06/03/09 – Greg Palast – The Scott Horton Show

All right, y'all, it's Anti-War Radio, Chaos 95.9 in Austin, Texas.
I'm Scott Horton.
Thanks for tuning in to the show today.
Our next guest is Greg Pallast.
He's a reporter for BBC Newsnight, and he's the author of The Best Democracy Money Can Buy and Armed Madhouse.
I think the new subtitle is From Baghdad to New Orleans, Sorted Secrets and Strange Tales of a White House Gone Wild.
Welcome to the show, Greg.
How are you doing?
Glad to be with you.
All right.
So I'm not sure exactly how to handle this.
I'm thinking in the context of this discussion, it's going to have to come up anyway.
So I might as well start with this.
I know you're a highly trained economist as well as a great reporter.
And I know you're familiar with the topic.
Seems to me that the entire economic crisis, with all the fraud and all the criminality and all the tricks used to tilt the playing field, that the primary cause of the boom and the bust crisis we suffer is a creation of new money by the fractional reserve central banking system in this country.
And isn't the inflationary effect of all this new paper money the root of all of this mess we're dealing with now?
No.
Sorry.
I mean, we're not having inflation, we're having deflation.
So we don't have inflation.
Well, I'm talking about the boom which preceded the bust, though.
This is what they call a correction to an artificial high, right, an inflationary bubble.
What we have going here is class war.
And it has many fronts.
One front is in Baghdad.
And another front is in Detroit.
And it is not a battle of the free world versus the Islamo-fascist Al-Qaeda nightmare.
It is the oil barons and the bankocracy taking it out on the rest of us.
And whether you're losing your job in Baghdad or you're losing your job in 8 Mile, you are the victim of the same little cabal of short-fingered vulgarians who cannot, who are not satisfied with billions because they want trillions.
Well, I don't think there's any question about that.
I mean, the story of your book, the story of the American empire, certainly of the last administration that we've dealt with, it's the combination of the private and the public power together in Washington, D.C. at war.
And as you say, against the people of Iraq, against the people of the United States.
Right.
I mean, in fact, I'll even have to, because of this, I now have to plug my new DVD, Palestine First Investigates, from 8 Mile to the Amazon, On Betrayal of Financial Marauders.
I'm mentioning that because I want you to go to GreatPolitics.com, you'll see a piece of mine that I did for BBC where I go to 8 Mile, which is the old M&M's old stomping grounds in Detroit.
And you see the effects of the Bush-Bama administration.
And what you see is, you are seeing the complete, deliberate, systematic takedown of an entire industrial heartland of America.
The whole purpose, you know, so I go back to something else.
You have to say that the war on General Motors, and when I say war on General Motors, I mean it's workers.
I don't care about the bondholders, and I'm one.
But the workers in the auto industry were under attack as part of Cheney's plan in those bunkers.
When Dick Cheney moved to raise the price of oil, and that was a deliberate program of Dick Cheney, which I wrote about in our Madhouse.
In fact, I go back to, I'm looking at page 302, where I talk about the General Motor dancing with the death's head of bankruptcy.
This is back, I wrote this in 05, based on the high price of oil.
That's what's killing us.
But what Cheney was more than happy to see, the oil industry and the airline industry die, because that destroys industrial power in America.
That destroys the labor union power.
It destroys the Democratic Party's political base, he hoped and fought, certainly undermined it.
So this is part of the program, the deliberate destruction of, there is much concern about controlling Michigan as Anbar province.
They're both occupied territories, they are both suffering grievous harm under the elite financial regime.
All right, well explain how this works.
If we accept your premise that if for no other reason than destroying Democratic political power and trying to maintain Republican power, there is this plan to de-industrialize America, how does it work?
Explain the mechanism to us.
Well, in fact, I don't want to make it too partisan.
Obviously Cheney has his partisan needs, but why the Obama administration?
And the answer is that this is not about really partisanship, that's in the mix, but it's secondary.
It's about elites versus working folk.
And the way it works is this, if you go back, first of all, to the oil spike, it wasn't just something that fell out of the sky.
From my investigation, and the internal documents I received from the Bush administration, is that Dick Cheney, and again, not George Bush, who seemed to be out of the loop at all times, but Dick Cheney had a program of protecting OPEC and making sure oil prices would be high.
He believed that this was, whether his intent was good or evil, that was his policy, as one of the top, Ed Morris, the top industry oil lobbyist, told me.
Now, I do want to mention that while the top oil industry lobbyists usually don't tell me what Dick Cheney is thinking, except he didn't realize I was recording him.
And has denied, by the way, for the record, this oil lobbyist that said I never spoke to him, but, you know, I do have the tape.
But, you know, we all have a document.
So you have a programmatic, a program of keeping oil prices high.
And by the way, we now talk about low oil prices.
Since when is $55 a barrel a low oil price?
Four years ago, $55 a barrel would have been considered international suicide.
And now, we've been punched in the face so many times that when we're getting kicked in the groin, we think that it's a relief.
I'm sorry, it's not.
I have a quote here, Greg, from George Bush.
At one point, he said, look, I understand gas prices are like a hidden tax, but not a hidden tax.
It's taking money out of people's pockets.
I know that.
But that really is the point.
That's the point you make in our madhouse, that all this money that the American people pay at the pump, quite a bit of it bounces off of Saudi Arabia and comes right back into buy American debt to pay for the war against Saudi Arabia's neighbor, Iraq.
For example.
Back in 2005, I said that the high price of oil was a tax on auto workers, on the American people and on auto workers, which runs through Saudi Arabia.
They suck it all up.
They crap it back out, and it's borrowed back.
If you look at the numbers, Saudi Arabia has actually returned more than 100 percent of the money they receive from the U.S. in oil funds.
More than 100 percent.
When we talk about money going out of Saudi Arabia, that's a return trip.
But to get it back, despite Islamic prohibitions on the collection of interest, these guys really like their pound of flesh, the sheikhs.
So to get the money back from Saudi Arabia and to get the money back from China, to get the money back from Japan, we've had to pay a massive increase in interest rates.
That's that inflation you're talking about, monetary manipulation.
Not so much even the printing of money as it is an economic financial system out of control, where we bleed out the money and then have to buy back our own U.S. dollars from the Saudis and the Chinese.
Now, what happened to General Motors is that their interest costs were less than half a billion dollars a year, quite sustainable.
It wasn't that they made cars that people don't like.
Actually, I looked it up today.
The number one selling car in America is a Ford.
The number two are the Chevy Silverados.
The Hondas are way down there and they're dropping like crazy.
So General Motors is making the cars that people buy in America.
I'm sorry.
They are doing that and they were selling enough.
The problem was that General Motors wasn't making money on the cars because they had two giant costs.
Cost one was a massive increase in interest payments from a half billion dollars a year, less than half a billion dollars, to two years ago, a 500% payout on interest to 2.5 billion a year.
Last year, I think, I hadn't looked, but it's at least double.
It's got to be at least $5 to $10 billion a year.
In other words, you're talking about a 1,000% increase in interest payments caused by this vicious cycle of having to borrow money, which weakens the company.
Then they have to pay a premium on their borrowing so the cost gets higher.
It was an endless loop.
It's not like the auto workers have been making more and more money because they've been making less and less money.
They've been giving back to keep their jobs.
Also, having the managers, even if we assume all the class war bad motives in the world, they've been living through and profiting from a car bubble where anybody who makes anything basically could get a car.
Just like in the housing bubble, people with low incomes have been driving around in really nice new cars all this time.
Now that reality's set in, they realize that that was an artificial high, that they can actually sell way fewer cars than they'd been planning on being able to sell around this time.
Definitely.
When you say a bubble, it depends what's the top and what's the bottom.
That is, General Motors was selling an awful lot of cars.
The problem was they were paying to make those cars.
They weren't paying so much to the auto workers because they don't pay any more than in Japan.
You remove health care benefits and it's basically Japanese workers get more per car.
But GM couldn't make any money because of the interest payment.
That's the problem.
Now then, when the Depression hits, people can't buy cars.
People can't buy cars.
Maybe the market was hypo before and there were excessive sales, but right now we clearly have depressed sales.
The result being that there's a depression across the industry and my problem is that while Cheney and Bush were like vultures, they didn't, as I said in my book, Cheney and Bush didn't sit there and say, oh great, the war in Iraq and high oil prices is going to kill the auto industry.
They're like vultures.
They're happy to wait and watch their prey die, which they watched and they sat on their hands and did nothing.
Whereas Obama is actively knifing the auto industry with that nice smile of his.
The Pope of Hope has a way of sticking the knife in and grinning.
What he has done is ordered basically the termination with prejudice of General Motors and the U.S. auto industry.
Don't kid yourself.
That's what his plan is right now.
That's exactly what they're doing.
Well, and that's your recent article on GregPowles.com.
Your recent blog entry there is about how they're making sure that the pension contracts are broken.
GM is using the power of the bankruptcy court or I'm not exactly clear, maybe the power of Obama's Supreme Executive Unitary Authority or something to violate all the contracts of the pensioners to guarantee that Citibank and JPMorgan Chase, which I love how that's one bank now and has been actually for a while now, to bail out all the guys who get to create as much money as they want out of nothing anyway.
They get 100% of their money while all the, as you say, the people who need a new spleen and whatever else get, I love this, this has got to be a punchline.
You must have been making this up.
Did they get promised worthless GM stock as their payoff for their stolen pension, Greg?
Say that ain't so.
Yeah, I wish I could.
To clue people in on the details, which are very important, what you don't see much of in the paper is that the plan proposed by, I was going to say the Bush administration, it's getting hard to tell the difference here, the Obama administration is that while in bankruptcy, usually everyone gets, gets bleed, take a haircut as they say.
Everyone bleeds.
But here there is one, two creditors.
There's a group of them, but they're led by JPMorgan Chase and by Citibank.
Those two creditors by the administration plan will get 100% of the $6 billion they're owed.
$6 billion they're owed.
100%.
And they would get it actually faster than if GM stayed in business.
They'd get paid in cash.
This is a company that can't pay its auto suppliers this week.
Yet they're supposed to fork out, according to Obama's boy, Stevie the Rat, Stephen Ratner, the car czar, that according to Stevie the Rat, GM should pay $6 billion cash to JPMorgan and Citibank.
If you want to know what the auto plan is about, it's clearly not about saving General Motors.
It's clearly not about saving General Motors workers.
It's clearly, look who gets the money, for all the money, it's clearly about JPMorgan and Citibank, who of course are the tarp babies who've sucked up something so far like a third of a trillion dollars in cash and guarantees.
So we know what the GM game is about.
It's about protecting, once again, protecting those banks.
The whole so-called anti-stimulus package, anti-recession plan, everything is aimed toward one thing, helping out those few privileged connected banks.
Now isn't that the case with the entire system since the Wilson era?
Wasn't it Frank Vanderlip from the National City Bank that wrote the Federal Reserve Act, Greg?
Isn't that what the whole point is, to be able to have the government be able to create as much money out of nothing, to bail out bad business decisions by the connected Wall Street bankers?
Well, the Federal Reserve is not a government agency.
It's an association of private banks.
Well, they've got police power, though.
Yeah, and they have this.
So you've got this weird amalgam of private banks and public authority, including the power of the U.S. currency printing press.
So you've got this weird beast.
The question is, the idea is that the beast is supposed to protect us, but like any other beast, that protects you.
Now be careful, Greg, because you're about to become a libertarian if you follow that logic.
Because, see, my position would be that the entire regulatory state was created by the Frank Vanderlips of the world to protect the richest businessmen from the simplest law of contract and supply and demand in the marketplace.
Well, I think that that's how it's worked.
It doesn't have to work that way, but that's how it has worked.
And I think that in the case of General Motors today, what you're seeing is there seems to be a lot of empathy for Citibank and J.P. Morgan getting 100 percent in cash immediately in this bankruptcy.
And the workers being told, and you have to understand, the workers are being told that they have to give up their retirement health benefits.
Now this is very important to understand.
This is normally an illegal act.
An illegal act.
That is, just like your pension plan, the 401K, when a corporation holds your pension, and your pension, by the way, includes payments for your future health care, if that's in your plan, that is your money.
They are simply fiduciaries.
They're like a bank.
You know, if Citibank's running short of money, they're actually not supposed to drill into your safe deposit box and suck out what's there.
Same with corporations like General Motors, GE, or any others.
They are holding pension money.
They're not supposed to drill in and suck out what are basically personal private accounts you've paid for out of your pay.
But that is happening here.
That is happening right now.
It is clearly against the law.
I know I'm going to get some of my union guys, and I have negotiated pension plans, and they're going to say, well, technically, they're not going to get arrested for the simple reason that if the union goes along with it, under U.S. law, you can actually violate the Pension Protection Act.
You can actually violate what's called ERISA, the Employee Retirement, whatever it's called.
It's what protects the pension plans of workers, and it's the law that prevents people from stealing pension money.
The presumption is, if your union says, go ahead and steal the money, they can do it.
I'm not blaming the union.
They're basically given the choice of the color of the shovel that will bury them.
They don't have, you know, they're not going to stand up to the Federal Reserve and Obama and Citibank, you know, House of Morgan.
I call Citibank House of Rubin after Robert Rubin.
You know, the union can't stand up to that stuff.
So they're saying, go ahead, steal away.
But you know what, I don't have to stand up and cheer and say, isn't it great that Obama's saving the auto industry, because he isn't.
He's not.
He's not saving the auto workers whatsoever.
And you know what, this is going to lengthen the depression absolutely 100%.
You cannot put another half million people out of work, which is what this plan will do, and get out of this depression.
When I was in 8 Mile and go to Palace Investigates, www.
GregPalace.com, and see part of this film, I'm with a member of the United Auto Workers, Robert Pratt, is about to lose his house to one of these scummy subprime loan deals he had with Countrywide Bank of America.
He's taking me down the street, says, see that house over there?
Foreclosed.
See that house over there?
Foreclosed.
See that house over there?
Foreclosed.
Yeah, well, and Detroit's been ahead of the curve, ahead of the rest of the country in their collapse.
I mean, I think that's probably a portent of where we're headed, because I don't think this depression's over by a long shot either.
Think of it as the testing ground.
Just like New Orleans was the testing ground for destruction of a city and taking apart a city, Detroit is the testing ground for, can the banks steal absolutely everything and no one says a word?
Now, you have to look at what's happening.
The Obama plan for General Motors will absolutely, completely demolish the city of Detroit, and they've bought off the mayor by saying that they won't move their headquarters, the GM, out of Detroit.
So he has to be silent, because otherwise he loses what's called, jokingly enough, Renaissance Center, which if he loses that, there ain't no Detroit.
So they bought him off.
But Detroit's destroyed.
Eight mile of that neighborhood, you can kiss that thing goodbye.
Robert Pratt, who has five kids, is planning to live in his car, okay?
That's great.
At least it'll be a General Motors car.
And, you know, maybe that's what we should do for all the foreclosed families.
Let me ask something, because I think you're right that the most powerful people obviously use as much economic power as they have and obviously as much state power as they have to protect themselves at the rest of our expense.
But it seems to me like there's a major miscalculation here, which is pretty obvious, isn't it?
That you can only fire so many Americans and still have enough Americans left around to buy your crap to keep you rich.
And it seems to me like this is where we get back to the question of exporting our inflationary dollars to the world.
And, you know, as Ron Paul often says, why work when we can print money and buy stuff from the rest of the world with artificially cheap money and exploit them by exporting all our inflation to them?
This is what has, it's not just that there's been some kind of hands-off, laissez-faire policy in terms of trade.
The U.S. government has, by various ways, been subsidizing the hell out of offshoring companies from this country to places where labor is cheaper.
In fact, I mean, hell, they're protected on the seas by the Navy and they got the FOIC, I think it's called, insurance to bail them out if they lose any overseas investments and on and on like that, right?
Well, yes, but some of your statement was a bit 20th century, Scott, by saying that if Americans won't have enough to buy our products, we don't have any products.
And that's when we are de-industrialized.
We're in the business of, like you say, America's gone from the business of making things to printing money.
And now what they're hoping is that China, stuck with $2 trillion in U.S. currency, $2 trillion, okay, is going to say, well, we can say we don't want any more of this crap.
Or they're going to say, if we stop taking this crap, then musical chairs and the $2 trillion we have will be seen for what it is.
You know, green toilet paper.
And so, therefore, we're hoping that the rest of the world is, basically, the rest of the world is holding what we call currency, as you would say, and your listeners are sophisticated enough to know that they're not, that what we call currency is really a promissory note.
It's really a debt.
It's a Federal Reserve note.
Basically, these are promissory notes, debts from the U.S. Federal Reserve.
The rest of the nation, you know, it's the old game when we owe these people.
When, you know, if you owe someone, you know, $10,000, you're in trouble.
If you owe someone a million dollars, they're in trouble.
We owe, through these Federal Reserve notes, we owe China $2 trillion.
Well, that's what's keeping it propped up as it is right now, in spite of all the new money that Bernanke's creating.
Everybody else has a crappy currency, too, and ours is still the Reserve Standard.
And if they admit, and in fact, you talk about this in your book, how the Chinese are revaluing the currency, and basically admitting that the American dollars devalued, if they go too far like that, then, as you say, they hurt themselves.
It's like a murder-suicide thing at that point.
They have to continue playing the game at this point.
Oh, yeah.
They're bought in completely.
But at some point, regardless of all the mirrors and string and Geithner going and negotiating in Hong Kong and all these things, at some point, the dollar is simply worthless.
You can only create so many of these things, and that's just reality like things falling from the sky, you know?
Well, I mean, we've hardly hit the limit of what we can create, but the problem is that as they're stuffing more money into the system, it's not having the effect that they need that they claim to want to have on employment.
But if you have an industrial policy which is deliberately shutting down your major manufacturing and you have no plan for stopping foreclosures except some bogus program that no one can participate in, and if you're so-called saving the auto industry by closing seven plants in Michigan alone and closing 6,000 dealerships in America, exactly what does, by the way, Mr. Obama expect these 52-year-old auto salesmen to be working?
And so, you know, if that's your program, you know that you're going to end up with massive, permanent destruction of the working class.
Now, they may not care.
They may say, well, I'll work for Walmart.
We'll all go down to minimum wage.
None of us will have health care pension benefits.
You know, this is the end of the private, this is the end of the industrial pension.
It's the end of industrial health insurance.
I'm not sure that they mind that whatsoever, and that's why I think if they put in charge of the car, the destruction of the auto industry, Stevie the Rat, who is, you know, himself worth about literally, personally worth about half a billion dollars.
And so they got one of the rulers to make sure that this industry will never come back from the grave.
Well, you know, this all reminds me, and it has reminded me over the years during the height of the bubble, I was always reminded of the Onion headline that the top half of 1% complete construction of their private escape pod.
And it has always seemed like these guys, they understand that empire is murder-suicide and they know that they've driven America off the end of the cliff.
And they figure just go ahead and inflate the biggest bubble they possibly can and still every last bit, liquidate every last resource and just pile up as much personal Maserati and mansion money as they could before the whole thing goes to hell.
Is that basically it?
They've known just how close to the edge they've been skating and now they're just sticking it to us.
This is just the comeuppance.
Let's see if we can use a phrase.
Can I coin a phrase here?
Let's try this out.
Maybe you have a better one.
Brazilianification.
Oh no!
Which is basically...
Didn't they have like a fascist dictator with a general shirt on like a Ted Roll cartoon of George Bush?
You know, when I was in Sao Paulo, Brazil, you had these, everyone I knew that had any money at all, lived in high, Brazil, Sao Paulo is about three times the size of New York, and it had these giant skyscrapers all over the city where people live under armed guard.
It's a city under siege where you have a half a million people living in high rises and then you have 10 million others, 15 million others living in, many of them in favelas, you know, just like cardboard shacks.
And it's like an ocean in which these towers are islands.
And as the economy is split, it is one of the most unequal nations on the planet.
We are heading in the Brazil direction.
And I think it's encapsulated in Stevie the Rat, who is just now completing his own escape pod.
He's now finishing a 15 million dollar mansion on Martha's Vineyard.
So that when Detroit goes under, he's not going to live in 8 Mile.
You know, my guy Robert Pratt, as you'll see in the film in Palace Investigates, talks about how he had six children, but his 12 year old boy was hit by a stray bullet and killed in his backyard.
I don't think that a Martha's Vineyard and his new 15 million dollar house, Stevie the Rat, is going to worry about that.
It's not his concern.
So he'll be on Martha's Vineyard.
Bill Clinton will be on Martha's Vineyard.
And, you know, Obama will be playing basketball in Hyde Park.
And sending his daughters to private schools.
Private schools, you know.
I mean, I always remember the year.
We're out of time.
I'm sorry.
I've got to cut you loose.
Everybody, that's Greg Palast.
Again, the new film is Greg Palast Reports.
The website is gregpalast.com.
And the book is Armed Madhouse, From Baghdad to New Orleans.
Sorted Secrets and Strange Tales of a White House Gone Wild.
Thanks very much for your time on the show today.
Gotcha, bye.