Interview with Amy Goodman of Democracy Now..partial due to length..
AMY GOODMAN: Meanwhile, John McCain tried to strike a populist tone on the campaign trail.
SEN. JOHN McCAIN: While employees, shareholders and other victims are left with nothing but trouble and debt, the people who helped cause the collapse make off with tens of millions in severance packages. Disgraceful. I’ve spoken out against the excess of corporate executives, and I can assure you that if I’m president, we’re not going to tolerate that anymore.
AMY GOODMAN: Professor Hudson?
MICHAEL HUDSON: That’s his constituency. His constituency are the people who have caused the crisis. That’s who he’s representing. Now, of course, you’re not going to come in and say, “I’m going to support the people who have caused this crisis at your expense.” If you’re going to bail out your constituency, you’re going to say exactly the opposite. So what he’s saying has no reality at all.
These are the people who sang, “There’s no money for Social Security. We’re going to have to privatize it. We’re going to have to turn over your Social Security to Bear Stearns, to AIG”—to the very people who have shown how they’re mismanaging money. Imagine if the Republican program had gone through and Social Security had been privatized and these were the jokers who were managing your Social Security. They’d stick you with the losses.
So, these are his constituency. He knows he’s not telling the truth. He’s not paid to tell the truth. He’s pretending that it’s a crisis that has to be bailed out, that it’s the financial system. But it’s not the financial system that’s being bailed out; it’s the debt system. And it’s the debts that the homeowners own and the industry owns. And now the government is coming on the side of the creditors, who are going to close down the industries, sell them off to pay the debts, foreclose on the houses, sell them off to pay the debts. And the economy is going to shrink and shrink. That’s the program that they’re standing for.
AMY GOODMAN: They’ve always said that Social Security can’t be bailed out, but that it’s going broke.
MICHAEL HUDSON: That [inaudible] bailout. They’ve already spent $5 trillion in the last two weeks to double the size of the national debt by taking over Fannie Mae. How can they bail out the gamblers, how can they bail out Wall Street and not—and claim that the Social Security system doesn’t really exist? They’ve used the Social Security money basically for the bailout. There it goes. They’ve made a choice. The choice is to bail out Wall Street against the people.
The Treasury is supposed to represent the government and the economy, and the Fed is supposed to be the board of directors of commercial banks, but now Wall Street plays both sides of the game. It not only supplies the heads of the Fed; it supplies the Secretary of the Treasury. And that’s why I said the class war is back in business with a vengeance.
AMY GOODMAN: Nomi Prins, you worked at a number of these places, like Bear Stearns. You worked at Lehman Brothers, too, now bankrupt. Let’s talk about the money that Obama and McCain get. According to the Center for Responsive Politics, Obama, it’s nearly $10 million from the securities investment industry; McCain, it’s nearly $7 million. So Obama actually gets more. Employees of Merrill Lynch, the investment bank that’s been taken over by Bank of America, have given the largest corporate money to Senator McCain’s campaign, Merrill employees giving some—close to $300,000 to McCain, close to $200,000 to Obama. Lehman Brothers, which filed for bankruptcy, given—has been the eighth-largest corporate giver to Senator Obama’s campaign. Democrats have become increasingly reliant on Wall Street money. The industry ranks as the third-biggest giver to Senator Obama’s presidential campaign. How does this influence the debate, and what are the proposals of the two men?
NOMI PRINS: Well, the proposals of McCain have to do with—well, they’re very nondescript. Basically, he says there is a greed situation, and we need to contain it. And we need—
AMY GOODMAN: And he says we have to set up a commission.
NOMI PRINS: We need to set up a commission to understand what’s going on. Well, we have seven different regulatory bodies in Washington, and they’re supposed to be watching various aspects of the financial community. And we have state ones that are supposed to be watching over insurance companies. So we actually have regulatory agencies. And Obama has basically said the same thing. He wants to strengthen the ones that do exist.
The problem is being connected to Wall Street, in terms of your funding. And Washington, in general—Wall Street, in general, was the biggest contributor to all of the politicians in Washington over the last decade. It’s where the most money comes from. So you have a situation where that money doesn’t want oversight, even when it so badly, as Michael was talking about, mismanages and over-leverages and over-bets and gets into such a tremendous problem that we haven’t seen. They don’t want the regulation.
What you should do, what the candidates should do, is step back and say, OK, well, you know what? Instead of having them dictate the terms and us coming in to bail them out with no strings attached—we’ll bail you out, and we won’t even ask you to explain to us what the heck has been going on with your balance sheets; we’re taking stuff on we don’t even understand—actually have to make it transparent and actually have to dissect the businesses back into a form where speculative businesses and commercial businesses are once again separated, at least until our government can understand what’s going on and understand the hook onto which they’re taking American public money to bail them out.
AMY GOODMAN: Professor Hudson, Phil Gramm was the top adviser to McCain. What was his role in all of this, the former senator from Texas?
MICHAEL HUDSON: He’s the frontman for the biggest crooks in the country. Basically, he says don’t regulate. He has responded to the lobbies by cutting back all of the information. The regulatory agencies don’t collect the information to let them know what’s happening. The government has no adequate statistics on what the value of real estate is, what the amount of debt is, because if it did have statistics, it would show that the volume of debt is far in excess of the ability of debtors to pay. And when you have that, you would have to do something about it.
Gramm has said don’t collect statistics, because if you know how these guys are making money, they’re going to pay taxes on it. And if you don’t look at what they’re doing, if you let them all do it through offshore vehicles, if you let them all bury everything, then they’re not going to be taxed. And that’s his constituency, to un-tax finance and to shift it onto labor and industry.
AMY GOODMAN: Where does Glass-Steagall fit into this?