21. October 2008 by admin.

I have to say,  much to my surprise, there are a number of former Reagan Administration officials that I have come to admire, based on work they’ve done after leaving government employment.  Kevin Philips, one of my current favorite political/economic affairs writers, who has written "American Theocracy" and "Bad Money", is amazingly objective, given his pedigree.  This gentlemen, Paul Craig Roberts, is another one.  While I don’t agree with everything Roberts says in general, I think he makes some very candid assessments in this interview, esp. given his previous stints with Reagan and the Wall Street Journal. 

I definitely recommend that you read this interview.

Here is one interesting extract from Amy Goodman and Juan Gonzalez’s interview with Roberts on Democracy Now on 10/17/08.

AMY GOODMAN: Paul Craig Roberts, the piece you’ve written, one of them, asks, “Has deregulation sired fascism?” What do you mean?

PAUL CRAIG ROBERTS: Well, the original Paulson plan was to give the Secretary of the Treasury $700 billion with no accountability and give him complete control over the financial system. And that, of course, is state capitalism or fascism. If you control the financial system, you control the economy. And so, that was my way of pointing out the dramatic sort of power that was said to be necessary to stem a crisis that, in my view, could be fixed just by refinancing mortgages, like they did during the Great Depression.

AMY GOODMAN: Who is driving this? Who framed this bailout? And explain exactly who it is who benefits right now.

PAUL CRAIG ROBERTS: Well, what the bailout does is it takes troubled financial instruments off the balance sheet of the banks and puts them on the balance sheet of the taxpayer at the US Treasury. So it’s a bailout of the financial institutions whose recklessness caused the problem. And as I’ve already said, it does not address the problem. It only addresses the problem of the banks. So the foreclosures and the defaulting mortgages will continue as the economy worsens, and yet nothing is being done to stabilize that default rate or to stop these foreclosures. So the money is essentially being poured into the coffers of Washington’s financial donor base.

JUAN GONZALEZ: In some of your articles, you reject a view by some Democrats that this is the end result of a deregulatory fever that began in the Reagan administration, and you point to a more recent aspect of this. And you point specifically to decisions that were made during the Clinton administration and the current Bush administration in 1999, 2000 and 2004. Could you elaborate on what those particular key decisions that were made?

PAUL CRAIG ROBERTS: Yes. First, just let me say the Reagan administration didn’t do any financial deregulation.

In 1999, in the Clinton administration, they repealed the Glass-Steagall Act. This was the Depression-era legislation that separated commercial from investment banking. In 2000, they deregulated all derivatives. And in 2004, Hank Paulson, the current Treasury Secretary, who at the time was chairman of Goldman Sachs, he convinced the Securities and Exchange Commission to remove all capital requirements for investment banks, and thus they were able to drive up their profits by amazing leverage. For example, when Bear Stearns finally went under, it had $33 in debt for every dollar in equity. So this is an amazing leverage. And it’s amazing that all reserves against debt would have been removed by the Securities and Exchange Commission. So, the whole thing is reckless beyond imagination. Now, they claim that they had new mathematical models that assessed risk and that they didn’t need these reserves. Well, that was all a bunch of hooey, as we now see.

AMY GOODMAN: Paul Craig Roberts, you write the US is not a superpower; the US is a financially dependent country that foreign lenders can close down at will. What do you mean?

PAUL CRAIG ROBERTS: Well, the savings rate in the United States is zero. The government is running large budget deficits. And these deficits are financed by foreigners who lend the money. The daily operation of the United States government is financed by the Chinese, Japanese, the OPEC sovereign wealth funds. This is not the financial position of a superpower. The same with American consumption. We consume about $800 billion a year more than we produce. We have an enormous trade deficit. And this has to be financed by foreigners, as well.

So the holdings of dollar-denominated assets, including United States Treasury’s, Fannie Mae, Freddie Mac bonds, in foreign hands is enormous. And they could exert, if they wish, dramatic control over American policy just by calling up Washington and asking if they wanted to buy these things back—of course, with no money to buy them with. And if they were to—they don’t even have to dump them. If they just stopped financing the budget deficit, the government in Washington would have to resort to printing money, like Weimar Germany. So, this is not a strong position.

Posted in Uncategorized | Print | 1 Comment »

21. October 2008 by admin.

As if there weren’t already enough ways for someone to find out what you think, say, do, eat, watch, etc.–apparently there’s now a way to capture the radiation from your keyboard and use it to eavesdrop on what you type.

Posted in Uncategorized | Print | 2 Comments »