Interview
Debtor Nation
The Hijacking of America’s Economy Some few issues ago, Acres U.S.A. quipped, “Why not dismantle the CIA and have the government take out one subscription to Harper’s magazine?” Certainly the editors of Harper’s have a track record of calling the international shots that leaves the CIA in the dust. An agency that could not discern that the Soviet Union was being closed down should hand over its trench coats, mini-cameras and spy glasses. One of the reasons Harper’s calls the economic shots so often is Dr. Michael Hudson, the president of an economic service so unique it might well summon Simon Kuznets from the grave. Kuznets often remarked, “They’re using my Economic Indicators for short-term projections. They were designed to forecast the long term.” Hudson’s business card reads, Institute for the Study of Long-Term Economic Trends. He is a Wall Street financial analyst, distinguished research professor at the University of Missouri — Kansas City, and the author of books that could reshape economic thought in America and help egalitarian forces change the kleptoparasitic financial structure that now holds most Americans in thrall. His 1972 book, Super Imperialism: The Economic Strategies of American Empire (updated in 2003), is a critique of how the United States exploited foreign economies through the International Monetary Fund and the World Bank. He is also the author of The Myth of Aid and Global Fracture: The New International Economic Order. He is presently chief economic advisor to Dennis Kucinich in his presidential campaign. At the recent American Monetary Institute meeting in Chicago, he laced his economic insight with snippets on human foibles: “[A British politician] looked at me, his eyes widened, and he laughed uproariously. He said, We’ve had an intellectual breakthrough. The poor are honest! They believe that the poorer they are, the more it is a matter of honor to pay their debts!” In this taped interview, Acres U.S.A. asks the questions, and Hudson’s responses are eye-openers, a threshing for the failure of academia to teach economic thought, chastisement for foreign nations that “want to be poor,” and rejection of free trade’s haunting fear that labor might rise above subsistence after paying interest and debt.
Michael Hudson, Ph.D.
ACRES U.S.A. Let’s start with subprime lenders, 182 of which have filed bankruptcy, causing Merrill-Lynch to write off $8 billion, Citibank for another $11 billion, and others reporting rising losses. What happened? MICHAEL HUDSON. Subprime lenders were selling homes without a credit check, inflating prices, and now their managers are walking away with golden parachutes. They set up their clients for a scam and acted in unethical ways. My basic judgement is good riddance — not only to them, but also to their parent banks and to the money managers that bought their debt, knowing full well that these debts would go bad, yet not caring, just so they could show higher three-month earnings premiums on their high-yield “junk” mortgages.
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ACRES U.S.A. That’s for the companies, but what will be the impact on all these people losing their homes? HUDSON. You’re right that the problem of people losing their homes is a separate problem from the survival of junk-mortgage companies and their Wall Street parents or managers and the institutional investors who went along. The fact that the mortgage companies are being folded means that it is harder to have recourse against loans that were unethical to begin with. The solution has to be political in character, but so far the Democrats in Congress are supporting the creditors, not the people who are losing their homes. When the Democrats say they want to pass a law to bail out homeowners and keep troubled mortgage debtors in their homes, they mean they want to use
January 2008 • Vol. 38, No. 1