Defaulting banks - where will it stop?

[Jan Klimkowski]

Long interview with Dr Michael Hudson expanding on ground discussed earlier in this thread.

http://www.globalresearch.ca/index.php?c...&aid=10731

Here's a teaser (and why Wall Street wins regardless of the outcome of the US Presidential election):

MH: Now so far, people have talked about the $700 billion that is at stake and the government has said we’re going to put securities in here, however what the media has not reported, although the British newspaper The Economist had a wonderful chart last week, showing that the Federal Reserve has already swapped $500 billion worth of Treasury bonds for junk. The cash for trash has already begun since March by the Federal Reserve so $500 billion is almost as much as the $700 billion that the Treasury is talking about, this has already been given away by the Fed to Wall Street insiders and nothing has been said in the media about this at all. Although its been statistically reported by the Fed. The Fed reports its holdings and securities. It reports its holdings of Treasury Securities, which have gone down by $ 500 trillion.

It reports its overall securities, which are now $1.1 trillion compared to less than $500 billion in Treasury Securities. And this leaves between $500 billion and $600 billion in essentially non-treasury securities, which are the junk they’ve taken on with these swaps that it’s arranged. And the Fed has been swapping this not only with the banks that its supposed to represent but its been doing cash for trash with insurance companies, investment banks and people who have no relation at all under the Fed and this is being done under the Fed’s special small print of the Fed’s Articles of Incorporation saying it can do this to save the economy. Well its not saving the economy at all. It’s wrecking the economy by doing this. It’s wrecking the economy by buying trash from insiders and as I said, creating a new Kleptocracy.

BF: Well I’ve never heard of this other, this previous $500 billion. No, that wasn’t reported. Well if they don’t have to…Why are they…

MH: Well the Fed says that it has reported it. Anybody can go online on the Federal Reserve and check the daily and weekly Federal Reserve Statistics. You can be sure that just everybody on Wall Street that has a stake in the financial system has done that. The media has blacked it out.

BF: Well if they gave away $500 billion previously with a media blackout why did they even bother to go public with the $700 billion?

MH: Because they need altogether about $5 trillion to create… If they’re going to create 500 billionaires to run the country for the next century and to create really a new feudal class they need $5 trillion and they don’t want the people to know what’s occurring because if they did the voters would get so upset they’d create probably a new political party, an alternative. And they don’t want the voters to have an alternative certainly before this election. They’ve got one candidate, McCain who is advised by Phil Gramm’s who is in completely in [???]’s pocket. They have another presidential candidate, Obama, whose financial advisor is Treasury Secretary Rubin. If you want to see what is likely to happen to the United States you should look at what Mr. Rubin did when America had a completely free hand in redesigning the Russian economy. This was their ideal. You’ve seen since the 1996 giveaways in Russia, the Russian population has fallen more than it fell in World War Two. The financial devastation today is even more devastating than military destruction. The result is a shortened life expectancy, lower birth rate, depression. The effect is psychological and social, not merely economic.

BF: Well why didn’t they keep their subsequent $700 billion a secret? Did they just feel they couldn’t?

MH: Because it’s become so large, larger than the Federal Reserve has on its balance sheet. The Federal Reserve only had $1.1 trillion and the Treasury can print an infinite amount of bonds to exchange for trash and what they needed was much more than just a trillion, they need really trillion after trillion to bail out the bad debts because that is how deep the hole is that Wall Street (and behind it, Free Market Economics of the Chicago School variety) has led the country into.

BF: Well then would you say it’s too big to bail out?

MH: In essence yes. It can’t really be bailed out. But what you can do is let the insiders get as much money as they can as quickly as they can under emergency conditions so that they can take their money and run. Of course it can’t be bailed out. But you can have a lot of insiders take their money and run. And they’re going to run--out of the dollar.