Truthdig Radio: Keep McChrystal Retired

Posted on Apr 13, 2011

Photo illustration from an image by Colin Grey

Truthdig Radio airs every Wednesday at 2 p.m. in Los Angeles on 90.7 KPFK. If you can’t listen live, starting on Wednesday nights look for the podcast and transcript of each week’s show right here on Truthdig.

Mr. Fish survives a MoveOn house party, Sandra Postel solves the water crisis, Daniel Denvir and James Harris take stock of segregation, Narda Zacchino puts Gen. Stanley McChrystal in the dustbin of history, and Nomi Prins and Robert Scheer digest President Obama’s speech.

Click to listen to the show, or continue reading the full transcript below.

Full Transcript:

Peter Scheer: Welcome to Truthdig Radio, bringing you the best interviews, culture and commentary from Truthdig.com, nominated this week for a Webby Award, and KPFK. On this week’s show, Mr. Fish survives a MoveOn house party; Sandra Postel solves the water crisis; Daniel Denvir and James Harris take stock of segregation; and Narda Zacchino puts Gen. Stanley McChrystal in the dustbin of history.

But first: President Obama gave a speech today detailing his philosophical differences with Republicans on the deficit. It’s been described as a partisan break with Obama’s usual above-the-fray approach. Robert Scheer is not so sure. Joining Bob to talk about it is Nomi Prins, author of “It Takes a Pillage: Behind the Bailouts, Bonuses and Backroom Deals From Washington to Wall Street,” and proprietor of NomiPrins.com. Welcome.

Robert Scheer: Hi.

Nomi Prins: Hello.

Robert Scheer: So, Nomi, you’re there. How are you? Where are you?

Nomi Prins: [Laughs] I am good. I’m actually in L.A. for a minute.

Robert Scheer: Oh, good. Listen, you’ve written—you worked at Goldman Sachs, you’ve written some of the best stuff on these pirates on Wall Street. And one thing that disappointed me about Obama’s speech—actually has disappointed me about his whole performance—is that he keeps acting as if our problems have … because we have Social Security, we have Medicare, we have this, we have that. But the crisis that we’re experiencing was engineered, was conducted, and was profitable on Wall Street. And that’s what’s really put us in a hole. And as someone who’s written about that, covered that, do you feel it’s sort of left out of the debate?

Nomi Prins: I am so glad you’re bringing that up as the real hole, because it is—it has been astonishing to me that they haven’t centered upon all the factors that have contributed to the entire discussion about the debt, and the entire increase in the deficit, and everything else. Wall Street careened out of control. The lack of control on Wall Street created a financial crisis that Washington paid attention to by creating and lending trillions of dollars to benefit the banking system, none of which trickled down to benefit the rest of Main Street, except for a stimulus package that was really a small part of everything that came out of Washington to benefit the banking system—which hasn’t changed, which isn’t, obviously, remorseful, which is systemically at risk and continues to be at risk to the rest of us, and which is showing record profits again, and whose bonuses are increasing again, as if absolutely nothing happened. Only now, they are being floated on trillions and trillions of dollars, which is the exact reason why there’s a debate about the budget and about debt. But it isn’t anything that’s being included in the conversation about it in Washington.

Robert Scheer: Yeah, I think it’s the big lie, really. I mean, you know, whatever the problems are with Social Security—which I think is largely a phony, you know … the adjustments that can be made to it won’t go crashing in the year ’47 or something; and Medicare is basically about controlling health care costs, it’s not about dismantling a very successful program. But the reason we’re in a bind, the reason we’re arguing about schoolteacher pensions and cutting Medicare and things like that, is because we’re in an economic crisis. We don’t have the jobs, we don’t have the tax revenue. And yet The New York Times reports that the quarterly profits, the fourth quarter last year, had the biggest jump in 60 years. The benefits for the CEOs of the top 200 companies is a median of 9 million bucks a year per person. So there’s two lies to this thing that really bother me, and I don’t want to force this view on you, but I’ll tell you the way I see it, and then you can comment. One is that these companies have paid back the TARP money, and there’s a very good article in The Wall Street Journal last week by three members of the congressional Oversight Committee pointing out that’s garbage. What happened was, they didn’t like the money they got from TARP because it actually had some restraints on what they could pay themselves. So what they did is they took the other trillions of dollars, the $1.1 trillion that the Fed used to buy these toxic assets and take them off their books, the $2 trillion that was made available to them at low interest payments, the almost $400 billion used to bail out Fannie Mae and Freddie Mac, which then allowed the banks to have this threshold. And that money allowed them to, so-called, “pay back” the TARP. So that’s a phony, that it didn’t cost; it has cost us at least $4 trillion. It also wiped out $5.5 trillion of home equity. It has put 40 to 50 million people out of their homes. The consequences are enormous. So the idea that they somehow paid back the money, and [Treasury Secretary Tim] Geithner says this is the best program he’s seen in modern times—that’s a big lie. But the other, even bigger lie is this liquidity trap that Paul Volcker talks about. That we have to give them cuts, we have to give them money, we can’t frighten them or they won’t create jobs. Well, the fact is they have all this money now and they’re sitting on it. They’re not creating jobs. So the idea of throwing even more money at them, it seems to me, is absurd.

Nomi Prins: Well, I absolutely agree with you. In fact, the profit aside, the taxes that the corporations have paid in general, were in 2009 at their lowest level historically, at 6.6 percent of total receipts that are coming in to Washington; they’re 8.9 percent of total receipts coming in to the Treasury as of last year, and it’s not clear they’re going to be very much more. So in general, anyone who is not benefiting directly by running or profiting as a corporation or being at the head of a corporation is footing 90 percent of the bill, 41 percent of which actually is money going into Social Security and retirement and Medicare and everything else. So this is actually … being funded, so the idea of even focusing on that as a problem, relative to the larger problem of all the float that has been given to corporations and banks, is completely misdirected. The fact that Tim Geithner continues to gloat on about the success of—and he only talks about the TARP program, he doesn’t talk about the trillions of dollars besides the TARP program that have been on offer to banks—is actually criminal. He created, under his Treasury, $4.1 trillion worth of Treasury debt was created. That debt was not created, and did not get used, by the general population; that debt was created to give liquidity, to give low-cost funding to the banking system; the banking system used that. So yes, paying back TARP out of cheap money that has made other people in the country, the majority of the country, indebted is not a successful program. It’s an evil program. It’s a criminal program. And that’s the program that Tim Geithner has been running, and obviously not just by himself, with the Fed which has taken on the role of buying some of that debt to cause it to appear as if it’s more—and it’s funny to talk about debt as being more valuable, but that the debt is more valuable because the Fed is buying it. So there’s this complete shell game going on between the banks and the Fed and the Treasury Department, which is a multitrillion dollar shell game, and the debate in Washington, and the conversation that Obama is having today about annual cuts, amounts to a fraction of a trickle of anything remotely near that amount of money. And so the debate’s wrong; the actions were criminal; and the fact that there is such a low cost to financing, the fact that the Fed is buying treasuries, or the Treasury Department is creating debt, is exactly why corporations can have profits. That’s why banks can have profits—they are getting money for nothing. And when you get money for nothing, you can look pretty stellar when you turn around and use it, particularly if you don’t have to use it and there are no strings attached as to how you use it.

Robert Scheer: You know, it’s interesting. People have trouble following this stuff, but this idea that they get money for nothing—or at very, very low cost; that they’re bailed out, and particularly these banks … then you have the homeowners. Nothing has been done to help them with their mortgages in any serious way. We’ve had now … as of the end of next year, there will be 10 million homes lost. And yet, if you are trying to struggle to hang on to your home, and you use your credit cards to help you make some of your payment and put food on the table because you’ve lost your job or you’re strapped—you miss a couple of payments, from the very banks that we bailed out, the Bank of America, CapitalOne, any of them—they will up your interest rate to, what, 25, 27 percent! Which, you know, biblical literature, whether it’s the Quran or Hebraic or Christian, would condemn as usurious, against God’s law, obviously evil. And so here you have this weird situation in which the banks get money for next to nothing from the Fed, and then if you miss a couple of payments you’re going to be paying 27 percent on it. And the media doesn’t comment on it; it’s not part of the discussion. Is that because Wall Street basically sets the agenda?

Nomi Prins: Ah, the media itself, the mainstream media, gets bogged down by Wall Street’s agenda, by the Treasury Department’s agenda, by the Fed’s agenda. I think they all have the same agenda, which is to act as if this financial crisis happened randomly—or perhaps because some people couldn’t pay for their homes, which crashed the housing markets, which crashed the banks, which is completely the opposite of what actually happened—you know, the banks extorted high levels on homes and extorted high rates and changing rates on loans and packaged them and repackaged them, and when that all failed, they came to the government for money. But … the whole story has been spun around, and there’s a reason that the Fed and the Treasury Department, and therefore the administration and much of Congress and Wall Street are on the same side. Aside from the fact that Wall Street lobbies and pays for campaign contributions and everything else, they’re all in the same game. They all have a vested interest in perpetuating the illusion that everything was bad and now everything is good, and they all did the right thing. And the media gets stuck in this, because that’s the material that they’re fed, that’s the material that they choose to take at face value for the most part. And the debate about things like money coming in for nothing and being lent out at personal or even small business interest rates of 10 to 15 percent, 30 percent on some credit cards, is not really even a part of the equation, when it’s really simple math. The Fed and the Treasury Department created cheap money; they created a fabric, a bailout fabric for the banks; the banks take that money, they trade with it, they speculate with it, they lend it out, but whatever they do they’re doing for no risk, because they have the support of this entire network in Washington. So it’s really a collusive shading of the truth. And today’s discussion about debt that, you know, came out of Obama was just kind of perpetuating a lot of that same illusion by not really mentioning it, perpetuating by ignoring it.

Robert Scheer: This is Robert Scheer talking to Nomi Prins. And let me just say I really love your perspective, because you were inside the devil’s temple. You were at Goldman Sachs; you know these people; you’ve seen them up close. And, you know, how do they sleep at night? How do these people, some of them, they claim to be—even liberal; they claim to be Democrats, like Robert Rubin; you know, they claim to care about art and people and they even give to some charities. Don’t they know what thieves they’ve been? Don’t they know of the hurt that they’ve—I mean, what do you think they’re saying to each other? Do you think they even think about it?

Nomi Prins: I think [Laughs]—it’s sort of a phrase Charlie Sheen has recently coined—I think as long as they’re winning, as long as they feel that if there was a crisis, whether by their own making or not, it’s not worth really examining, what’s worse, it is to get out and make money and move on and continue business as usual. And that’s a game; it’s a game of power, it’s a game of influence, it’s a game that’s worked for people inside. I mean, Robert Rubin doesn’t feel to this day—and you’ve written about this—that he has had anything to do with any of the calamity that’s been caused by the blurring of lines on Wall Street, and the immense power that the sheer landscape of Wall Street has net of the individuals that run these companies. And when you select your truth [Laughs], you don’t think about the consequences, unless they affect you personally, unless they ruin your company, unless they affect your own money or own bottom line; then you think about it, then you worry about it. But as long as—you know, there’s a sense inside that, you know, you’re navigating, you’re always kind of trying to …

Robert Scheer: Yeah. And it’s good that we have you to cut through this. We’ve run out of time, Nomi, but I want to thank you for being on. And I want to remind listeners: the top 1 percent of people in this country, as professor [Joseph E.] Stiglitz pointed out last week, control 40 percent of the wealth. Keep that statistic in the mind when you hear the president’s sweet words. Thank you, Nomi, and this is Truthdig Radio.

Nomi Prins: Thank you.

Peter Scheer: Nomi Prins is the author of “It Takes a Pillage.” More info at NomiPrins.com. Robert Scheer is the author of “The Great American Stickup.”

 

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