Invisible Hand Episode 9: Interview with Ellen Hodgson Brown

May 24, 2010

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This episode of The Invisible Hand features my recent interview with
Ellen Hodgson Brown, known for her popular book Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free, for which there is now an updated 2010 edition. She runs the websites and She also writes a weekly column that can be found on her website, as well as the Huffington Post. She talks to us about stock market manipulation, financial terrorism, debt-free currency and state-owned banks.

Also, here are some of the news stories included in this edition of the podcast:

  • Stocks worldwide are sliding again and the Eurozone teeters on the edge of collapse after German Chancellor Angela Merkel made a unilateral move to ban naked short selling on government securities. This is the controversial practice of shorting securities that don’t belong to you without even borrowing them first from the actual owners. Although prohibited in the United States by SEC regulations, it continues nonetheless, and is thought to be a primary tool of market manipulators, used to take down targeted stocks, market sectors, and in this case, entire currencies. Greece’s credit rating was recently downgraded despite the $1 trillion bailout package pledged by the EU and the IMF.

    This had an extremely negative impact on the value of the Euro. With her popularity tanking and her coalition government losing elections in Germany, Merkel placed the blame on market speculators, and made the move to ban naked shorts on government securities. This sent stocks tumbling all over the world and sparked criticism from investors. But Merkel is undaunted, saying that the Euro faces its greatest crisis yet and that strong medicine is needed to save it. The Euro is of course the only currency in the world that stands to threaten the US dollar’s position as world reserve currency, and Europe’s current woes have certainly helped to stabilize the volatile US dollar.

  • The Daily Mail is reporting that President Obama personally called European leaders the week before last, to pressure them to go along with the bailout package to Greece designed by the International Monetary Fund. The President made phone calls to Angela Merkel, Nicolas Sarkozy, and Prime Minister Zapatero of Spain. He also pressured Zapatero to accept even more of the austerity measures currently being pressed upon Spain by the IMF, which include higher taxes and smaller public benefits.

    The Financial Times reports that Spain recently cut the salaries of public employees by 5%, froze pension funds, abolished at least one form of child welfare, and reduced services in the public health system. But the IMF wants to see yet more service cuts and tax increases, both of which are being opposed by Spanish trade unions, and the American President apparently agrees with the IMF. White House Press Secretary Robert Gibbs defended the President’s involvement in the domestic budgets of European countries, saying that the President would continue to “do what’s necessary to ensure this problem is dealt with and doesn’t spread.”

  • The idea that the global financial crisis is largely a result of white collar criminal activity seems to be picking up steam. Bloomberg News reports that Prime Minister George Papandreou of Greece is considering lawsuits against US investment banks that he believes may have contributed to his country’s financial demise. He made the statement on CNN’s program Fareed Zakaria GPS. This comes as Jean-Claude Trichet, President of the European Central Bank, expressed concern about currency manipulation through the sale of naked credit-default swaps on government bonds.

    Also the Committee of European Securities Regulators has announced an investigation of “exceptional volatility in the markets.” As we’ve reported previously, the US Securities and Exchange Commission is also investigating possible market manipulation on the New York Stock Exchange on May 6. And as the AFP reports, Iceland has gone so far as to arrest several of the top bankers at the country’s three largest banks, which collapsed in 2008, They’ve also issued warrants for the arrest of other bankers currently living abroad, and launched lawsuits against several others in the New York state Supreme Court.

  • An op-ed in Fortune Magazine by Dody Tsiantar suggest that Greece might be better off defaulting on its sovereign debt, since they will just have to borrow more money from the IMF in order to continue servicing the old debt. Also, the article points out that the austerity measures prescribed by the IMF are likely to send the country further into recession, reducing tax revenues, and thus the government’s ability to pay off debt. Tsiantar says that defaults in recent years by Russia, Argentina and Uruguay have led to rapid economic growth, following the inevitable immediate economic retraction.

    However, Greek Prime Minister Papandreou told Spanish reporters on Sunday that Greece would be neither defaulting nor even restructuring their debt. Reuters reports that he “did not believe his government would reach a point beyond which it could not ask people to tighten their belts further in order to convince markets its public finances were in order.” He then admitted that the austerity measures would shrink the economy, and added that the EU needs to provide “stimulus measures” to counteract that.

  • The Obama administration is being attacked for not only mishandling the continued oil disaster in the Gulf of Mexico, but trying to cover up the extent of the damage. As Fire Dog Lake reports, following recent revelations in the New York Times that researchers from the University of Southern Mississippi have discovered plumes of oil underwater wafting out from the leak site, these scientists have now been told by the government to stop granting press interviews. The plumes were said by Pensacola TV station WEAR to be “5 miles wide, 10 miles long, and 300 feet in depth at the time of the report, on May 17th. The study was funded by the National Oceanic and Atmospheric Administration, and was being highly-touted to the press prior to this discovery.
  • Appearances indicate that British Petroleum, not the government, is truly in charge of the oil disaster response. This is perhaps because the oil rig was offshore and not technically on American soil. This may or may not explain why CBS reporters looking to cover the response, were turned back and threatened with arrest by BP employees and officers from the US Coast Guard for trying to film a beach in South Pass, Louisiana. The Coast Guard officers said on camera that they were taking their orders directly from BP. Lieutenant Commander Rob Wyman, a spokesman for the Coast Guard, later told CBS that the incident had been caused by “confusion,” and that they were looking into the matter. He did not deny that BP was giving orders to the Coast Guard, and added that the media did have access to “impacted areas” through the use of 400 “embedded reporters.” This description of journalists reporting on a domestic situation, as if they were on a battlefield in a foreign land was disturbing to writers at The Raw Story, and several other blogs.
  • On a related note, McClatchy News reports that it is BP who is largely responsible for monitoring the extent of the spill, which they flatly admit they don’t have the equipment to do accurately. Spokesmen for BP have said that they can’t monitor the flow at the source and would rather focus on stopping the leak than gathering information. They have only reluctantly released video of the actual leak point, which they did only after a direct order to do so from the US Congress, and have thus left the government to rely on satellite imagery of the surface area, which as of last Tuesday was about the size of New Jersey, to make estimates of the extent of the spill. Peter Ortner, a biologist at the University of Miami, says that the National Oceanic and Atmospheric Administration has been “slow to consider sub-surface effects and didn’t deploy the sophisticated gear that might help surveying for submerged oil.” The New York Times reports that not even one test result from water samples has been made available from either BP or the government.
  • McClatchy News also reports that BP has yet to reveal test results on the quality of the air surrounding the spill, or the potential health effects on clean-up workers and fisherman working in the Gulf. Yet they have not encouraged the workers or anyone else to use any special safety gear while on the water. This even though several fishermen and clean-up workers exposed to the air there, including those working several miles away from the site, have reported symptoms such as headaches, vomiting, and respiratory problems. A senior scientist from the Natural Resources Defense Council announced on the council’s website that she herself could smell the oil miles away and that her air monitoring devices detected elevated levels of various toxic compounds. This matches similar findings by the Environmental Protection Agency.
  • The EPA also seems to have no control over the chemical disperants that are being used by BP to try to dissolve the oil. On Thursday the EPA gave BP an order to use a less toxic disperant than Corexit, which they are currently using, and a 72-hour deadline to comply. BP responded by saying that they would continue to use Corexit regardless of the government order, as they cannot find a better product to use “right now.”

Also included in this edition of the show is a commentary piece by me called “7 Reasons Why We Need a Global Default.”

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