[R-G] [BillTottenWeblog] Naomi Klein, Robert Kuttner and Michael Hudson

[Bill Totten]

Dissect Obama's New Economic Team & Stimulus Plan

by Amy Goodman

Democracy Now (November 25 2008)


On Monday Obama named New York Federal Reserve Bank President Timothy
Geithner to the post of the Treasury Secretary. Former Treasury
Secretary under Clinton Lawrence Summers was named the Director of the
National Economic Council in the White House. Obama also called for a
stimulus plan that will "give a jolt to the economy". We host a
roundtable discussion about Obama's latest economic moves [includes rush
transcript].

Guests:

Naomi Klein, Investigative journalist and author of The Shock Doctrine:
The Rise of Disaster Capitalism (2007).

Robert Kuttner, Veteran economic journalist and the cofounder and
coeditor of The American Prospect magazine. His latest book is called
Obama's Challenge: America's Economic Crisis and the Power of a
Transformative Presidency (2008).

Michael Hudson, president of the Institute for the Study of Long-Term
Economic Trends, Distinguished Research Professor of Economics at the
University of Missouri, Kansas City and author of Super-Imperialism: The
Economic Strategy of American Empire (1972, 2003). He is the chief
economic adviser to Representative Dennis Kucinich.


AMY GOODMAN: The Treasury and the Federal Reserve are expected to
announce a major lending program today that will finance billions of
dollars of consumer loans as well as business debt. President Bush said
Monday that he expected the country would recover from the QUOTE "tough
situation" and said his administration was working in "close
cooperation" with Obama's economic team to draw up plans to calm the
financial markets.

GEORGE W BUSH: This is a tough situation for America. But we will
recover from it. And the first step to recovery is to safeguard our
financial system. Last night on Air Force One coming back from Peru, I
talked at length to the Secretary about his recommendation - on the
decisions made to safeguard Citicorp. We have made these kind of
decisions in the past and we made one last night. If need be, we will
make these decisions to safeguard our financial system in the future.

AMY GOODMAN: Meanwhile Obama introduced the leading players in his new
economic team at a news conference in Chicago. He named New York Federal
Reserve Bank President Timothy Geithner to the post of the Treasury
Secretary. Former Treasury Secretary under Clinton Lawrence Summers
named Director of the National Economic Council in the White House.
Obama also announced that he had chosen Berkeley economics professor
Christina Romer to head his Council of Economic Advisers and Melody
Barnes as Director of his White House Domestic Policy Council. Obama
called for a stimulus plan that will quote "give a jolt to the economy".

BARACK OBAMA: We need a recovery plan for both Wall Street and Main
street, a plan that stabilizes our financial system and its credit
flowing again the same time addressing our growing foreclosure crisis,
helping our struggling auto industry and creating and saving 2.5 million
jobs. Jobs, rebuilding our infrastructure, roads, bridges, modernizing
our schools and creating the clean energy infrastructure of the 21st
century. Because of this moment, we need to restore both confidence in
the markets and restore confidence of middle-class families who find
themselves working harder, earning less, and falling further behind.

AMY GOODMAN: I'm joined now by three guests for a discussion on the
state of the economy and what to expect in the coming months. Veteran
economic journalist and the cofounder and co-editor of The American
Prospect magazine, Robert Kuttner, joins me on the telephone from
Florida. His latest book is called Obama's Challenge: America's Economic
Crisis and the Power of a Transformative Presidency (2008).

Investigative journalist Naomi Klein, author of The Shock Doctrine: the
Rise of Disaster Capitalism (2007), joins us on the telephone from Toronto.

We're also joined here in the firehouse studio by Michael Hudson. He is
president of the Institute for the Study of Long-Term Economic Trends,
Distinguished Research Professor of Economics at the University of
Missouri, Kansas City and author of Super-Imperialism: The Economic
Strategy of American Empire (1972, 2003). He is the chief economic
adviser to Representative Dennis Kucinich.

We welcome you all to Democracy Now! I wanted to begin with the
appointments. This is how president-elect Obama introduced the next
Treasury Secretary, if confirmed, Timothy Geithner.

BARACK OBAMA: Tim Geithner offers not just extensive experience shaping
economic policy and managing financial markets, he has an unparalleled
understanding of our current economic crisis in all its depth,
complexity, and urgency. Tim will waste no time getting up to speed. He
will start his first day on the job with a unique insight into the
failures of today's markets and a clear vision of the steps we must take
to revive to them.

AMY GOODMAN: And Lawrence Summers, named the Director of the National
Economic Council in the White House.

BARACK OBAMA: One of the great economic minds of our times, Larry has
the global reputation for being able to get to the heart of the most
complex and novel policy challenges. With respect to both our current
financial crisis and other pressing economic issues of our time, his
thinking, writing, and speaking have set the terms of the debate. I am
glad he will be by my side, playing the critical role of coordinating my
administration's economic policy in the White House and I will rely
heavily on his advice as to navigate the uncharted waters of this crisis.

AMY GOODMAN: We begin with Naomi Klein. Your response to these
appointments, and what they signify. If you could begin with Larry
Summers, the former Clinton Treasury Secretary.

NAOMI KLEIN: Hi Amy, its good to be with you. Well, I have to say it is
a profound disappointment. It really does represent a very safe choice,
but let's remember Barack Obama won this election saying that taking the
status quo, that staying with the same policies that have been governing
the country for the recent past, was actually a very dangerous course. I
think in many ways we are paying the price of the frankly intellectual
dishonesty of the progressive liberal left during the bush years.
Because Obama said again and again during the campaign that the crisis
on Wall Street represented the culmination of an ideology of
deregulation and laissez-faire trickle-down economics that had guided
the country for the past eight years.

And the truth is, it was not just eight years in which those policies
guided US economic policies. They certainly guided them under Reagan and
they certainly guided them under Clinton. That is where Larry Summers
comes in because Larry Summers was the last Treasury Secretary under
Clinton. And, he along with Alan Greenspan and Robert Rubin were really
the key architects of the policies of deregulation that created the
crisis that we're living now. And those key policies, as you know, are
the killing of Glass-Spiegel that allowed a series of very large bank
mergers that created these institutions that are too big and too
intermingled to fail we're told again and again. The deliberate decision
to keep the derivatives out of the reach of financial regulators - that
was also a Summer's decision. And also allowing the banks to carry these
extraordinary levels of debt - 33 to 1 in the case of Bear Sterns.

Now, in my book the Shock Doctrine I start a chapter with a quote from
Larry Summers. The context in which he says it was 1992 and it was when
he was making World Bank economic policy as it related to Russia, in the
midst of a financial crisis. What he said and this is why I quoted him
because it really shows the extent to which he is truly an ideologue,
and truly a follower of the very ideology - not just a follower but a
propagator of the very ideology that Obama ran his campaign against. And
here's the quote?this is Larry Summers in 1992: "Spread the truth. The
laws of economics are like the loss of engineering. One set of laws
works everywhere." And then he laid out those laws a little bit later.

He referred to the three "ations", and those were privatization,
stabilization, and liberalization. So he has been preaching the
doctrine. He is by no means an innocent bystander. He is a
dyed-in-the-wool privatizer, free trader. And he along with Tim
Geithner, his deputy, played key roles during very important economic
crises in Russia, during the Asian financial crisis, during the Mexican
peso crisis. When these countries were suffering a profound economic
crisis, created by deregulation, they preached more deregulation, more
privatization and  - this is key - economic austerity to disastrous
results. So I think this is really troubling. One thing that Obama said
is that Larry Summers set the terms of the debate for this financial
crisis and that once again is very worrying. Because if Barack Obama
thinks that these are the only terms, the parameters of the debate, then
its very, very narrow.

AMY GOODMAN: Naomi are you there? Well lets turn to Robert Kuttner,
we'll get Naomi Klein back on the line from Toronto. Author of Obama's
Challenge (2008) and founder of American Prospect Magazine. Do you have
the same feelings as Naomi Klein about these two choices?

ROBERT KUTTNER: Mostly, I'm not quite as pessimistic as she is because
first of all, Obama is the President, and not Summers. I certainly wish
someone other than Larry Summers had been appointed. My candidate had
been Sheila Beir, the head of the FDIC, who has been much more proactive
not just to throw money at banks but to take them over. I totally share
Naomi's view of Summers, but I think there are a couple of differences.
Number one, we have reality on our side in the sense that there is a
very serious crisis. And if Obama follows the advice of the 90's version
of Larry Summers, he will be politically toast.

I think even Summers, because he is such an opportunist, has lately been
calling for a very large stimulus package, has been calling for tighter
regulation of banks. Now you have no way of knowing whether that is
sincere or whether its posturing, but I think Summers is smart enough to
recognize that partly because of its own policies, things are in such
disastrous shape, different policies indicated. Whether he can be the
instrument of change is an open question. I can point to a couple of
silver linings here. Number one, in Obama's own speeches on the subject,
he's very much been on the side of stringent re-regulation of financial
institutions as the price of recapitalizing them and also as the
necessary policy.

There's a very good person who is going to be in charge of the specifics
of what banking regulation should be going forward. That's Dan Torillo,
who's one of the two or three progressives present at a fairly senior
level inside the Obama administration. I completely agree with Amy's
assessment of Larry Summers, I'm not quite as despairing ...

AMY GOODMAN: Naomi's assessment. But let me ask you something Bob:
William Greider had an interesting piece in The Nation. He said:

"On Monday, Geithner was busy executing the government's massive rescue
of Citicorp - the very banking behemoth that Geithner and Summers helped
to create back in the Clinton years - along with Federal Reserve
Chairman Alan Greenspan and Robert Rubin, Clinton's economics guru. Now
Rubin is himself a Citicorp executive and his bank is now being saved by
his old protege (Geithner) with the taxpayers' money. Geithner has been
a central player in the deal-making, from Bear Stearns to AIG to Citi.
The strategy has not only failed, it has arguably made things worse as
savvy market players saw through the contradictions and rushed out to
dump more bank stocks."

And ... Mark Ames ... in writes, "Ultimately Summers was one of the key
architects of our financial crisis. Hiring him to fix the economy makes
as much sense as appointing Paul Wolfowitz to oversee the Iraq
withdrawal." Your response, Bob Kuttner?

ROBERT KUTTNER: I basically agree. The only thing I can say, and maybe
this is because I am a congenital optimist and because I have some faith
in Obama's own leadership, and intellect - although I have to contradict
myself and say if he's such a smart guy why did he appoint these
fellows? I do think Timothy Geithner is a competent technocrat. He is
not an investment banker himself. He's been a civil servant for almost
all of his career. And secondly, when he was pursuing these failed
policies, he was doing so as part of a threesome that included Ben
Bernanke and Henry Paulson. And of the three, Geithner was the most
inclined toward tough regulation as the price of bailout. But Greider is
absolutely right about the intense conflicts of interest of which Rubin
is both the emblem and substance.

And the question is, whether Geithner and Summers - in very different
historical moments - can turn into different kinds of people under the
leadership of a president who knows his own survival depends on pursuing
a recovery. I certainly wish other people had gotten these positions. I
am not quite prepared to conclude before the man is even inaugurated
that this dooms the Obama administration to failure, but it certainly
would have been better if he had appointed more progressive people.

AMY GOODMAN: We're talking to Bob Kuttner co-founder and co-editor of
American Prospect Magazine and author of Obama's Challenge. Naomi Klein
wrote The Shock Doctrine: The Rise of Disaster Capitalism. And we will
be joined by Michael Hudson. He's just back from Berlin. Stay with us.

[break]

AMY GOODMAN: As we talk about the latest appointments by the
President-elect Barack Obama, Naomi Klein, our guest from Toronto, she
wrote The Shock Doctrine: the Rise of Disaster Capitalism. She is just
back from Poland. Bob Kuttner is with us. [He is] co-founder and
co-editor of the American Prospect. He has written Obama's Challenge,
and Michael Hudson, Co-founder and President of the Institute for the
Study of Long Term Economic Trends, also the professor at the University
of Missouri at Kansas City. You [Michael Hudson] are just back from
Berlin [and will] talk about the international response.

And what Bob Kuttner says is he is an optimist and whoever [Obama]
chooses, it does not mean that is the position Barack Obama will take.

MICHAEL HUDSON: I think in a way it does. I think the deal that Obama
has made is that when he talked about change, he was not talking about
the vested interest ... he wasn't talking about finance or real estate,
or the FIRE sector. He is going to leave Wall Street and vested interest
in the hands of the people who [represent] continuity from the Bush
administration through the Clinton administration. And [Obama] is going
to concentrate on infrastructure, and hiring, work-place conditions, the
environment.  But he is not going to change the debt position, and the
most worrisome aspect of the appointment of Summers is indeed, as Naomi
pointed out, what he [Summers] did in Russia under privatization. He
created a kleptocratic class of billionaires who will be ruling Russia
for the next hundred years. And the key was to use public expenditure
that would increase private wealth. And I think what the plan is from
everything Obama has said is that there is going to be a heavy
government expenditure [on] infrastructure here.  [It will be] very much
like it was in Chicago and this infrastructure is going to create huge
real estate fortunes for the property along the lines in the vicinity of
the location infrastructure. It's going to create huge financial fortunes.

AMY GOODMAN: Michael Hudson, at least when he is talking about
infrastructure, is he talking about mass transportation?

MICHAEL HUDSON: Largely that.

AMY GOODMAN: I mean, as opposed to highways and roads, and actually mass
transit?

MICHAEL HUDSON: Yes, that is certainly the key. And mass transit in
almost every country creates an increase in real estate values along the
routes that could actually - the rental increase that is created by this
transportation could actually finance the entire transport system. For
instance in London when they built the tube extension to their financial
district, they created thirteen billion pounds worth of increased real
estate value. The tube itself cost only eight billion. They left this
GBP 13 billion real estate value in the hands of the private landlords.
Same thing in Chicago in the United States. There can be a very heavy
investment in mass transportation here. This is going to create enormous
real estate values. The tax system will leave these [increased values]
in private hands.

And I think all of the tax proposals that Mr Obama has spoken about have
to do with income tax, primarily. The rich people prefer not to earn
income, because you have to pay taxes on them. They prefer to make
capital gains. So the intention of the economic team that Mr Obama's
brought in, is really to create a huge capital gains economy and even
more disparity of wealth while leaving in place the one thing that
should have been addressed in the last year and that is the enormous
debt overhead. Nothing is happening at all on that. He is adding to
debt, not reducing it.

AMY GOODMAN: Barack Obama throughout the campaign continually said that
- wealthy the people should be taxed, and went after the Bush tax cuts.
But now in yesterday's address, he seemed to back off, saying well, he
would let them expire perhaps, that's a possibility, in that I think it
was 2011. Your thoughts?

MICHAEL HUDSON: The kicker is when he [Obama] is talking about tax, he
is talking about income tax. Most wealth, is not taxed, because most
wealth takes the form of return capital gain, most wealth does not pay
FICA wage withholding or others, so what Obama is talking about is
taxation at the margin. He is not talking about the kind of wealth, and
the kind of returns that Wall Street gets, which are not subject to
taxation at all. In fact, the giveaways, that the treasury put into the
bank bailout law, says that because the banks have bought affiliates
that have tax loss carry-forwards, they are not even going to be subject
to income taxation. So the whole issue of ... the devil's in the details
of the small print and Mr Obama, thanks to his appointing Summers and
Geithner and this team, is going to leave it there. The Russian
kleptocrats didn't have to tax on income,  As the phrase went, "only the
little people pay taxes". I am afraid that's going to be the case under
Mr Obama also.

AMY GOODMAN: Bob Kuttner, why are the banks not asked the same questions
that [the] auto industry is asked? You have Nancy Pelosi and that others
are saying, "When you bring us the plan, maybe we'll talk about giving
you money". Do the banks have any plans with the money they're getting?

ROBERT KUTTNER: No, and of course that's what we should be doing. I
think rather than throwing money at them we ought to probably
nationalize one or two banks. That with the money taxpayers are putting
into the banks does what money usually does, producing ... The amount of
money taxpayers are putting into banks at this point is more than the
total value of the stocks of these banks as valued by Wall Street.

Well if you're putting in a majority share of the money, you should get
a majority share of the ownership. If banks are too traumatized to
resume lending - even with public money - then if we had a
publicly-owned bank or two, we could show them how to do it. We could
also have a complete look at their books, which we don't now have. One
question being asked about Tim Geithner is that if the Federal Reserve
is the agency charged with examining bank holding companies and it was
the strategy of Citigroup as a bank holding company, as shown in
Sunday's Time investigative piece, the strategy of the holding company
was to do all of these exotic speculative investments.

Where was Tim Geithner at the Federal Reserve of New York which has the
examiners that are supposed to be examining the bank at the holding
company level. Why didn't they get a look at the book? If we do not have
tools to allow examiners to get inside to dig deep inside the plumbing
and understand what dangerous risks bank speculators are taking, we need
to do two things. We need to change the laws so the agencies can have
adequate supervisory power. The agencies need to use that adequate
supervisory power. And in the meantime, we need to take this money and
just nationalize a couple of banks outright. I completely agree with you
that there is a double standard vis-a-vis the banks and vis-a-vis Detroit.

It is a little bit easier ... [to have] the political will to just take
over a bank [than it is] to take over an auto company. Because the
question remains, even if we were to require the auto executives to come
up with a plan for conversion to fuel efficient cars and [if we were to]
fire the auto executives and get people who were competent and [if were
were to] get public representatives on the company boards, you still
[have] to come up with products consumers want to buy. And that has so
far eluded Detroit. It has not eluded the Japanese competitors of
Detroit. But, oddly enough, the recipe of how you fix a bank is somewhat
easier than the recipe of how you fix an auto company. Stay away from
these exotic financial instruments, get rid of conflicts of interest,
have transparency. And we [if we] had the political will, it would not
be that difficult to get the banking sector back on track. Detroit, if
anything, is even harder.

I think Pelosi is right to say that we don't want to throw money at
Detroit until we see the plan, but we ought be doing at least as much
for the banking sector.

AMY GOODMAN: Naomi Klein, your comment?

NAOMI KLEIN: Just coming back to what we can expect from Summers [and]
Geithner. I think it is clear there's going to be a major departure from
the ideology of the idea the government cannot do anything. We'll see
major economic stimulus, major investments in infrastructure, as Michael
was discussing, and one hopes that there will be a lot of investment in
infrastructure.

But the key issue [is] we also want to be optimistic. Part of what
causes ... the situation that seems to be very disappoint[ing]
appointments is the fact [that] we [have] not been honest about the
legacy of the Clinton years. So much misinformation was spread during
the election campaign, because it was a nice message to present the
nineties as these wonder years in contrast to the Bush years. That is
exactly what created the situation where you could have Summers been
presented as the wise man instead of going down with Alan Greenspan.
When Alan Greenspan's reputation was raked over the coals, it should
have Rubin and Summers alongside him.

And I think we have nobody to blame but ourselves for that failure. So
essentially, it was an electoral strategy ... that relied on
intellectual dishonesty. And now to continue to make excuses for Obama
is a real mistake, because he is not running for election anymore. He
has already won, so there is no reason to be pandering in this way. In
terms of the real issue here, yes there will be stimulus. But how will
it be paid for? Obama ran an election campaign promising to increase
taxes on the wealthy. And Rahm Emanuel has already hinted that he might
not do that right away. We are already seeing hesitation about the
commitment to not renew the Bush tax cuts. Then there's a huge fight
over capital gains tax and the kinds of taxes paid by hedge funds.

Here I think it's important to remember [that] Larry Summers is coming
straight from a hedge fund. He's managing director of one of the most
secretive hedge funds around. So the real question is not whether they
will spend taxpayer money - they will [spend] on infrastructure. But the
point is will they just just rack up huge debt and deficits or will they
actually pay for this with taxes on the wealthy, which is what they
promised to do and what we're seeing Gordon Brown begin to do in
Britain. Because if they do not pay for this [in] an equitable way, in a
progressive way, then what will happen is this huge investment in
infrastructure will a create huge economic crisis down the road. It will
be blamed on Obama. And then, there will be a wave of privatizations
[of] these new investments in public spending. There will be a whole new
bubble.

AMY GOODMAN: You do not agree, Michael Hudson?

MICHAEL HUDSON: Here is the problem: most infrastructure is built by
states and localities. I do not think there will be privatization of
this new infrastructure because right now, the states and localities are
broke. Here in New York city [it has been] announced they're cutting
back on the Second Avenue subway, raising transport fares. All over the
United States, municipalities are broke. The idea of bringing in Summers
is to do this from the very beginning, with private funds that will be
provided largely by the government itself. And if you look of the
bailout money that has been given, yesterday Bloomberg calculated over
7.7 trillion dollars of just the government taking over from the
financial sector this year. Of all of the 7.7 trillion dollars, what has
not been done?

One thing that has not been bailed out has been the pension benefit
guaranty corporation. They are already $25 billion in deficit. And
Congress a few years ago passed a law [saying] that this year if they're
not fully funded, they are going to have to suddenly make up the entire
shortfall. Which is essentially going to make many corporations
insolvent for their pension funds. Forcing a shift away from guaranteed
pensions to sort of 'whatever we have we'll pay you'. Standardize
contributions, but not standardized payoffs. So there's going to be an
enormous squeeze on the kind of labor that is employed in states and
municipalities, and unions for infrastructure to essentially privatize
from the beginning with government guarantees, government funds and it
will be a bonanza for the banks and that's out there - they are going to
[try to] earn their way out of debt. By lending to private funds instead
of government funds.

AMY GOODMAN: President-elect Obama was asked about his plans for the
auto industry at his news conference yesterday. And he talked about his
support for a bailout of the big three.

BARACK OBAMA: We can't allow the auto industry to simply vanish. We have
to make sure it is there and the workers and suppliers and businesses
that rely on the auto industry stay in business. What I have also said
is that we cannot just write a blank check to the auto industry.
Taxpayers cannot expected to pony up more money for an auto industry
that is been resistant to change.

AMY GOODMAN: I want to turn to a film that came out a few years ago
about the electric car. In 1996 General Motors introduced the EV-1
electric car in California and Arizona. Hundreds of the electric cars
were soon on the road, then they all disappeared. The mystery behind
their disappearance is the subject of this documentary "Who Killed the
Electric Car?" We featured the documentary on Democracy Now last year.
And we interviewed the filmmaker. In this clip, we start with Peter
Horton the actor and then Tom Hanks is on David Letterman.

PETER HORTON: There's nothing like driving a car when you realize as you
are sitting in traffic there's no pollution coming out of your tailpipe.

DAVID LETTERMAN: By driving an electric car, what are you sparing us from?

TOM HANKS: I'm saving America, Dave. That's what I am doing, I am saving
America by driving electric cars.

AMY GOODMAN: That was Tom Hanks speaking on the David Letterman Show.
Despite the praise from drivers, General Motors stopped manufacturing
the cars and forced all drivers to return their EV-1s. GM was able to do
this because none of the cars had actually been sold, only leased. After
the electric cars were removed from the road they were sent to Arizona
where they were crushed.

CHRIS PAINE: We flew over at General Motors and looking down, we could
see right next to the racetrack where the EV-1 was first tested, we saw
maybe 50 EV-1s, crushed and put on top of semi flatbeds right next to
the yellow crusher. General motors is almost finished off I think. I
don't imagine there's many EV-1s left that haven't been crushed out.
It's pretty sad.

DAVE BARTHMUSS: There's one of four things that will happen with the
EV-1s. They will go to colleges and universities, engineering schools.
They'll go to museums and other displays across the country. Other EV-1
vehicles are being driven by our engineers and the other option for
EV-1s at the end of their life is recycling. But know that every part of
the EV-1 is going to be recycled, dismantled through a third party and
then reused. Everything is going to be recycled, we are not just going
to crush it and send it off to a landfill.

JIM BOYD: When I saw the picture of the pile of crushed cars, it hurt
and I, you know, I thought it was pretty spiteful.

IRIS OVSHINSKY: To see on the computer, on the internet, that the
crushed EV-1s that GM did?it was tragic.


AMY GOODMAN: An excerpt of "Who Killed the Electric Car" by Chris Paine
the filmmaker. Robert Kuttner, could you imagine if the CEO of GM
instead of coming with the other CEO's of Chrysler and Ford in a private
jet came to an electric car, of course, he could not because GB killed
the electric car.

ROBERT KUTTNER: That film is one of the most profound documentaries of
our time. GM was actually ahead of Toyota.  And now [we're] working our
way back towards a plug-in electric car via modified hybrid.  But they
had the technology twelve, fourteen years ago.  You can't make this
stuff up. The patent for the battery that made possible the EV1 was
bought by Exxonmobil just so it would never be utilized again. I think
that is why in restructuring the auto industry, you have to get rid of
the executives.

It's not just enough [to] throw money at them. It gives you a sense of
how profound the challenge is.  Just analogizing Bob Rubin for a second,
in a country where market capitalism has as much power as it does in the
US, whether the villain of the piece is GM or Robert Rubin and
Citigroup, it is bigger than any one person.  It's a system you have to
fight. It's the mark of their power - the residual power of the system.
Even when the system has come to a crisis of its own making, and your
president is as attractive and intelligent as Barack Obama, the
institutional practice to reappoint the same standards [is]
overwhelming. It is only when Obama looks over the cliff of the failure
of his own administration because he has not thought boldly enough, that
he may change his plans and move in a more radical direction.

So far the direction [he has moved], whether its taxing rich people, is
disappointing. The same thing was true of the Roosevelt administration
in the beginning. All you can do is hope that pressure from folks like
us, ordinary people and social movements, and from the dire
circumstances we face, will push the administration in a more
progressive direction.

AMY GOODMAN: Michael Hudson?

MICHAEL HUDSON: I think the idea that Obama will change his economic
philosophy is quixotic. In Berlin, almost everybody there was sure that
Obama would be another Gorbachev, somebody laying low, somebody going
along with seemingly conforming so that all of a sudden nce he was in he
could do a revolution. Almost everybody was hoping against hope that
would be the case. And instead of looking like Gorbachev, not all of the
sudden MrObama is looking like Yeltsin. Just the umbrella for these
kelptokrats to come back in. The point that Robert Kuttner made, the
bottom line for that is the fatal alliance between the American auto
industry and the oil industry. It was the auto industry that bought up
public transportation in Los Angeles and other cities after the World
War II, and tore it down some people would not have public
transportation and would have to have oils to drive cars.

AMY GOODMAN: Naomi Klein, when you were last on, you were talking about
structural adjustment programs for banks in the auto industry. But why
aren't if the U.S. tax payers are going to bail out the wealthiest
corporations and banks in this country, why aren't demands being made
like the all the boards have to resign, the leadership has to be thrown
out, and if the US has to inject money, sometimes the poorest people in
this country, there have to be certain rules which include you cannot
build another SUV? Naomi Klein.

NAOMI KLEIN: Exactly. The point I made before, when anybody comes
looking for a [loan], whoever has the money has the leverage. We know
that from the International Monetary Fund and you know that from your
local bank. They set the conditions for that loan. When you look at
deals that have been negotiated, not just by Henry Paulson, but also by
Tim Geithner - you know he's the one, really the key person, that
negotiated the JP Morgan-Bear Sterns deal; he was also central in the
AIG deal. And what we see again and again [is that] taxpayers have taken
on enormous risks from these companies. But they have not been exerting
control in terms of reregulating the sector as a whole.

When exactly is the Re-regulation going to happen? This is the moment
[that the government has] high leverage. It is not just about firing the
boss and [those who sit] on the board.  It is about...regulating exactly
what Larry Summers and Tim Geithner de-regulated under the Clinton
administration. The real question is: Do these people have the humility
to fix their own mistakes? My question: Is his (Larry Summers') ego too
big to fail? These guys should not be promoted at this point. Their
reputations should really be destroyed by their own track records.

All these people are constantly talking about how brilliant [they are],
despite the dismal track record in this country and other countries in
which they have meddled, including [in] South Korea and Russia.

The key issue here, I think, in coming back [to] the issue is [that]
Obama is coming to these decisions because he is under enormous pressure
from above - Wall Street.  How do you transition from a pro Obama
campaign movement to an independent social movement that will put
counter-pressure on him from [below]? Those are the conditions under
which Roosevelt sold the new deal as a compromise to the elite. We do
not have those dynamics right now. We have a situation where we have
super-fans for Obama, constantly apologizing for every decision that he
makes, versus a gloves-off elite who are putting real pressure on him
behind the scenes. And we are seeing the result.

AMY GOODMAN: I want to thank you all for being on. Naomi Klein wrote The
Shock Doctrine: the rise of disaster capitalism. Michael Hudson, just
back from Berlin, has written Super-Imperialism: The Economic Strategy
of American Empire.

http://www.democracynow.org/2008/11/25/naomi_klein_robert_kuttner_and_michael


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