democracy incompatible with debt collection

Video - The Greek debt scandal has also pitted U.S. banking interests against France, Germany and other European powers. "The Americans are putting immense pressure on Europe saying, 'We will wreck your economy if you don't wreck Greece's economy,'" says economic analyst Michael Hudson on Democracy Now! Nov. 3. President Obama is "basically telling Europe, 'Don't go the democratic route, support Wall Street.'"

MichaelHudson | AMY GOODMAN: And what does it mean if Papandreou is out?

MICHAEL HUDSON: It could mean a number of things. Either it means that other members of his party—the finance minister, who is against the referendum—will come in and not hold a referendum at all, and try to keep Greece on the austerity plan, or there will be a fall in the government, a no-confidence vote, and people will presumably vote for the Conservative Party, which is very much like the Republican Party in the United States.

The reason there have been all of these demonstrations is the same reason that the Occupy Wall Street movement is in New York and the rest of the United States. The frustration is not only at the financial overhead, the debt overhead; it’s at the political fact that there is no choice. Both the Conservative Party and the Socialist Party in Greece, just like the Republicans and Democrats here, are both taking the side of the banks. So people don’t even have a chance to express a democratic alternative to essentially being ground down by debt peonage and letting the economy polarize even further between creditors and debtors.

AMY GOODMAN: And the significance of President Obama being there, and what this means—the meeting of the G20, what is happening in Greece—for the United States?

MICHAEL HUDSON: He’s making the threat that Europe has to cut its own throat in order to save the United States hedge funds and banks from taking a loss on the Greek bonds that they’ve insured. One of the reasons that people have been willing to buy Greek bonds is they bought credit insurance. And the European banks, mostly—maybe not Barclays or Deutsche Bank, but most banks—are not willing to write credit insurance, because everybody at the Böckler Foundation conference here in Berlin, every single economist says there is no conceivable way in which Greece can pay its debts. But the American hedge funds and bankers have come in and said, “We’ll write a guarantee.” Then they lean on President Obama and Tim Geithner to tell the Europeans: “You have to make Greece pay, so that we win the bets that we’ve made, because if we lose the bets, then we go under and the stock market crashes, and a lot of people can’t collect on their money market funds.” So this is just naked brute force that Mr. Obama is doing. He’s basically telling Europe, “Don’t go the democratic route. Support Wall Street.”

AMY GOODMAN: Michael Hudson, economist, president of the Institute for the Study of Long-Term Economic Trends, distinguished research professor of economics at University of Missouri, Kansas City, author of Super Imperialism: The Economic Strategy of American Empire.

We’re going to go to break. When we come back, we’re going to talk about a related issue. What happened with MF Holdings? How is related to Greece and to the United States? Its head, Jon Corzine, was both a senator and governor from New Jersey. Stay with us.

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AMY GOODMAN: I wanted to bring Michael Hudson, the economist, back in to relate what we’re seeing with MF Global to what’s happening in Greece and in Europe right now. Michael?

MICHAEL HUDSON: I was discussing that earlier this morning with a German investment banker, and their belief is that, so far on Wall Street, Wall Street’s been able to have the attorney general they want, Eric Holder, who has refused to prosecute any financial crime on Wall Street at all, as my colleague Bill Black has pointed out. But now, the investment banker told me, it’s very much like The Godfather. Even the Mafia once in awhile has to get rid of one of its own members and sacrifice its own members for the common good. And the European told me that in Europe, it’s really a no-no to use customer funds for your own—to gamble with that at all, that this is so criminal that if there is no criminal prosecution of Corzine, if it turns out that he did take the money, then that is going to lead the European capital markets to withdraw their money from the American capital markets, because the whole — the whole of Wall Street would turn out to be gangsters, without any prosecution, without any rule of law at all.

So, this is the moment of decision.

Is Mr. Holder going to continue to refuse to prosecute any financial criminal and saying, “Crime is us,” or is he finally going to do—enforce the rule of law on America? Nobody knows over here.

AMY GOODMAN: William Cohan, your response?

WILLIAM COHAN: Well, I think Professor Hudson is a little extreme in comparing Wall Street to the Mafia and gangsters.

MICHAEL HUDSON: I didn’t compare it. That was the Wall — that was the German banker.

AMY GOODMAN: And Michael Hudson, we just got this word, breaking news, that the Greek prime minister, George Papandreou, is expected to offer his resignation within the next half-hour of this broadcast, sources in Athens have just told the BBC. Your response?

MICHAEL HUDSON: Well, I think the issue is—

AMY GOODMAN: We’ve got five seconds.

MICHAEL HUDSON: —what the man just said: what kind of capitalism are we going to have? Will it be industrial capitalism—