Nomi Prins talking:
One of the things I talked about in Washington last week, to the Fed and the IMF and the central banks, bankers around the world, is that there is a continued instability, which some of them know and some of them refuse to admit, in the financial system throughout the world. And that has had a knock-on effect on global economies everywhere. There was a decision made by central banks, by private banks and governments together at the highest levels of these countries to help the banking system at the expense of the people system, the real economy, to invoke austerity measures in order to pay bondholders. And that continues to be in place. So when you talk about the situation in Greece, what Greece is basically saying and has been saying for a long time is that, look, are the austerity measures that you pressed upon us are irrational, are impossible to use relative to the fact that our economy has slowed down and our debt, the strings attached to the bailout that we received in order to pay bondholders, in order to pay the IMF and central banks and so forth, are impossible to pay. But yet, they continue to facilitate stability for the financial system and the major banks around the world. So they are getting the money, they are getting the benefit. People in the countries outside of that upper echelon are simply getting hurt.
Clinton Cash was a book that came out recently by Peter Schweizer where he looks at some of the Clinton Foundation associations with countries and I go further into examining what their associations are with a major banks in these countries, particularly from the United States. And if you follow a two decade through line from when Bill Clinton became president through Hillary Clinton now trying to become president, you see that the relationships along the way with Bank of America, with Citigroup, with Goldman Sachs and so forth, whether through appointed positions, whether through money along the side, whether through pushing their policies of deregulation and benefit to the banks at the expense of the rest of the population, they continue to go through. So in the beginning we had deregulation coming in through the Clinton administration. We had the the Glass-Steagall Act being repealed which meant these bigger banks could become bigger and consolidate people’s deposits with all of these risky derivatives and other types of transactions, which then imploded the financial system in the wake of the financial crisis, that still exists.
Relative to the rest of the world, the biggest six banks in the United States are bigger than they were before the crisis. They’ve received more help from Obama’s government which has a lot of people in it from the administration, from a treasury perspective, and they continue to thrive at the expense of the real economy. In addition, the foundation, the Clinton Foundation has received from $250,000 to $5 million donations from these same largest institutions, among others, that continue to push their agenda throughout the United States as well as throughout the world.
We still get information or news about the LIBOR exchange conspiracy, the currency manipulation. We see continued crime after crime in the financial world and doesn’t seem to be any real structural change occurring.
And that was one of the things that said in Washington. Basically, and also, the big six banks in the United States, they’re hoarding cash. So the result of these zero interest rate policies throughout the world emanating from the Fed and the United States and this quantitative easing are buying bonds back from all these banks, giving them more money, is they have 400 percent more cash after the crisis than they had before, not going into the real economy and they’re committing crimes. The big six banks in the United States have paid fines or settled to pay fines for $120 billion to $130 billion. LIBOR rigging, FX rigging, mortgage fraud, money laundering, it goes on and on.
the FIFA thing is a scandal, is such a nonevent relative to the fact that we had a, just recently, that $5.6 billion fine on FX rigging. That means rigging the currencies, these five banks including J.P. Morgan, Citigroup and the United States, UBS and Barclays, they got together and rigged what people pay for goods back and forth. They engendered harm to the global economy. They got a $5.6 billion fine, compared to $150 million fine, nowhere in the same vicinity, for FIFA and heads rolled. No heads rolled. Jamie Dimon got a $20 million increase in his compensation, voted upon by his shareholders right before that FX rigging find came out.
it would make a big difference if the heads of these banks, and I mentioned, if some of the CEO’s would actually be sent to jail, be held accountable in any personal way whatsoever at all. Instead they’ve been able to point fingers inside their institution. That trader did it, that was sort of a bad department, that was a bad apple approach. And they continue, Jamie Dimon and Lloyd Blankfein, they continue to run these companies. And globally, again, these banks have committed more crime and been settling for more crimes than anywhere else in the world. It would make a difference. It would send a message that you can’t do that. But not only have they not been sent to jail, not only have they not had any personal indictments or convictions, they also continue to get upholded by their shareholders here, which actually isn’t something — in Europe they’ve kicked out some of the bankers and CEOs along the way, by shareholders.
there has to be a moving over, of supporting the global financial system at the bank level, to supporting the global real economy at the foundation level, at the people up level. And whether that’s debt relief, bringing in taxes so they are not off shelter, de-leveraging the banking system, making it more transparent, cutting up the banks, making them responsible, because they’ve gotten all of this help, to the real economies. All of that has to be part of the play, otherwise, this continues and it just continues to hurt the economies least able and least getting all of the help from the top.
Eric LeCompte talking:
I think the entire role of the G7, as they describe it themselves, is to focus on global economic growth. When we’re looking at these particular issues around divestment, I think we also see a lot of connections between what Nomi was just describing in terms of how the global banking system is operating as well as what Gawain described as some of chief concerns from protesters on the ground being TTP, these trade agreements, as well as an overall negligence to really addressing global poverty issues. Right now when we look at Greece and we look at the developing world, when we look at the International Monetary Fund, the European Central Bank and others, wanting to promote a higher degree of austerity in Greece in order for them to receive more bailout funds, we have to understand that fundamentally, we’re dealing with a problem of global instability. And In fact, when the G7 financial ministers met last week in Dresden, when I was in Dresden, the chief focus, how the table was actually set for this G7 summit, the financial ministers focused on the issues of high debt, and being able to achieve growth in what is now considered by the G7 and International Monetary Fund to be unsustainable debt, unsustainable debt that will prevent economic growth.
I think, as we’re looking at the Greek situation, we’re looking at these broader issues of divestment, I think we need to see some real shifts in terms of how the global financial system operates. And I think one of the issues that was very interesting that’s now been at the table at the United Nations with three general assembly votes in favor of global bankruptcy process, they’re working on a process, the International Monetary Fund for the last two years has been working on a process. Last week in Dresden, we saw all of the major religious leaders, the Catholic bishops, the Protestant bishops call on the G7 to end poverty by bringing stability, by erecting a global bankruptcy process to end poverty. And in fact, at the prayer service last week in Dresden, we saw German Finance Minister Schäuble attend because we know these issues are so key right now, we do need to see some solutions if we’re going to have greater stability in the markets, in the global financial system.
We have to understand that debt and tax are flip sides of the same coin. Two years ago at the Lough Erne Summit, we saw the G7 take some historic action. They called on broad ways to curb corporate tax avoidance, to be able to stop these anonymous shell corporations, which around the world are hiding these funds. And although we’ve seen some action, much of it has just been talk so far, I think at this particular summit, we’ve also heard that they’re reviewing these issues. This last summer here in Washington, President Obama and the White House hosted a very important Africa summit and one of the main drives that came out of that summit is the curbing of corporate tax avoidance evasion and corruption because right now, the developing world is losing $1 trillion a year to these illicit financial flows, to tax evasion, to corruption. And we’re looking at the question of Greece right now. We have to say that these issues are very much connected.
Certainly, more austerity plans for Greece are not going to work. They can’t be part of the recipe. And there needs to be some real debt relief like we saw in 1953, ironically, with Germany when Germany had, what Germans call the Wirtschaftswunder, the economic miracle. That was a direct result of the 1953 London accord where all of the lenders, all of the creditors were brought together to London, not only was Germany given debt relief, but more important, Germany was given what the Greeks are asking for right now. And that is not even necessarily debt relief. It is to be able to extend those payments further in the future so that money can be invested in the people now. And that also deals with this tax issue, Juan, that you’re bringing up, because have to understand that in Greece, there are issues in terms of corruption and tax evasion that although the government has done a better job of collecting these monies, they need to also improve this in the future so that they can get out of the debt trap.
Gawain Kripke talking:
The G7 leaders come here every year and say that they want to tackle climate change. And then at the end of the day, their communiqué says very little. You heard President Obama earlier in the program mention climate change as one of the big issues that they are going to take up at the G7. Chancellor Merkel has talked about climate change being a key issue for this G7. Other leaders have said so. We want to see some real action. This is the year to do it. Oxfam has been calling on the G7 leaders to commit to phasing out coal from our energy portfolio. And it’s quite feasible to do. Coal is no longer the cheapest option, in a lot of cases, but it’s certainly the dirtiest option. And by our calculations, it’s quite feasible for the G7 countries to phase out coal and make a big step toward solving the problem of climate change. We made that call before they started, and we’ll see what they do when they come out of the G7 summit. We’ll know within an hour what they’re going to do. We don’t expect them to take the big step they need to. So it all rings a little false when leaders come here and say they want to tackle, change and don’t do much.
The first thing to recognize is that, historically, climate change is a problem caused by developed countries. In the room at the G7 is — are leaders representing 50 percent of the carbon in our atmosphere right now. So these guys have a special responsibility to help solve this problem. Developing countries have been coming up and they’re producing more climate change, but the problem started in rich countries and the solution should start in rich countries. So we’re calling on developed countries to do things like phasing out coal, make big commitments to reducing our carbon implant — their carbon emissions, and also to providing the funding necessary for the world’s economy to move to a zero carbon energy sources and to adopt — adapt to the climate change that we know is going to happen.
Many of the poorest countries and many of the poorest people are very vulnerable to changes in the weather. Most farmers in Africa, for example, depend on the rain. They don’t have irrigation. So if the rain changes, they’re really in trouble. And we think that the richest countries in the world that are here have an obligation to help poor people in poor countries adapt to climate change. We are calling on them to make commitments in Copenhagen. Leaders said that they would provide $100 billion a year to make these transitions. So far that money hasn’t been coming.
Eric LeCompte talking:
We have to understand, just as some background in terms of the Greek situation, we look at Greece as one of the most terrible examples of how the global financial crisis impacted our world. The further we get away from the crisis of 2008, all economists tend to agree where getting closer to the next crisis. And our inability to deal with the Greek situation illustrates a greater inability to deal with the global situation. In 2010, instead of dealing with the severe debt problems that took place in Greece, the can was kicked down the road where emergency financing was given which mostly bailed out the private sector, German banks, and others, without really dealing with the problem. Intense austerity measures were put in place in 2010. And those measures, now, the International Monetary Fund agrees, are essentially, what drove about a third of the entire population of Greece under the poverty line. Greece, now, instead of dealing with those problems in 2010, is the third most indebted country of the world. And right now, what leaders are talking about are more financing as opposed to dealing with the debt situation head on.
We have to understand that Greece also exemplifies what went wrong with the global financial system. And although world leaders are not firmly agreeing on solutions, they’re all agreeing on the problems. And we see those problems in Greece. That the Greek crisis was caused because of combination of an unsustainable debt load and speculative, extreme risky investment. We see that in the mortgage crisis, back here at home in the United States, we see it in developing countries having food security issues and it becoming a global economic crisis.
The question now, what should be done about Greece? What needs to be done moving forward to not only address the Greek problem, but to promote real global stability? Well, in Greece, more financing isn’t necessarily the answer. We saw last week the Greek government say that they’re going to bundle their IMF payments to the end of this month, about 1.6 billion euros. They delayed a payment, about €3 million, $218 million last week, as a negotiating tactic. We have the Greeks and we have the G7, we have the Germans, the European Central Bank playing a poker match with people’s lives. What’s happening right now is a negotiation of how much austerity for financing the Greeks are willing to take.
But we go back to what happened in 1953 with the London accord where we saw a real global bankruptcy process that led for the economic miracle for Germany to become one of the strongest economies in the world. And we see that as a model for the Greek situation. That we can have a global bankruptcy process that not only can be applied for Greece, but now for the financial system, stem risky investment behavior and start to get debt loads around the world in a more sustainable place.
Alexis Tsipras, the Prime Minister of Greece is not there, as Putin is not there, though other leaders like the Prime Minister of Iraq are meeting, for example, with President Obama.
We have to understand that just last week, Greece was considered to be a part of the official agenda of the G7 and then on Friday, we saw it removed. We know it dominated the conversation yesterday. But part of what we are seeing by the G7, is to some degree, a snub of Greece. We’re seeing the Obama administration align with the other G7 countries, and starting to take a harder-line approach with Greece. And although what the White House has continually said about working together, about keeping Greece in the eurozone, not necessarily turning to austerity as the solution — these are positive things, but we have to understand that with the summit being hosted in Germany, that right now Merkel, along with the other G7 leaders, are snubbing Greece and trying to play hardball with them.
we do recognize there is a real opportunity here to be able to do something different, to be able to turn away from austerity, to be able to start to invest in people and not to invest in banks. Not to say that the markets should drive what is happening, but as Pope Francis has pointed out, it’s not about markets, it is about people. So we do see that there is a real opportunity. We see there are models. We see at some points there have been positive conversation. I think the concern we have right now is at the end of the day, from conversations that we’ve also had with governments and seeing how these kinds of issues are moving forward, that the Germans and others are perhaps willing to just push Greece outside of the eurozone and perhaps look at some of these policies for greater stability in the future. Because even though Greece is happening right now, even some of the G7 countries them self and some of the wealthiest countries of Europe from Italy to Spain are dealing with these serious debt issues. So we have even heard acknowledgments from the German government that eventually, they do want to create a bankruptcy process, at least for the eurozone. But in the short-term, we might see the Greeks getting pushed out and them bearing the brunt of what has been a problem of the making of the banks in the private sector.
— source democracynow.org
Gawain Kripke, director of policy and research at Oxfam America.
Eric LeCompte, Executive Director of Jubilee USA Network.
Nomi Prins, former managing director at Bear Stearns and Goldman Sachs, and previously an analyst at Lehman Brothers and Chase Manhattan Bank. She’s now a distinguished senior fellow at Demos. Prins is also the author of, “All the Presidents’ Bankers: The Hidden Alliances that Drive American Power.”