Should the USA keep feeding "zombie banks" public money after death?
Former Chief Economist of Senate Banking Committee advises: stop catering to past patterns of power.
The following is a transcript from the February 27 edition of Bill Moyers Journal on PBS.
Moyers Remember when economists poked fun at Ronald Reagan's voodoo economics? Well, now they are dead serious about so-called "zombie banks" — financial giants like Citigroup and Bank of America whose debts are greater than their assets, with stock worth less than zero, and they're only able to stay alive by devouring federal bailout bucks.
Those banks, in turn, are terrified by talk that the government might come in and nationalize them. Well, some critics ask, why not? Given all this, I wanted to talk to a man with a clear-eyed perspective on the worldwide economic impact of this banking crisis.
Robert Johnson was once the Chief Economist of the Senate Banking Committee under the chairmanship of that fiercest of budget pit-bulls, the late Wisconsin Senator William Proxmire. Johnson became a Managing Director at Soros Fund Management, and now serves on a United Nations Commission recommending reforms of the international monetary and financial system. . .
Moyers Given what we know is happening around the world, are you scared?
Johnson: Yes I am.
Moyers: What scares you the most?
Johnson: That everybody will stand and watch and cater to past patterns of power. The banking system has been the dominant sector in our society and in our politics, which is heavily money driven, for a very long time. As they falter, we could stagnate, catering to their needs disproportionately while the system sinks.
Moyers: This week, a term came into play that I hadn't heard before. People refer to Citibank, Citigroup, as zombie banks. What's a zombie bank?
Johnson: A zombie bank is a bank that's insolvent that's allowed to continue its activity. It's allowed to go on living as a dead financial entity. . .
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Bill Moyers Journal interview of Robert Johnson on PBS, February 27, 2009, transcript and video
Posted: March 07, 2009
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