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tv   [untitled]    September 8, 2011 1:30am-2:00am EDT

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nine thirty am in moscow these are your r.t. headlines a sports team parishes and a country mourns after wednesday's plane crash near the city of jaroslava kills forty three including the members of one of russia's top ice hockey teams and tragedy also touched other nations as players from many countries were on board on their way to belarus for the first match of the season. twenty years behind bars a russian pilot arrested in a us thing operation in liberia sentenced her conspiring to smuggle drugs constantino shango insists he wasn't guilty while moscow previously accused the u.s. of conducting an illegal arrest and rendition. and the british government under fire
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for halting an inquest into the death of weapons expert david kelly who insisted iraq never had buttons of mass destruction cause of death of suicide again being questioned by doctors coming up al gore and of speaks to watford amaryllis professor michael hudson about the outlook for the u.s. economy stay with us. for the full story we've gone to. the biggest issues get a human voice face to face with the news makers. hello
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again the no come to swap live the interview felt an artsy a mother's love and today we're going to talk about money but other people's money and what's more important than our money. politicians and the columnist from i round the world have gathered in the russian city to. take part in the global political front the decision makers are going to discuss among other things how to avoid future economic crisis but does it mean the path out of the current economic recession is already clear and where does it lead here's the participants in the forum to wall street financial analyst professor michael. one of the goals of these two years here is love the little balls for us to find out how to reduce the gap between the rich and the poor the economic crisis doesn't shake europe and america is still a serious threat to the future of the euro zone has in doubt just recently america
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was facing the threat of a technical default that would have had a knock on effect worldwide the american government managed to avoid it that's an expert see the measures taken only temporary threat is still there. mr hudson welcome to the show thank you thank you thank you very much for being with us well first of all standard and poor's has downgraded we've all been a vacation on television it's downgraded the u.s. in the u.s. trade to ranking is it only the beginning. of a process of downgrading the united states or the investors still have faith in. the standard and poor's downgrade ing had nothing to do with investors it was a political stunt given for time when there were negotiations on how to balance the u.s. budget the obama administration and the republicans both want to cut back social
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security and use the budget basically to subsidize wall street and the standard poor was a public relations act to convince people that if they didn't impose cutbacks social security cut back medicare cut back social spending and give more money to the creditors and to wall street that somehow there would be a danger investors ignored all of this because the united states government and its central bank can print all the money it has there is no way that the united states government can default on its debt because it controls the printing press so of course it's impossible to downgrade it so the downgrade was only political nothing to do it all with. well. experts say. to me very hard maybe an impossible even choice right now what should be his economic
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priority tackling tackling the sovereign debt we're unemployment he should of course tackle unemployment his policy is to increase unemployment his objective is to lower wages by ten to twenty percent because he believes the neo liberal myth he actually believes that a race to the bottom is how to win but if you cut back living standards if you lower wages that will make the economy more competitive well actually it makes the economy less competitive but his loyalty really is with wall street he believes that wall street is necessary to make the industrial economy work when in reality it's just the opposite of the liberal myth americans have been calling liberal missed all along but it's mean to live for decades why is the why do you still call it a myth that what you mean by that. just means you're going to believe the neo
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liberal know it's been alive because the. akademi are the neo liberals led by the chicago school who controlled all of the prestigious. academic economic journals i teach at the university of missouri and kansas city and my students in order to get promoted from assistant professor to associate professor need to publish in these journals the neo liberals make sure that if you don't believe the myth that they've told that travesty of economic history that somehow you're not able to get a job and this is. shown for instance when the neoliberals came to russia after nineteen ninety russia believed that it was being told how the west developed and what the west wanted it to develop the way it. said in reality the neo liberals told russia to do exactly the opposite of how america got rich to
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tax labor not real estate and finance not to have progressive taxation and indeed to focus on finance rather than an industry and you've seen the disaster that happened in all of the post soviet economies and it was completely unnecessary to happen so the neo liberals in america no longer have the history of economic thought being taught in the academic curriculum you no longer have economic history being taught you have textbooks that there is if the whole economy operates on partner and there's no understanding really of finance except in the business schools where they actually get students how to take over a company empty it out increased stock market values by borrowing money to pay zero to stay victims or to buy back your own stock which of course helps the managers with exercise their snap options but the financialization process that neo liberals
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push end up stripping the economy of capital for tangible investment and the neo liberals in the united states the problem is not merely unemployment going up it's that wages have been going down for the over thirty years. a chance to be really stupid if he doesn't tackle and doesn't solve the problem kind of so there is no question but he will be reelected nobody in the democratic party is going to challenge him because he already has his constituency locked up the urban constituency the minorities the liberals and the republicans want to make sure that he's elected i mean he doesn't have to solve the problem he doesn't have to solve the problem at all he has no intention of solving it he will no no no. he will continue to aggravate the problem he in the task of
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a politician in america or england or anywhere else is to deliver your constituency to your campaign backers his campaign finance theirs or wall street his job is to make sure that the constituency does not protest while he does exactly the opposite of everything that he's promised wasn't we all watched this through. the news with the congress trying to trying to come to an agreement on the debt and so on why did it take so long why was it so hard for the democrats and republicans to to come to disagree because it was organized like a wrestling match you know dramatically to make people think that the fight was all about how much to lower wages how much the lower. that was they my why obama by the book and the republicans the intention was to focus make americans believe that you need lower living standards in order to get to survive that you
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need to cut back social security that you need to the economy and send the economic surplus into the banking system in order for the economy to survive that's the myth michael how do you think it will take i'll soon be we expect to see the debt ceiling achieved again but the debt ceiling give mean relieved there is no way in which the debt ceiling cannot be raised because of the degree of military spending the off balance sheet the question isn't about the debt ceiling the question really is what changes are going to how is the government going to cut back spending on labor and on social security and on social programs in order to increase the military budget very substantially. in order to give more bailout funds to the banks so so you sound pretty optimistic if i was
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a banker i would be very optimistic if i were an economist and this means that the economy will be moving into a depression for about five ten years good financial action expert was to be next if you want and it isn't the bankers nor bankers. and economists so who do your what makes you happy i don't. think you have understanding what's happening and my identity is basically a bit of a professor. is to tell people what the future is going to be not to represent any particular interests and so i like it when i can analyze and look at the economy as a system unfortunately the world is going into a depression and it's completely unnecessary and it's because it's following a policy that is unrealistic really giving into the depression i mean i mean i mean
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the problems in the united states are the share whatever we call the what happens in portugal in only some of the country it's a similar problem in europe in the united states the governments are taking the bank losses on the balance sheet and adam smith said over two hundred years ago that no doubt remained as ever repaid it steps there's a natural tendency for debts to grow at compound interest in an obsolete but economies are growing in an s. curve and what makes the economy shrink is that more and more of the economic surplus is going into the financial sector normally a different kind of a recession is to wipe out the depth of the bankruptcy people lose the savings and then you begin with a lower debt but right now mr obama has broken his promise and not just the banks to write down the debts to mortgage debts to match the actual value of property so one quo. her of american real estate has a higher mortgage than the property is worth until we start quoting karl marx let's
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take a short break now just to remind of michael hudson is my guest on the show today a wall street financial analyst and professor spotlight will be back shortly after the break so stay with us. some.
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your is when you look for nuclear weapons you can still lots. in human blonde is measured in barrels. will brain is more than your body. many have new ideas. new. orleans.
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welcome back to spotlight i'll be loving just to remind you that my guest on the show today is michael hudson professor and wall street financial analyst michael well we've been discussing this situation and one of the first of all in the american economy and it looks like that the economic problems so far have. led to a run of popularity of right wing ideas he says will be the key points for one year and does that mean that the us left today is incapable of offering the society our free business any any breakthrough ideas ways of overcoming it certainly is capable in. the representative from ohio has often said however it doesn't get much of
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a hearing and the left is so confused by the fact that it's a democratic president obama that is leading the move to the right mr obama is known to the right of the republican party the tea party people such as michele bachmann voted against the bank bailouts the republicans voted against the bank bailouts this is a democratic program and the democrats are very much like tony blair's labor party in london moving to the right of margaret thatcher that's the irony of the labor party's and social democrats throughout the world are moving to the right of the old right wing parties and what you call the right or tea party which is backed by the billionaire koch brothers in america are actually using a populist rhetoric their job isn't really to get elected their job is to make sure that a crazy person is nominated for the president who everybody will think is so bad that they would vote as obama seeming to be the voice of reason and of course he's
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not the voice of reason he's an ultra right wing. pro wall street anti-democratic republican but how do you make him look as if he is a democrat you have somebody so bad that people will vote for him as the lesser alternative in reality people in america will vote with their backsides you can be sure that in this election but voter turnout will be way down compared to the last election. what is behind the you gov decision to do the things from the mistake they want to see to the banks responsible for the current economic situation is it because obama wants to demonstrate that he's serving the people not the only guy who will know there is a law in the united states a three year statute of limitations banks old hundreds of billions of dollars worth of fraudulent mortgages to fannie mae and freddie mae which were the federal government is guaranteed basically the bank of america citi bank j.p.
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morgan banks you should think of these as gangs that made their money off find it huge financial fraud and by financial fraud i mean the mortgages that they gave just like an england when they look at the property the property is only worth twenty two cents on the dollar in other words there was massive fraud no documentation loans fraudulent appraisals it is what my colleague professor bill black of kansas city calls a criminal genic environment with control for on and finally the financial sector in america the investors realize we can't let crooks write and all our money because the crooks are stealing our money the money of the rich for themselves and the idea is that the american banking you have a situation today when the american banks are not opening credit lines to europe or to other banks the banks in america believe that other banks are just as crooked as
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they are and if that's the case they're calling back all the credit on. the economy is falling apart and until under the savings and loan crisis in the 1980's two thousand bankers were sent to jail in america's case only one financial fraud is run to jail bernie made off and he walked into police headquarters with his hands up and thought i surrender there is been no prosecution of angelo mozilo of countrywide and the reason is they realize that the bank lobbyists have decriminalized crime the new york real say crime is part of the free market it's all how to get ahead and all of the sudden the pension funds and the others on wall street realize we've turned the economy over to crooks and we have to start but in the three year statute of limitations for hundreds of billions of dollars of fraud ran out so the banks are trying to legitimize and say fraud is us it's all legal it's all. our government is saying look when you have thirteen trillion
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dollars worth of bailouts remember they're saying that they have to cut back social security because in fifty years there will be a trillion dollar deficit but they've just given thirteen trillion to the banks for the fraudulent loans obviously this is a crazy situation and even the wall street people realize there has to be some limit on crime at least when it's against themselves all you said he increased banks are essential bankers dentists is it is something maybe also car mechanics i mean. these these for example. this is not the issue with of course banks are essential the bank depositors in america are insured by the federal deposit insurance corporation and it's manager said look we could have we we could have closed down citibank everybody's deposits would have been protected
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what was what would have been wiped out of citibank. chase and bank of america would have gone under would have been their gambles their casino capitalism their bets the wealthy would have lost the winners of the bets play called unfair wouldn't have been able to get trillions of dollars and bets that the economy would collapse but the real economy everybody's insurance would have been all right and she was in our third week we could close them down so they may see the banks big nothing will happen nobody's. business nothing has changed because of the major lobbyist do you think do you think you do you think europe can do the same do you think the e.u. confront to see it looks to me like the e.u. is being torn apart by the fact that angela merkel there are two models for europe one is the irish model where the european central bank told the irish government bail out the banks you can afford it and now they took so much of the bad irish
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bank that ireland is in a depression for ten years the other alternative iceland iceland so there's so much money we can't possibly play sue us we're not going to push ourselves into feudalism in order to help you become our new masters we fought off your dollars and so while europe take the icelandic route or the irish route. the fight now is suffering defeat to the new political decisions these days and it looks so far as if the peons first of all want to save the banks rather the jobs the standard of living do you agree the european people probably do not want the united states seventy four percent of them obviously don't think things are the politicians who are they going to follow the voters or their campaign contributors they they the campaign contributors financial interests make sure that the people
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who run for president are what in america we call us. it's people who really believe that they have to come first there's that mr obama is there for mrs merkel it's and it's a tragedy because of the debts and not be paid and there is a basic principle in economics a debt that can't be paid won't be so we know that that's what we paid and trying to pay and that beyond your means simply imposes that peonage on your population it's almost like feudalism and that's where europe and the u.s. economy are going and i hope that the russia and the other post soviet states like where we can avoid that. as you mentioned this interview russia and post soviet states were taught first of all by americans politicians and their experience these new liberal ideas. are fine no capitalism has shown its dark side to
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third world countries including the post soviet countries today he is showing it to the world's most developed countries this is it means that we witnessing the collapse of this new liberal consensus we're seeing the victory the victory of aneel liberal consensus is to impoverish the rest of the world by taking the entire surplus in the form of finance i'll give an example suppose you're a buying a house or a person the idea of a bank when you go to a bank to get a loan is how much does this person make how can we capitalize what he makes and make everything about subsistence pay to the bank for a loan a company in america. there will be a quote suppose you're a corporate raider and you want to buy a company you go to the bank and you bid against others and you end up saying how much is the company's profit and cash flow you are pledging all of the profit. to the bank as interest and then you will hope to come in and downsize and outsource
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and shrink the company and hope that you can come up with a capital gain just lay. in real estate if you're an investor in america people will bid for an office building or a house and they'll say how much is the rent the winner is the person who pledges all the rent to the bank is interest and then you hope that somehow the price can go up and then you keep the price goes up as lot long as the federal reserve will flood the economy with money and then you hope that somehow the price will go enough for you to pyro the interest from the bank every year that's what economists call a ponzi scheme now it's called a made off scheme because mr made off with much bigger but the idea is that the bank you're borrowing the interest from the bank and this is a bubble something the public was bursting and the question is who's going to pick up the pieces the wall street or will it be the economy and it looks like wall street and the very wealthy are. taking more and more of the national
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wealth in every country and the people are being left in poverty and the economy can only shrink under conditions like this if the next wave of the crisis will strike europe and this is probably the thing that russia will be in a better position than either you can choose because of this room into the or not i don't think any country in history has ever been in a good position by exporting raw materials because you don't need many people to dig a hole in the ground russia seems to have a lot of money yes the russian has a lot of money but it is all the money in the world today yes it would be a very good thing for it to use this money to to educate the population and to re industrialised i don't think russia has helped itself by the industrializing and becoming a raw materials export or americans call this being a year of wooden drawer of water that's what the bible said and so america is doing exactly the opposite of how america germany england france and japan all got rich
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ultimately the way to get rich is by adding value by. trying and with a skilled population and if you raise wages high wage labor is more productive labor it's better educated better housed russia is missing out on recycling that surplus to upgrade the population and that's very unfortunate it's missing an opportunity now is the time for it to take that opportunity thank you thank you very much for being with us in just a reminder that my guest on the show today was michael hudson professor wall street financial analyst and part time to get us love the economic political forms of staking out place. so that's it for now from the spotlight we'll be back with more comments on what's going on in and outside russia until then see him on c n n
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