Transcript: Thom Hartmann & Matt Taibbi: Greed, Greece and...Goldman Sachs? November 1, 2011
Thom Hartmann: Well top of the Tuesday morning, afternoon, evening, whatever it may be, to you. Greetings my friends, patriots, lovers of democracy, truth and justice, believers in peace, freedom and the American way. Thom Hartmann here with you. Herman Cain's non-campaign continues to implode. There is evidence that Occupy Wall Street is working. Occupy Nashville just got a big boost. Republicans are doing something truly bizarre in the House of Representatives today. I mean truly bizarre. When I tell you about this, it's just going to, you know, raise the hair on the back of your neck. Big oil is making a fortune. I guess that's not news until you actually notice how much they're making and what the price of gas is, we'll share that with you. And the 1%, speaking of the 1%, has moved into the halls of Congress, and boy are they doing well there.
So, some interesting things for our day, for our program. I think, frankly, the most interesting thing is, just looking at the front page of the Financial Times, for example. The headline at the very top, this is today's Financial Times, this is their electronic edition, I left the newspaper at home, but they typically track each other pretty closely. "Fears rise of disorderly Greek default". I was up around 4 this morning listening to the BBC and they're talking about how all the markets in Europe are opening down a couple of hundred points because it looks like the Greeks are going to hold a referendum on whether they should pay back the banksters the same way that the Icelanders did. And if the people say no then the banksters get screwed. Well what's missed in all this coverage, what's missed in the story is that it was the banksters that created this crisis in the first place. And the best reporter I know on this topic is Matt Taibbi. Matt Tiabbi is a contributing editor to Rolling Stone magazine, or newspaper, whatever it is, weekly. And author of "The Great Derangement," and most recently "Griftopia," RollingStone.com. And Matt, welcome back to the program.
Matt Taibbi: How's it going Thom?
Thom Hartmann: Good, good. Give us the story behind the story about Greece, because I don't think most Americans have a clue. I mean this could be like the Archduke Ferdinand moment, you know, the assassination of this obscure guy in Sarajevo in 19-whatever it was, 17? Kicks off World War II, and nobody to this day seems really sure why other than all these interlocking agreements that everybody had. How did Greece, let me just toss it to you.
Matt Taibbi: Well it's a fairly complicated story but essentially way back in I think it was 2001 or 2002 Greece was facing a debt crisis, in order to retain it's membership in the EU I believe the situation was that their government couldn't exceed a certain number, it was something like 60%, of their GDP, or something like that. And so they were in danger of exceeding the EU prescribed debt limit and they needed to get around that problem. So what they did is they went to…
Thom Hartmann: Right, if I may interrupt. And the reason that was a big issue was because if they got kicked out of the EU they couldn't use the Euro, they wouldn't have access to all the resources of the rest of the European Union, they couldn't sell and buy at no tariffs, those kinds of things.
Matt Taibbi: Exactly, and again this all will end up tying into all the problems that Europe is experiencing now, trying to hold the Euro together, trying to hold the EU together economically, and so on. So Greece is in sort of this economically a rogue state, it was exceeding it's debt limit. And so what do you do when you have that situation if you're a sovereign entity like Greece, you can go to the invest banks. And what they did is they arranged with Goldman, they bought a series of what I call cross currency swaps. It's essentially an interest rate swap, or currency swap. And all it really did is, it's a derivative instrument that allowed Greece to push more of its debt into the future as opposed to having to pay it up front. Now there are some people who would contend that what Greece did by essentially reworking its balance sheet to make it look like it didn't have to pay off that much debt that year, that didn't actually change its debt situation. It was still over it's debt limit, it had just rearranged the deck chairs a little bit to look like it had less of a…
Thom Hartmann: Not only that, it made it worse. Because now they had fees that they had to pay to Goldman.
Matt Taibbi: Right, right exactly. And that sounds bad enough, but what's so incredible about this story is that after Goldman set up you know sold Greece all of these swaps, and incidentally this is, we'll get into this too, this is something that goes on not just in Greece but in countries all over the world and locally here in the United States, places like Jefferson County, Alabama. These swaps are everywhere. As soon as they did this, what did they do. They went up and they set up an exchange so that you could, they and other investment banks could short, in other words bet against Greek debt. So they worsened Greece's debt situation and then turned right around and bet against them. So all of this sort of leads directly to the situation that we're in now, because these situations, all it really does is you take a present group of politicians who have financial problem and they just hire the investment banks to kick the problem to a future set of politicians and that's what's happening now. The 2002 politicians created the mess that we're in now.
Thom Hartmann: Right. And Papandreou who is the current prime minister of Greece, was he in on this back in 2002?
Matt Taibbi: You know, I don't know that actually. I've only, the only reason I really know that much about this particular story is because I had to do a story about, you know, Alabama, where they, where other investment banks sold very similar instruments to Jefferson County in the Birmingham area. So I was sort of looking at it parenthetically and I don't know that.
Thom Hartmann: But it was basically the same scam. And these Wall Street banksters who basically, just set up and now are bringing down Greece, are absent from the news. They're just absent from the news reports. Just like they're absent from the news reports when states talk about how their pension funds are broke. Nobody ever mentions the fact that their pension funds are broke because they were invested in CDOs and derivatives that were sold to them by these Wall Street banks. I don't get it. How do they get away with this invisibility?
Matt Taibbi: I don't know that. I think people don't understand how these things work. You know, in the case of the mortgage backed securities, this is just outright, you know, theft. I mean what these guys are doing on Wall Street, you know, they would, you know, lend money to a company like Countrywide or New Century, that would create a huge mass of really, really dingy subprime loans. And then they would take those loans, chop them up, turn them into AAA rated securities, using some hocus pocus math. And then they would turn around and look for suckers who manage state pension funds and they would take thes guys to the super bowl and to strip clubs and get them to spend a billion dollars of taxpayer money buying this stuff. And then when it all blows up, oh well suddenly it's the state is broke and it can't pay its pension funds because we're paying too much in salary to teachers and firemen or whatever it is. And somehow they forget this other story that went on that actually caused the problem.
Thom Hartmann: Yeah. It really is quite extraordinary and you've done a brilliant job of reporting about it. Particularly here in the United States, as you said with Jefferson County and much of the other work you've done, and in “Griftopia" as well. Matt Taibbi, contributing editor at Rolling Stone. Matt, just 30 seconds. What's your quick thoughts on what's going to happen in Greece?
Matt Taibbi: You know, I don't' know. I talked to somebody just yesterday about this and most people think that you know they're going to figure out some kind of controlled crash landing situation. But you know the problem is there's not a whole lot that they can do. The rent is going to come due sooner rather than later. So it's whether you're going to take your pain now or later, it doesn't really matter.
Thom Hartmann: Or default.
Matt Taibbi: That's right, exactly.
Thom Hartmann: I'd frankly bet on the default. But we'll see. We'll see. Matt Taibbi with RollingStone.com, Rolling Stone. Matt, Thank you.
Matt Taibbi: Thanks so much Thom.
Thom Hartmann: Great talking with you.
Transcribed by Suzanne Roberts, Portland Psychology Clinic.