Architects of economic disaster
Chossudovsky said the architects of the FSMA which create these global financial institutions are very powerful.
He said that the the people who are behind the global financial architecture are precisely the people who are part of the new Obama economics team.
He said that Timothy Geithner, chief executive officer (CEO) of Federal Reserve Bank of New York, has been appointed to head the Treasury and Lawrence Summers who was the architect of the Financial Services Modernization Act of 1999 has been appointed as economic adviser of the White House, chairman of the council of economic adviser.
“The CEO of the Federal Reserve Bank of New York which is a private banking institution controlled by the major banking conglomerate is appointed to the Treasury and the Treasury now is in charge of acting on behalf of taxpayers. In effect, the whole process has been hijacked and what we are dealing with is a tremendous accumulation of private wealth by these Wall Street financial conglomerate,” he said.
“What you see is that the architects of economic disaster, those who set the financial agenda in 1999, Lawrence Summers, Robert Rubin, members of the financial establishment, the Rockefeller family and so on, these people are now part of the new economic team,” he added.
“There’s continuity. We have to understand that continuity. The Obama administration does not break that continuity,” Chossudovsky said.
He said that the same people who are behind the financial crisis mainly the Wall Street banks, the big players such as the JP Morgan Chase which is closely linked to the Rockefeller family, Bank of America, the oil companies, what we refer to as military industrial complex which are the major Anglo-American defense contractors, the producers of weapons – the Lockheed Martin, Northrop Grumman, Raytheon, General Dynamics, Boeing, British Air Space remain in control.
Chossudovsky said, “The architects of economic disaster are those who are being called in to provide solutions. Within that frame of reference, there are no solutions because the solutions lead to the exacerbation of the crisis, they don’t lead to resolution of the crisis.”
He said that the logic of the first bank bailout which was implemented by the Bush administration is very similar to the logic of Obama’s stimulus package with some differences.
Solutions first proposed by the Bush administration, the Troubled Assets Relief Program (TARP) at the time was a $700-billion rescue package which was to help the troubled financial institutions.
Chossudovsky said that even with this bailout, you will never resolve the problem of the accumulated debts in the banking system.
He explained, “You have a $700 billion Treasury emission which requires running on a budget deficit. You can’t hand over $700 billion to the banks out of thin air. The Treasury needs to finance this. What do they do? They remit $700 billion worth of government bonds and Treasury bills. Now, who is going to buy 700-B worth of government bonds and Treasury bills? Maybe the Chinese, Japanese and some stupid people in Southeast Asia will buy these but they have to go through the banks, they are the brokers of this public debt so that they will help the Treasury to transact this public debt but they will also hold a portion of the public debt.”
He said further, “The mechanics is the following: The banks say we need $700-billion to get rid of this toxic asset etc. The money goes into acquisition of other financial institutions, a part of it is diverted to the hedge fund, it goes into the hands of private financiers connected to the financial institutions.” “The recipients of the bailout are also the creditors of the state which are financing, providing them the money either directly by holding a portion of the debt but also by selling of the debt in the international market.”
Chossudovsky said that to finance this bank bailout, the Treasury needs to slash public expenditure in a massive way. He said, “…[I]n effect, the US state is financing its own indebtedness, it is handing money to the bank and then it is asking the banks to help them finance the deficit and in turn, the public debt goes up dramatically. And I’m not talking about one bailout package, there were several others and then what happens is the whole structure of the public finances of the country goes damn, you can’t fund the schools, you can’t fund the hospitals why? Because you have to give money to the banks.”
“You lend money to the bank and the bank lends you money to finance the money that you handed to them and then they impose also a very major repacking of old categories of expenditure and virtually a situation where the state becomes totally privatized…What is happening in the US is the situation where the banks are overshadowing the entire structure of public expenditure,” Chossudovsky continued.
Chossudovsky said that the financial institutions which call the shots in public policy will then start to transform this massive amount of paper wealth. “What is happening is that this massive concentration of private wealth in the hands of financiers. There’s a lot of cash money capital available at this moment in the hands of a handful of institutions and wealthy individuals and they will start buying up airlines, automobile companies, high-tech firms, universities etc, hospitals. In other words, we’re going to see this shopping spree where the upper echelons of the financial establishments will start buying up the real economy.”