One-on-One with Paul Craig Roberts #1
By Greg Hunter’s USAWatchdog.com
There has been plenty of calamitous news surrounding the European debt crisis. Greece is insolvent. Spain just got a big bank bailout, and Ireland wants a new bailout deal. No matter how bad it looks in the EU, Paul Craig Roberts says the problems in Europe are “nowhere near as big as the ones here.” The U.S. is printing massive amounts of money to paper over the mess, but it won’t work. Roberts says a collapse of the U.S. dollar could happen at any moment. It could be triggered by any number of things such as war or a derivatives meltdown. When a former Assistant Treasury Secretary (under the Reagan Administration) and a PhD in economics sounds the alarm bell, people should take cover. Dr. Roberts says, “The cliff dive we are experiencing in housing isn’t over,” and precious metals prices are “being suppressed.” Roberts says, “Gold prices should be rising. Why? Because the debt is rising.” What is the reason why Dr. Roberts thinks the suppression game has gotten so intense? Dr. Roberts says, “The fact that they are driving the price down suggests to me the situation is getting more desperate.” Greg Hunter interviews Paul Craig Roberts one on one about these subjects and more.
Thanks for having Mr. Roberts on. All I can say is that I went to a couple of places and checked the numbers behind you guys and I am terrified. The “Banksters” have the middle class walking on the edge of a razor. They loot our 401-K plans with program trading and selling naked shorts. The banks and traders are robbing us and the US AG is going after Roger Clemens. It seems like an episode of the three stooges.
Why are no bankers in jail for destroying our economy? Why are the” banksters” allowed to continue to steal from us with market manipulation and the government turns a blind eye? Sarbanes-Oxley, passed in the wake of the Enron and World Com scandals, mandates criminal penalties for misstatement of financial statements yet the CEO’s of Fannie and Freddie are not only NOT BEING prosecuted, the government is paying legal fees to defend against current litigation. The rule of law is enforced on the masses while the rich and politically connected have no rules.
One more thing to mention about how badly this economy has been managed is the rape of companies has begun in Ca to pillage profit for the state to survive as is,in a state of financial ruin. Ca is on the brink of collapse and the citizens are angered but unable to grasp why, they only know that nothing this state government tries stops the spending or addresses the debt that is causing them to lose more out of their pockets each month, they cannot stop trusting a liberal pack of con artist….Ca is the bellweather or unspeakable problems.
Two speakers of truth in one video; unusual in today’s propaganda driven discourse. It is interesting that PCR alludes to the real reason for Reagan’s assassination attempt, which is the same motive perhaps for the Kennedy assassination; i.e you can’t go up against the Military Industrial Complex without consequence. Ike’s warning went for naught, unfortunately.
I do not think it can be explained any clearer. The source speaks from his mouth so no misinterpretation can occur. We search for the answer as to when it is all going down. You have to ask just how much warning does it take for the majority to wake up and smell the roses.
Then you have to take action and that requires you get off the couch.
Put down those heart attack burgers and 32 ounce slurpies and actually do something. You all know nobody is going to do anything till they have to and by then it will be too late. They control the news media, the money, education and politics.
Notice Mr.Roberts said that there is no more Independence of Journalism. The fact they control interest rates and money supply. Our educational rewards are outsourced overseas and our politics are driven by a few hundred croonies in Washington, D.C.
All of what is needed to overthrow a nation from within, without firing a shot.
One morning we wake up and habeous corpus is suspended, martial law installed and the banks are all closed. The news media chimes on with instructions from the “NEW” government.
There is only one item that ties everything together. Our National Debt. Over 15 trillion and counting. Since we are the Worlds Reserve Currency and the Largest Debtor Nation. The national debt will determine how long our economic engine runs. The positioning of World Central Banks to buy gold instead of selling gold and the call of another Currency to work alongside the dollar as a world reserve fiat, indicates that the dollar is not as safe of an investment as it use to be. As the cycle of materialism and consumerism decline so does debt which is needed in ever increasing amounts to sustain the Ponzi Scheme. So I believe it is not the amount of debt that matters that will cause a collapse but percentage of acceleration of the debt that will cause it. How fast do we reach terminal velocity?
Derivatives for Dummies and Why the Politicians won’t discuss them.
Contrary to what few stories one might find among the orthodoxy of economic talking heads, derivatives aren’t really all that complex.
They can be best explained by constructing an analogy or two that even the partisans among us should be able to understand.
Derivatives are quite simply a form of insurance policy. Nothing wrong with insurance right? Well no, unless of course the value of those policies outweigh the assets of the underwriters on a scale of several hundreds to one.
Imagine if you will the U.S. were to experience a disastrous hurricane season. A dozens cities along the Gulf coast and the eastern seaboard are destroyed. Think Katrina on steroids. Most of those homes and businesses are insured of course and the owners will file the requisite claims for financial restitution. Except that if the sum total of all the claims exceeds the cash reserves and liquid assets of the underwriters, they go bankrupt. Not only do the claims not get paid and the policyholders are destroyed, but all of the stockholders and bondholders in the insurance companies are also wiped out. This includes not just individuals, but because of interconnectedness, many banks, credit unions and mutual funds. Even more insanely insurance companies underwrite policies against each other’s insolvency. This is a derivative know as a default swap. The failure of one threatens the solvency of all.
This is exactly what happened to AIG. They had insured the assets and solvency of GM, Chrysler, Lehman Brothers and Merrill Lynch. When they went belly up AIG did not have the assets to cover the losses, so the good old U.S. taxpayer was called to the rescue.
To make matters worse, the repeal of the Glass-Steagall act has allowed the banks to become insurance companies and to issue some charming little derivatives known as “naked swaps.” These are nothing more than insurance policies issued to individuals and corporations who hold no underlying interest or liability in the insured asset (if you want to call debt an asset, but that’s not the point).
Picture if you will, you want to buy a new car. You have the down payment or the trade-in but you need to go to the bank and borrow $20,000.00 to complete the purchase. In order for the bank to loan you that money you must show them that you have insurance to recover the value and repay the loan in case of theft, an accident or some other total loss. Now imagine that 99 of your neighbors also took out insurance policies against the value of your car. They don’t make the payments, they don’t pay the taxes and they don’t buy you gas, but if you suffer a loss, not only does the insurers have to pay off your creditor for the $20,000 loan, they also have to pay your 99 neighbors $20,000 each on their claims. So the insurance companies end up shelling out $2,000,000 on an asset that was only worth $20,000.
Criminal fraud you say? My point exactly, but that is just what we are faced with. It’s not just the $140 billion in Greek debt that would get wiped out in a default, but $1.4 TRILLION in derivative insurance policies (Credit Default Swaps) that would come due and could not possible be paid. Now multiply that number by 4 or 5 for Spain and 6 or 7 for Italy and you might begin to see just how untenable a situation the banks have put the entire world in. So greedy are they to collect small premiums on hundreds of huge policies that they have placed us all in peril. BofA alone has underwritten $50 Trillion in derivatives, JP Morgan another $70 Trillion (that they admit to). The total derivative market is estimated at over $1.4 QUADRILLION! How many people can even grasp the size of that number? I know I have a hard time with it. I do know it is more money than exists or has ever existed.
If I am afraid of anything it most certainly is not being faced with any sort of caustic hyperbole. But derivatives do scare me, as they should scare anyone who has even the smallest grasp of economics and the size of the numbers involved.
Unfortunately for the politicians and their media hacks, once the derivatives issue enters into any honest analysis of the current financial crisis, they destroy both the arguments of the right for so-called austerity and the arguments of the left for more stimulus and increased taxation. Hence the refusals by both sides to consider or even discuss them in any context. Better for them to pretend they don’t exist or are irrelevant to the situation.
Anyone who knows me understands that I hold the POLITICAL right and left in equal contempt as they are both beholding to the same crony capitalist (i.e. fascist/Fabian socialist) financial interests on Wall Street and at the Eccles Building. The concepts of formation and implementation of policy have not been subsumed but completely lost in the obfuscations of political arguing.
What I am is an unrepentant classical liberal and capitalist, the very thing that both sides mutually fear and loathe. Neither side wants the voting public or even their own political hacks and operatives to understand that in the post Eisenhower/Kennedy period we have politically devolved into a one party state that just happens to have a façade of right and left wings.
We elect Republicans for a term or two and they pillage our economy and rights. We get tired of them so we elect Democrats for a term or two and they do the same thing until the public grows weary of their pillaging. Rinse repeat, rinse repeat. Nothing changes except for the worse, and the game goes on with each side concerned with nothing but the maintenance of their own position and power.
As it now stands we are reaching the limits of this corrupt game. The cancerous infection of debt and deficits has grown beyond the point of any possible political excising, not that either party would be willing to do that even if it were possible. Their aforementioned financial owners would never allow it. Such an action would not only destroy their institutions but would leave individuals exposed to criminal charges both nationally and internationally.
The precedent for such trials was established at Nuremberg where Nazi finance minister Hjalmar Schacht was in the dock along with the other leading Nazis. That he was acquitted was a great travesty of justice.
(As an aside, I state that not just as a personal opinion. In the early ‘70’s I had the great pleasure of meeting Bernard Metzler, the man who was originally charged with preparing the prosecution’s case against Schacht. He asked to be removed from that charge after complaining to Chief Prosecutor Roberts that he was coming under pressure from other member of the staff to drop the charges “for political reasons.” He also stated that in conversations he had with Roberts and some of the judges after the trial, that Schacht was acquitted because “the political pressures were to great.” He further said that in his mind he interpreted that to mean threats, but he didn’t think it could ever be proven. Schacht’s personal and financial connections to FDR’s Ambassador to the USSR, Averell Harriman, were to numerous and ugly to withstand scrutiny at the time. He was too powerful and too well placed within the Truman administration.)
So then the financial elites will fight to the very end to protect themselves and their power, to keep the citizens in perpetual debt bondage. They will use their politicians and media operatives as their front line shock troops to hide their own culpability. They know full well that the end result of their game will be disastrous, but they think they are well enough insulated by power and money that they will be left as the last man standing so to speak. They will be laughing all the way to the their vaults as the politicians, media shills, and naïve hacks end up bearing the brunt of the public’s wrath.
We need to wake up, all this talk about raising taxes a few billion here or there or cutting the budget a few billion over 10 years is utterly meaningless. You might as well try to lower the level of Lake Michigan with a bucket.
Nothing in the worlds of political economy or financial gamesmanship is as simple as any left vs. right argument. Anyone who tells you it is, is either a fool or trying to play for one.
And that is why I have said taking everything, all sovereign debt back to zero is the one and only debt solution. Would that be fair to some and unfair to others? Yes but it would strip the banksters of much of their power and provide a foundation upon which economies might be rebuilt. Unless of course you like the idea of a deflationary collapse followed by hyper-inflation like no one has ever seen.
Thanks Davis, very informative.
Excellent points made Davis, an honest assessment of the situation. Sorry I don’t know you, but do you have a website or blog to follow?
Also Greg, keep up the great work disseminating the truth.
You did not mention two important issues I am sure you know but many people do not understand. The “money” for the derivatives is created from thin air and insured by the government (our tax dollars? more gov. debt) So “fair” should not come into it. If I have your credit card and I am jetting around the world living like a king at your expense and you shut off your card, that is not fair? Really? We must end the fed to end the rule of the banksters. Fair? I am still gagging sorry. We can not go to the gold standard because as was discovered during the Reagan years (gold commission report) our gold was turned over to the fed for our “debt” the paper they traded us for it? Good trade! These actions are entirely criminal. These people should all be in jail. However since the rule of law is dead and the American people are mostly brainwashed and crying for more government to “save” them. People are still prostrating themselves to Bush or Obama in worshipful ignorance. As long as the welfare checks, unemployment checks and food stamps keep coming, they will keep watching TV.
Schacht’s connections to Harriman may have gotten him off. But his good fortune was hardly unique. … In his 1950 book “All Honorable Men,” James Stewart Martin, a US Army officer and former DOJ anti-trust lawyer who was given the job of breaking up the German industrial war machine, described how Wall Street bankers — detailed to Ike’s staff — succeeding in completely frustrating his efforts to de-Nazify and decartelize those industries. Martin’s experience shows that American multinationals viewed the failure of fascism as a mere setback to doing business as usual.
Paul Craig Roberts makes a lot of good points, most of which is nothing new to me. But, these guys never talk about the root cause, which is resource depletion. Sure, greed, corruption, and stupidity got us into the financial mess we have, the world has, but in the big scheme of things, it’s a Peak Oil / resource issue.
Growth is coming to an end, because of this. And as desperate acts, those that understood this (some of the elite), have made huge bets, at all costs, to make one final profit.
Collapse will not happen all at once. I follow a lot of smart folks, and this is a good article to read: http://thearchdruidreport.blogspot.com/2012/06/collapse-now-and-avoid-rush.html
We will have some major financial issues to deal with, in the years ahead, etc., but they’ll come and go, as growth declines slowly. If people wake up in time, some may have a chance.
Thank you for this great interview. I hear you ask this in every interview: “when”, but no one knows and all these guys are a lot smarter than me. I still don’t know wheather it will be inflation or deflation. Mish says deflation because no credit is being cut loose by the banks. But John Williams says inflation. We canned a bunch of hamburger over the weekend and the price was $4.89/lb when it was $1.49/lb 2 years ago. That sure feels like inflation. Mish doesn’t think the World will cut the U.S. consumer loose and stop selling to them. If they do drop the U.S. Dollar as the reserve currency, they will have to loose the U.S. consumer. Can China do that?
thanks for the truth. thanks
Good Video, but you need to fix your audio. Love your articles too.
Your sound was like (under water). Dr. roberts was clear.
Well once agian you nailed the lame extreem media agian.
A friend of mine wants me to say the shell game will continue to eternity,because the people will never wake from there coma.
I dont think so,thats his thoughts. anyway good job bud.
Great article and interview! This is the kind of important information people need to hear. You’re setting the example.
I would have loved for Mr Roberts to share his insights about the Exchange Stabilization Fund(ESF)which is controlled by the Treasury.
Guys, I don’t recall as to whether PCR gets a little bit into the ESF in that article “Collapse at Hand” (excellent !!) but Rob Kirby certainly does. So now that PCR has joined Kirby and Harvey Organ in esposing the USG-ESF-TREASURY-FED-PRIMARY DEALERS (TBTFs) IRSwap rig, this revelation is going viral. A gold BLOC is forming around the producer/resource nations to challenge the SWIFT / Dollar reserve / petro-dollar system.
With each new affront to our senses in our derivative world, where we have a derivative economy (hosted by a Keynesian fallacy of artificially creating “symptoms” of a healthy economy while doing nothing to stabilize the root cause of its death) and fight derivative wars with derivative money, it becomes harder and harder to imagine the status quo not being crushed by the weight of it all.
These two links and the info contained in them explains why the dollar is being “cautiosly exited”. The propaganda ministry does not want to see an all out run on all banks globally, but this is what you will see in the collapse at hand. No fiat paper, no contracts, no derivatives of derivatives or their hypothecated claims will survive the coming inferno.
Great interview. But you need to invest in a better mic…it sounds “crap”
Roberts is usually blaming all of the problems of the USA on Israel. So Roberts has been largely part of the problem for waiting to wake up the people.
Now that it is apparent that China owns us, his blaming of Israel has no more traction.
2008 was a band aid solution.
I am withdrawing 10,000 monday to purchase gold and silver.
Hats off to you for having enough courage of going against the blind mainstream trends against discussing such topic critically and realistically.
Greg, Mr. Roberts interview was very clarifying. As noted by Mr. Roberts, any number of events (black swans) could trigger a collapse of our present day economic model. One astute note was early in the interview about what happened to our middle class jobs, he noted they went overseas. In my mind how much more arrogance could our corporations have but to take our manufacturing (jobs) off shore and expect to extend our economic lifestyle long term. Their short term greed will be their Waterloo. The middle class is getting smaller which, as Mr. Roberts said, will constrain growth and perpetuate the loss of money supply in the economy. I’m old enough now to see this whole stagflationary decline in the last 35 years started when our jobs were sent to Asia. Too bad our esteemed companies got greedy for short term profits at the expense of our people. Wall Street pressured the companies to maximize profits by cheap labor thereby increase the stock prices. Once again, in my mind, you can see America being destroyed by Wall Street, you just got to connect the dots and follow them back to their source. Simply put, Wall Street is not the friend of the American middle class.
Lastly Greg, great interview!