Tuesday, November 24, 2009

US Have Been HoodWinked? Secrets of the Empire Revealed

Remember those Congressional hearings with Alan Greenspan speaking in subhuman tones and commentators acting bewildered later as they tried to parse his encantations? I do. I also remember thinking that anyone acting like he had must be trying to hide something. And he certainly looked like the creepiest magician I had ever seen.

Even the faith of snake handlers is not as devout as Greenspan’s. Unfortunately, however, he was able to hitch our nation’s economic well-being to his own absurdist ideological fancy. The guy who was lionized as the smartest, most- stable economic thinker in the land essentially turns out to have been a quasi-religious nut. . . .

WILLIAM BLACK : But the bigger part of the problem, in many ways, is that they have such an ideology about the market and its ability to deal with all problems that has no basis in reality, has been exposed in this crisis as completely fictional, and yet they can’t give it up. I mean, think of yourself as one of these professors who’s been trained in the Milton Friedmanish views, and you’re in your fifties, and you’ve been saying — you know, everything you’ve said in your career is wrong. Everything you’ve learned in your career is wrong. All of your areas of expertise are wrong. Are you going to admit that? “Hi, I’ve been misleading you, and I’m sorry I caused this disaster. And by the way, I have no meaningful skills or experience.”

I had a friend tell me back in 2002 that he found out Wall street was a bunch of people that took undergraduate liberal arts and then got an MBA after their family connections put them in jobs there. The meat of a business education is in undergraduate work. Kind of like making a peanut butter sandwich without the bread.

The government would immediately outlaw it, but what the people of the US should do is sell their stocks, take the check to the bank and get the cash. Force these banks to deliver the cash, which they can’t do. You have no idea the rampage I have been on for a year over the fact these banks weren’t closed and that their insolvency was covered up. This thing was allowed to fester because Citi was broke. There is no telling what went on between AIG and its counterparties, but it clearly wasn’t the actions of an insurer. That branch of AIG should have been taken out of the conglomerate and put into bankruptcy. Goldman stuffs $1 million an employee in their pockets while the rest of us get the bill. I did simple math on GE the other day and it is clear that despite actions to keep them solvent, they had repurchased a sizable percentage of the corporate stock during the past year. The proportion of the per shares isn’t even close. I have been telling people for years the stock market is a pool of fraud and Wall Street/Ivy League misinformation and people in general have been too interested in making an easy buck than realizing they are getting scalped.

In How the Servant Became a Predator, one of our best economists who happens also to be a famous regulator (who was instrumental in bringing the Savings and Loan fiasco of the 80's to a decent, public-serving conclusion), William K. Black, banishes the mist that clings to the idea of the free market as he "explains how the finance economy preys on the real economy instead of serving it. He shows how both have become dysfunctional and warns that we must not neglect the real economy — the source of our jobs, our incomes, and the creator of goods and services — as we focus on financial reform."

What exactly is the function of the financial sector in our society? Simply this: Its sole function is supplying capital efficiently to aid the real economy. The financial sector is a tool to help those that make real tools, not an end in itself. But five fatal flaws in the financial sector’s current structure have created a monster that drains the real economy, promotes fraud and corruption, threatens democracy, and causes recurrent, intensifying crises.
Read on please for the best economic/financial insight in our times. When Amy Goodman interviewed John Perkins, the present day come-to-Jesus former "Economic Hit Man" about his new book Hoodwinked: An Economic Hit Man Reveals Why the World Financial Markets Imploded — and What We Need to Do to Remake Them, he lays out the scenario that our wealthy industrialist friends (now all located overseas - where the money drowns them in a gusher of cheap labor) used to lead us to our own come-to-Jesus moment. Or should that be "Jebus?" (And how long do you think it took a smart guy like Obama to see the light here?) (I've also wondered for a very long time how long it will take them to announce that Social Security has been black-opped?) (Emphasis marks added - Ed.)

Welcome, John. Well, for starters, though we’ve discussed this before, what exactly does an “economic hit man” mean?

JOHN PERKINS: Well, Amy, I think it’s fair to say that we economic hit men have managed to create the world’s first truly global empire. And it’s basically a secret empire.

We do it in many ways, but principally, we identify a country that has resources that corporations covet, like oil, arrange a huge loan to that country from the World Bank or one of its sisters. The money never actually goes to the country; it goes to our own corporations to build the infrastructure projects in that country that help a few very wealthy people, but don’t benefit the majority of the people, who are too poor to buy electricity or have cars to drive on the highways. And yet, they’re left holding a huge debt that they can’t repay.

So we go back at some point and say, “You know, you can’t pay your debts. Give us a pound of flesh. Sell your oil real cheap to our oil companies. Vote with us on the next critical UN vote. Allow us to build a military base in your backyard.” Something along these lines.

And when we fail — as I talk in my books, I failed with Jaime Roldos, president of Ecuador, Omar Torrijos of Panama — the Jackals go in and either overthrow or assassinate these leaders. And if the Jackals fail, as they did in Iraq, then we send in the military.

AMY GOODMAN: And what personal experience do you have to prove this?

JOHN PERKINS: Well, I was there. You know, I was with Jaime Roldos in Ecuador. I was the guy — one of the guys who was supposed to corrupt him, bring him around, and Omar Torrijos of Panama and many others. When I failed with those two gentlemen, the Jackals went in and assassinated both of them. And I was there; I was in those front lines. My official title was chief economist of Charles T. Main. I had about three dozen employees working for me and did this for ten years, and finally saw the light.

But I think what’s — you know, what’s really important about all this is that in this period of time, since the 1970s, and really beginning very strongly in the 1980s, we’ve created what I consider a mutant, viral form of capitalism. Earlier on the program, you showed the statistics of 37 percent of the people in the survey not believing that capitalism is working. I don’t think the failure is capitalism. I think it’s the specific kind of capitalism that we’ve developed in the last thirty or forty years, particularly beginning with the time of Reagan and Milton Friedman’s economic theories, which stress that the only goal of business is to maximize profit, regardless of the social and environmental costs, and not to regulate businesses at all—regulation is bad, all forms—and to privatize everything, so that everything is run by private business. And this mutant form of capitalism, which I think is really a predatory form of capitalism, has created an extremely unstable, unsustainable, unjust and very, very dangerous world.

AMY GOODMAN: You talk about the robber barons, the modern day robber barons. Who do you mean?

JOHN PERKINS: So many of them. You know, we’ve seen them recently on Wall Street, the people from Goldman Sachs and Citigroup and so many other organizations, people like Jack Welch, who is a former CEO of General Electric. And as I lecture at business schools and MBA programs, Jack Welch is often held up as this idol. Jack Welch laid off a quarter of GE’s employees. You know, he said he was making the company meaner and leaner—he certainly was making it meaner—gave himself huge raises and bonuses at the same time, turned General Electric essentially from a manufacturing company into a financial services company, which really was one of the leaders in taking us down this course today that we’re on of a failed economic system.

And we truly have a failed economic system at this point. It’s deep. You know, one of the reasons I wrote Hoodwinked is because I saw a lot of books coming out that deal with what I consider triage. What do you do with AIG? What do you do with General Electric? What do you do about the immediate problems with Wall Street? But the problem is much, much deeper. There’s a cancer beneath all that. And this is this very basics of our current economic system. And we must delve down and root out that cancer and move into something much better.

I have a two-year-old grandson. And as I look at this baby, you know, I think, what’s this world going to look like in six decades, when he’s my age? If we stay the course, it will be horrible. But we have this opportunity now, and I think this economic turmoil that we’re in today is teaching us that we must change. We have a failed system. We must create something better. And we must realize that my grandson can’t possibly hope to inherit a sustainable, just and peaceful world, unless every child growing up in Ethiopia and in Bolivia and in Indonesia and in Israel and Palestine has that same expectation. Everybody is listening to For the first time in history, we’re really living on a very, very tiny, highly integrated planet, and we’re all communicating with each other.Democracy Now! all around the world. We’re all talking on the cell phone and by internet. We really get it. We’re a very, very small community, and we need to recognize that.

AMY GOODMAN: John Perkins, you have an interesting theory about what happened in Honduras, the coup that just took place there. What do you think?

JOHN PERKINS: Well, I don’t think it’s a theory. You know, I think it’s—I was in Panama at the time that the coup took place. And, you know, the democratic—


JOHN PERKINS: Yeah. The democratically elected president, Zelaya, had called for a new constitution to replace the old one that was really set up by the oligarchy in favor of the very, very, very wealthy and the international companies. He also called for a 60 percent increase in the bottom wage rate, which had a huge impact on Dole and Chiquita, two of the biggest employers in that company. They, along with a number of companies that have sweatshops in Honduras, strongly objected, very much the same way that they had objected to Aristide in Haiti, when he did something similar, and called in the military. The general in charge of the military was a graduate of our School of the Americas, this, you know, school that’s famous for creating dictators, and they overthrew Zelaya. It was a classic CIA-sponsored type of coup, very similar to what United Fruit had done in Guatemala in the early ’50s. And, of course, United Fruit became Chiquita.

So you had this—you know, this strong relationship and got rid of this democratically elected president, because he was drawing a line in the sand. We had seen ten countries in Latin America bring in new presidents who are instituting very significant reforms in favor of the people, in favor of using local resources to help the people pull themselves up by the bootstraps, and I think the corporatocracy decided to draw a line in the sand in Honduras.

AMY GOODMAN: Iran and the swirling clouds?

JOHN PERKINS: You know, I think Iran today — Iran is this example of where we went in and overthrew a democratically elected president, Mosaddeq, in the early ’50s, and we’ve seen terrible blowback from that ever since. It’s, you know, not only in Iran, but it impacted the whole Middle East. If we had supported that president, who simply wanted to use more of his oil money, his country’s oil money, to help the poor people—we strongly objected. We overthrew him in a coup and replaced him with the Shah. So we’ve seen the blowback that comes out of that. And this has led to this situation that we’re in today.

And the swirling clouds, to me, are the big corporations. So, in the past, you had roughly 200 countries on the planet, which a few had a lot of power — the United Kingdom, the Soviet Union, the United States. But today the geopolitics might better be envisioned as the same roughly 200 countries with these huge swirling clouds that are the big corporations. And they are really calling the shots all over the planet. They know no national boundaries. They don’t listen to any specific set of laws. They strike deals with the Chinese and the Taiwanese and the Tibetans and the Israelis and the Arab nations. Whoever has the markets or the resources, they cut deal with — deals with. And as we’ve seen in our most recent election here in the United States, we bring in a president who is very diametrically different from the former president, and yet the corporations are still calling the shots.

Which takes us back, Amy, to the fact that we, the people, must create the change. This has always been the case. And this is a clarion call for us at this point now in history, that we must get out there. We’ve got to get behind Obama and all the other politicians. We’ve got to force the corporations to change their goal, get away from this goal of maximizing profits regardless of social and environmental costs, and instead say, “Yeah, it’s OK. Make profits, but only within a context of creating a sustainable, just and peaceful world,” only within the context of creating a world that my grandson will want to inherit, and that means every child on the planet will want to inherit it, because I think it’s really important that we understand today we cannot have homeland security unless we understand that the whole planet is our homeland. Our homeland is now no longer defined by the Rio Grande and the Canadian border. It is — we are one — one human species living on a very fragile planet.

AMY GOODMAN: What is the burden of the melting glaciers?

JOHN PERKINS: The melting—you know, I was in Tibet a couple of years ago, and I stood there with these nomads and looked at this glacier that had been down at the road a decade or so before, now it’s way back a mile away. And these glaciers up in the Himalayas feed the five largest rivers in the world. They provide water to China and to India. And as these glaciers melt, the water is drying up. The glaciers are melting because of global warming, because of us. And what we have to understand is the huge consequences. If these five rivers no longer can feed water to the Chinese and the Indians, these people are going to die of thirst. And before they die of thirst, they’ll become very rebellious.

We have to understand that one of the root causes of terrorism — I don’t even like the word “terrorism,” because I don’t think it really is — it’s a whole bunch of diverse groups all over the world. But in every—practically every case, it results from starvation, from desperation. I’ve met a lot of terrorists. I’ve interviewed them for books. I’ve never met one who wanted to be a terrorist. These are farmers who have been driven off their farmlands by oil companies or hydroelectric projects, or they’re fishermen, like the Somali pirates, who can no longer make a living fishing, because their waters have been fished dry or destroyed by nuclear waste from US military vessels. I have not met anyone who wanted to be a terrorist. They’re desperate people. If we want to get rid of terrorism, we must get rid of the root causes, that cancer that is destroying our whole system.

AMY GOODMAN: The new rules you propose for business and government?

JOHN PERKINS: Well, you know, we all know that getting rid of the rules that protected us from another recession has helped to bring on this current recession, you know, things like Glass-Steagall and the banking laws and so forth. We need to implement a lot of those again.

But I think we also need another whole new set of laws that says businesses must be — look at being environmentally and socially responsible. For a hundred years after United States became the United States, no corporation was allowed to get a charter unless it could prove that it served the public interest. And charters came up for renewal every ten years or so. They didn’t get a renewal unless they could prove they served the public interest. That all changed with a Supreme Court ruling that made corporations equivalent to individuals in the late 1880s, and then John D. Rockefeller stepped in and really took things—made things go out of hand.

But we need to go back to an understanding that corporations are there to serve us. When I went to business school, I was taught that a good CEO takes care of the long-term interests of the corporation—the employees, the customers, the general economy—not just there to make short-term profits. And we really need to get back to that, to an understanding. I think we need laws and rules that say that corporations must be aiming toward creating a sustainable and just and peaceful world. We simply have to do that. These are our main controlling organizations today, and they must be answerable to what’s best in the public interest, not just the interests of a few very wealthy, powerful people.

But we've known this.

The question is where is the leadership to act on this knowledge on our behalf?

Thank you "R" and "T" for your generosity at this very tough time of year.

Suzan _____________________


TomCat said...

My economics education is only one year of undergraduate work, bit even fifteen years ago, that was enough to tell me we were in trouble. I wrote my final essay on how corporations create pseudo-profit by privitizing profit, but externalalizing cost. Socialiam for the rich has buried the rest of us.

Suzan said...

You got it, baby.

Pretty good for one year of undergrad work!

I have to admit that I was predicting this during my grad work in the early 80's as I wrote about what the Raygun had wrought - my profs were open-mouthed then in wonderment. I couldn't believe how naive the so-called educated class was, but, cross their palms with silver . . . .

Thanks for the comment!


darkblack said...

'I couldn't believe how naive the so-called educated class was, but, cross their palms with silver...'

Upton Sinclair said it best.

Although public awareness on a broadly scaled level came too late to head off Babylon's collapse, I am thankful for the hubristically egregious stupidities of the Wall Street predators that made it impossible for any but the intellectually bedridden to not notice that a perilous game was afoot and farther along than most knew.


Suzan said...

Thank you so much for the Sinclair (who passed into eternity's pantheon of heroes two days after my birthday) reference, DB.

There should be book clubs organized today for the sole purpose of reading his books (which is desperately needed for simple intellectual self defense in this whacko climate of hysterical hype over the triumph of "capitalism" and Neocon nonthink).

He founded California's chapter of the American Civil Liberties Union and ran for rep for Congress, Senator and eventually on an End Poverty campaign for Governor - imagine how far CA had to fall to think Reagan qualified for same. Heinlein campaigned for him!

He should be read widely; I would suggest getting one's feet wet with:

The Jungle

Dragon's Teeth

Oil! (the basis of There Will Be Blood (2007), starring Daniel Day-Lewis)

Fascinating man.

Totally engaged life.

Thanks for the comment.


"The American People will take Socialism, but they won't take the label. I proved it in the case of EPIC.

Running on the Socialist ticket I got 60,000, and running on the slogan to 'End Poverty in California' I got 879,000.

I think we simply have to recognize the fact that our enemies have succeeded in spreading the Big Lie. There is no use attacking it by a front attack, it is much better to out-flank them."


TomCat said...

Fortunately I had a pretty good Prof. He agreed with my conclusions, said my work exceeded the requirements of the class, and gave me an A. He got into education after he quit working as an economist for Aramco for ethical reasons.

Suzan said...

I'm guessing he got sick of Aramco.

Funny how those guys go into education after screwing up the world isn't it?

Thanks for your comments!