The Fictitious Economy, Part 2, An Interview With Dr. Michael Hudson

[Joanne98]

Transcript of a A Guns And Butter Interview by Bonnie Faulkner

In the second half of an hour long interview with economist Dr. Michael Hudson broadcast on Guns And Butter June 25, 2008, Dr. Hudson explains some of the factors in the price of oil that are seldom discussed in the mass media, and details why the price of a gallon of gas may double again before year's end. He also predicts a long, slow and inevitable economic depression in the US and in other nations which do not decouple themselves from the US dollar, and talks a little about what to expect from a new US administration next year.

The Fictitious Economy, Part 2, An Interview With Economist Michael Hudson
The following is a transcript of the first half of an hour-long interview with financial economist Dr. Michael Hudson, that was broadcast on the Pacifica Radio program Guns and Butter. The interviewer was the show's host, Bonnie Faulkner. A link to the MP3 audio of the full hour is provided below.

BF: What is economic globalization really? I mean isn’t it really just an unregulated asset grab that turns over the natural wealth of individual nations to the global financial elite?

MH: No. It’s very heavily regulated. The economy is moving towards central planning by the large financial institutions that are coordinated by the International Monetary Fund and the World Bank. So, the globalization is a centrally planned asset stripping of countries outside of the United States. Countries are to give their economic surplus to the United States as exports and they are to serve as markets for whatever the United States can produce in excess, mainly agricultural crops and military equipment. So globalization is very, very tightly regulated.

BF: Why do national governments around the world co-operate with corporate globalization?

MH: There are two reasons: either they’re wittingly pro-American or they are run by oligarchies, which are making money by this process because the essential philosophy of globalization is to strengthen oligarchies. Or they’re just afraid of disagreeing with the United States and passively go along with it. The assumption underlying all political theory and economic theory is that nations and individuals act in their own self-interest and obviously that premise of economic and political theory is not being followed. They’re not acting in their self-interest. China is. A few other countries are and the United States is. But it’s as if other countries are passively going along with a strategy that is undercutting them… or at least was until Venezuela, Cuba, Brazil and Argentina began to break away here and China moved to create the Shanghai Cooperation Organization to make an Asian currency block.

BF: A very pressing question at this time is the massive food and energy costs worldwide, which are causing misery and protests. Do you think speculation at the Commodities Future Markets is the primary cause of skyrocketing prices or is it more a matter of monetary policy… low interest rates, easy credit, and the weak dollar?

MH: Well, neither. Well, speculation is a function of monetary policies and deregulation, so certainly speculation has played some role but at the same time there are many other factors that have been pushing up oil prices. The main factor is the decline in the dollar. Americans have seen oil prices go up but they’re not going up for the Europeans so much. They’re not going up for countries that have hard currencies. The OPEC countries have said the oil prices are going up for reasons:

the dollar is going down and we’re been pricing our oil in Euros, so as the dollar depreciates against the Euro you’re going to have to pay more and more dollars in order to give us exactly the same price in hard currency we were getting before;

the dollar is going down because of the war in Iraq and OPEC says we don’t want to encourage you to have a thriving economy while you’re attacking us all, so we’re not going to support the war in Iraq. We’re going to raise the price. And they say

as the dollar goes down, we’ve lost so much money on the dollar reserves that we’ve held in the past years that we have to make it up by charging more. So this is a response to the war in Iraq and the free ride. And that means the prices will continue to go up until the United States cures the balance of payments mainly by cutting back its military spending and reindustrializing the economy.

BF: Well you know I had thought that the rise in oil prices, of gasoline prices for instance for Americans, did have to do with the demise of the dollar and yet when I saw the protests in Europe, the truckers blocking the roads because of the high fuel costs, I began to think, well it’s got a lot more to do with other elements involved other than just the demise of the dollar.

MH: Well, it’s connected to the war as I said. The prices have gone up recently in Europe but nowhere near as much as they’ve gone up for the United States. A lot of these protests have been organized for covert political reasons that… I’m not sure exactly what they are, but they are more than they seem. But again the OPEC countries are saying we want to recoup the dollars losses that we’ve had on our foreign exchange reserves and Europe has not made that connection. They act as if somehow just the government can somehow stop taxing oil. It’s not going to do that. And all the strikes are doing is disrupting the local economies.

BF: Now I believe that you have written that OPEC is cutting back on its oil production, is that true?

MH: There have been mixed messages. Some countries wanted to cut back. Last week Saudi Arabia said it was going to produce more and the other OPEC countries, Iran and Venezuela and others said, “Wait a minute, if you produce more when we’re saying produce less, then we’re going to expel you from OPEC... at the very least.”

And the fact is, producing more crude oil is not going to have any effect at all on the gasoline prices here because there is no refinery capacity. Every refinery in the world is now operating at full capacity. There is no extra shipping capacity. Shipping rates are going way up because there’s nothing to ship them in. So no matter how much more Saudi Arabia says it’s going to produce there’s no means of shipping it to the US or other countries and no means of refining it once it gets here. So this is all basic propaganda. The oil companies are very happy with the situation. For them the Cheney and Bush war in Iraq has been a win/win situation. if they win the war they get to grab all the oil for themselves and take out the Russians and Chinese that were beginning to develop the oil resources under Saddam. And if they lose the war there’ll be such a disruption in oil supply that prices will go up and create an umbrella for the American producers who make super profits. So they’re very happy both ways and they like to blame foreigners because they don’t want to be blamed themselves.

Continued>>>
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[Karenina]

1. Wow!

:wow: