Bill Black: Banks try to start a run on the banks in Ecuador
Story Transcript
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Baltimore. And welcome to this week’s version of The Black Financial and Fraud Report with Bill Black, who now joins us.
Bill’s an associate professor of economics and law at the University of Missouri–Kansas City. He’s a white-collar criminologist, a former financial regulator, and author of the book The Best Way to Rob a Bank Is to Own One. Thanks for joining us again, Bill.
BILL BLACK, ASSOC. PROF. ECONOMICS AND LAW, UMKC: Thank you.
JAY: So what do you got this week?
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BLACK: Craziness on three continents. So I just got back from Ecuador, invited by the government of Ecuador to speak about antitrust, and fly in, and randomly there is a banking crisis, except the weirdest banking crisis I’ve ever seen. The four largest banks of Ecuador were trying to cause a banking crisis. They were upset that the government was going to have an excess profit tax and to cap executive compensation. So they emailed every depositor in Ecuador a message that said basically, we think that this may cause the bank to fail and maybe you should stage a run.
JAY: So they try—they organize a run on their own banks.
BLACK: They’re trying to do so. I’m not sure that they’ve actually created the run yet. But this is all to pressure the government to withdraw the legislation. And the four biggest banks control about 85Âpercent or 90Âpercent of the banking market in Ecuador so they can earn nice monopoly profits. And they make—at one of the banks, the CEO makes more than 760 times what an average worker makes, to give you some idea of how out of control compensation is.
JAY: Any suggestion the government’s going to cave?
BLACK: No. I think that there’s a decent chance the government is not going to cave. It counterpunched. It actually brought me in front of a number of members of their assembly, their national legislature, to talk about why this was outrageous and what kind of enforcement actions and even criminal actions we would have taken against the banks.
JAY: And we’re doing a story on that. So that—we’ll either have run it or will run it in the next couple of days. So that’s craziness on one continent. What’s the next continent?
BLACK: Second continent is that President Correa of Ecuador wasn’t available to weigh in on this because he was in Spain dealing with their craziness. So this is the Ibero-Americas conference, in which the prime ministers of Spain and Portugal and the heads of state of Latin American nations get together. And Correa and a number of other of his counterparts tried to convince the Spanish prime minister that the austerity provisions that he’s imposed that have led to Great Depression levels of unemployment were catastrophic disasters.
Here’s the kicker. The prime minister of Spain responded, no, you’re wrong; you don’t understand; we’re following the policies that were so successful in Latin America—austerity. Now, this is hilarious, of course, because, first, he’s telling the Latin Americans they don’t know their own history and he does, and second, of course, the Latin America leaders have so many very strong progressives precisely because they were elected on the promise to fight the Washington consensus, which is the austerity program that was imposed on Latin America and caused so much harm there. So we have an effort by the colonies to try to save the mother country, and instead, the mother country is responding with fictions about the histories of Latin America and telling the Latin American presidents they don’t understand their own histories.
JAY: Alright. That’s pretty crazy. What’s the next continent?
BLACK: That’s pretty crazy. And the third is a followup on a story we did earlier, craziness in the heartland. So we talked before about how Kansas had to purge even the moderate conservatives, and only Tea Party fanatics stayed in charge. And they adopted the following fiscal plan for Kansas. They’re going to eliminate all income taxes, starting with every business owner gets his income tax eliminated. And they’re going to replace the lost revenue partially with highly regressive sales taxes that will hit hardest on poor people in Kansas. And then they’re going to cut government services dramatically as their third whammy. And the fact that—Kansas’s only claim to, you know, economic competitiveness now is their really good educational system, which they are about to flush down the drain.
Okay, that was crazy enough, but here in Missouri, the same people that brought us Todd “legitimate rape” Akin have decided to fund a campaign to get Missouri to follow the same fiscal plan I just described as Kansas, with an ad by, you know, a actress, a little girl, who says, hey, unless you lower your taxes in Missouri the way they did in Kansas, all the Missouri businesses will move to Kansas, and that will erode our tax base; and who’s going to pay my teacher? Now, of course, this is significantly insane, because these are the people who are demonizing teachers, and they are proposing to eliminate our tax base by eliminating our taxes, and the specific thing that will be cut the most is education. So that’s craziness, Missouri style.
JAY: That’s pretty crazy. And while we’re at it, let’s just catch up on Washington, D.C. There’s talk about a deal that the Republicans are willing to discuss and negotiate and such. I’m a little concerned. The more bipartisan cooperation there is, the more, perhaps, it ain’t very good for the rest of us.
BLACK: Oh, it’s catastrophically bad. So this is the great betrayal of social programs and the safety net—Social Security, Medicare, and Medicaid. We’ve got a bunch of articles about this, you know, on the websites, that you have on your website as well, that can give people ammunition against this form of insanity.
But it’s—this is the old magic trick, right? Watch my right hand, watch my right hand. And so all the emphasis coming out of the White House is, hey, we’re going to finally get tax increases on the wealthy. And they may get a little bit of tax increases on the wealthy, but what this plan will do overwhelmingly is adopt austerity.
So we’re back to the insanities that I’ve just discussed, the kind of insanity that caused so much damage in Latin America, that is currently causing so much damage in Spain, where they have Great Depression levels of unemployment, and President Obama is trying to bring that to America with dramatic cuts in social spending and increased taxes overall, and cuts in Social Security, Medicare, Medicaid, food stamps at precisely the time that they’re going to be throwing millions of additional Americans into unemployment and poverty so that they can increase the misery a great deal—a complete betrayal of everything that has made America great.
JAY: Well, that’s the craziest thing of all. Thanks very much for joining us, Bill.
BLACK: Thank you.
JAY: And thank you for joining us on The Real News Network. Don’t forget we’re in our year-end fundraising campaign. There’s a Donate button over here. If you donate a dollar, we get another dollar and a matching grant till we reach $100,000. If you want to see more Real News in 2013, we need you to click it. Thanks for joining us on The Real News Network.
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