute the banks, 'cause if we did, they already are so insolvent that we'd essentially have to take over the banks, and if we fined them, they wouldn't have any reserves left, and we'd have to make them into public banks, and that would be socialism, well, the fact is that 200 years ago, when the Industrial Revolution was taking off, all of the bank reformers in England, in France (the Saint-Simonians), in Germany, they all believed that industrial capitalism was going to develop banking. And instead of banking being predatory, as it had been for thousands of years, instead of banks lending against real estate and assets and foreclosing and putting people in debtors prisons, for the first time in history banks were going to begin to make loans to actually create new means of production, to create industry, to finance factories and equipment that weren't already there. And this is what happened in Germany, it's what happened in central Europe with the Reichsbank. Leading up to World War I, you had the German banks working with the German government almost as semi public entities--along with the military and industrial complex, to be sure, but you had banking taking industrial form.
World War I changed everything. You had a reversion to the English-Dutch-American kind of banking that was called merchant banking. Banks would make loans to ship goods that are already produced, or they'd make loans against real estate. So today you have 80 percent of bank loans in America and England and Scandinavia are all loans for real estate. So, essentially the function of the financial sector has been simply to load down the economy with debt without helping the economy grow.
What you really want is for banks, instead of loading the economy down with debt, to be able to finance economic growth instead of just eating into growth as an overhead.
Well, suppose that the government were to do what Sheila Bair, head of the FDIC, recommended her agency do in 2008. When Citibank went under, Bank of America, she said, look, we're in the business of taking over banks. It's not really socialism. It's what we do. When a bank is insolvent, the government takes it over.
Now, imagine what America government, the public sector, could have done with Citibank and Bank of America. These were the two largest mortgage holders in America.
What actually happened was that President Obama said, gee, I hope the banks write down the mortgages to what people can afford so that we can take off again. Instead, Citibank, Bank of America that bought Countrywide Financial refused to write the loans down. And so what you have now is 10 million Americans in the foreclosure process or already losing their homes. What you're having is the banks having a predatory process. And all of a sudden, the banks are part of the problem, not part of the solution.
JAY: Isn't this, like, inevitable? What I mean by that is if you go back to the early 20th century where banks start to play this role of lending money to create new means of production--and it's a massive need for this, with big industrialization, with tens of thousands of workers in one factory. They need large amounts of capital. As banks become more and more powerful, don't they then find that it starts becoming more profitable manipulating the stock market, speculating? And you get this whole period, up to the '29, '30 crash, where you have so much banking is parasitical. And then the whole thing replays itself out again over and over again. But isn't it inherent that as long as you have private banking so powerful, it will be also parasitical?
HUDSON: This is--the key word that you just said is private banking. Yes. If the government would have taken over Citibank, it would not have done the kind of things that Citibank did. The government would not have used its depositors' money and borrowed money to gamble with. It wouldn't have done casino capitalism. It wouldn't have played the derivatives market. It wouldn't have made corporate takeover loans.
Suppose the government ran a bank. It would make loans for long-term purposes to serve the economy and help the economy grow, which is what governments are supposed to do.
That's not what banks are supposed to do. Banks are supposed to make money. And, unfortunately, they can make money most easily, as you point out, by being parasitic, not by being productive. So if you want banking to play the productive role of financing infrastructure, of financing growth, then the only way of doing this is for the government to run the banks. Some recognition of this has come by real estate lobbyists, mainly from Wall Street, saying, ah, we need a public-private partnership. The partnership is where the private sector basically will screw the public sector.
JAY: Yeah, they make the profit; the public can take the risk.
HUDSON: Yeah, takes all the loss. So that won't work. A public-private partnership really means you're leaving banking in the hands of the private sector. And the last time that was tried was in the educational loans system, where the government underwrote all of the education loans made by the banks. And you see the problem now with the defaults there. You would find that in a vaster scale. The problem is that infrastructure shouldn't be funded by banking. If you fund road-building and other bridge fixing up with a private partnership, then you're going to have to charge money for the bridges, you're going to have to charge money for the roads, you're going to turn America's roads into toll roads, you'll turn the bridges into toll bridges, and all of a sudden you're going to increase the cost of living, increase the cost of doing business, all to squeeze out the money for the people who run the toll booths to these roads, to pay the banks for the money they borrow to buy the privatization of the roads, and you're going to end up looking like England looked up after Margaret Thatcher and her Labour Party and Tony Blair. The financialization of the economy is going to end up cannibalizing the industrial sector. And that's already happened.
So instead of what textbooks describe is industrial capitalism of the cartoons, where the banker will give money to the industrialist to build a factory and happy workers are coming in, the banker gives money to the corporate raider who buys the factory that's already there, lays off half the labor force, works the remainder more deeply, takes the pension fund for himself, replaces it with a defined contribution program instead of defined benefit, so all you know is what's--is docked from your paycheck every month, not what comes out. And the role of private banking is predatory finance, takeover loans, shrinking employment, worse working conditions. And they call that rising wealth creation because the wealth is being sucked up to the top. And when they talk about wealth creation, they mean wealth to the 1 percent, not prosperity for the [crosstalk]
JAY: And the rest of the economy gets paralyzed.
HUDSON: So as long as that kind of finance is left in private hands, you're going to have austerity and America ending up looking like Greece and Ireland.
And imagine how different it would have been if the government would have taken over Citibank and the big banks and said, okay, we're going to make loans now and extend credit to our own economy to build bridges and roads, like they do in China, for instance. And we don't have to charge interest. We're providing the credit for it. We don't have to pay executive salaries. We don't have to make finance into the ripoff system it's become.
JAY: Thanks very much for joining us, Michael. And thank you for joining us on The Real News Network.
This piece was reprinted by Truthout with permission or license.
We can do what 80% of Americans say they want
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A constitutional amendment to
Overturn Citizens United and Corporate Personhood
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For a complete analysis of the amendment issue,
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JOIN our OWS Working Group:
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HR29
Wow, deja vu. Germany plans to overrun the countries of Europe once again.