The US government's risk of default comes closer to reality as both parties of the Congress still disagree over the debt ceiling issue.
Press TV interviewed Max Keiser, journalist and broadcaster in Paris, to discuss the issue.
Press TV: How major is this situation not only for the US but for the global economy?
Keiser: Well to follow up on what the previous speaker had said, the influence of the banks and the fact that they become such a huge part of the economy, both in the United States, in the UK and around the world, that is a big part of the problem that is not being addressed.
In terms of this specific debt ceiling issue, it is interesting that with the new element this time that we haven't seen in the previous passes at raising the debt ceiling is that the rating agencies have come in and threatened to downgrade US debt.
So, this resonates with what we have seen in Europe because the rating agencies have downgraded debt in countries like Greece, Ireland, and other countries, and this is a part of the waterfall cascading effect that we have seen in the collapsing of those economies.
So, it is interesting to see these rating agencies now suddenly turning their guns on the US. So, this is the first I think in this chapter in this particular era.
Press TV: Why are we seeing that this time around, why is there a threat from the rating agencies that they would downgrade the US?
Keiser: Well, in my opinion, I think the rating agencies are really working with some of the predatory bankers and the hedge funds who are trading in these naked credit default swaps, and are targeting these economies and countries for failure, because they make more money on these insurances than they lose on their bond holdings, and we have seen that played out in Europe, we have seen an earlier version of this played out in Latin America before the credit default swaps were invented, but we saw something similar during the banana republic, a couple of decades ago. Now we have seen it in Europe.
You know, Marx said that the capitalist will eventually sell themselves the rope to hang themselves. So, maybe credit default swaps are that rope.
Press TV: Why isn't major military cuts being talked about here? We know that the United States is spending major money on the many wars that it is involved in. So, why isn't that really used as one of the options to help with those cuts?
Keiser: Well, to pay the debts, and whether it the $14.3 trillion they are talking about or if you add the other -- and nobody is mentioning this -- you have to add into the American balance sheet the debt's of Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) that is another 5 trillion, and [when you add] the unfunded reliabilities of Medicaid and social security's, add another 50 trillion.
So, we are talking really $70 - $80 trillion of debt for America, and to pay for this debt you need some growth, and the growth has got to come from the middle class, it has got to come from manufacturing, it's got to come from real people doing real jobs. But unfortunately, you have got two predators in the American economy.
Number one is the banking sector; they are a third or 50 percent of the economy, depending on how you calculate. That is totally unproductive. They do nothing to add anything to the economy, they are just stealing from the economy; they are leeching money from the economy.
Then you have the Pentagon which is fighting yesterday's war, funding military operations that don't address the fact that we are in the 21 century currency war. It has nothing to do with the land based war; it has nothing to do with missiles, rockets, and submarines. It is about the currency. And America's currency is collapsing, and this is why all over the world people with serious net worth are buying gold, silver, and other assets, because they realize that nobody in Washington knows what they are doing, they don't trust them, they are totally in control of corrupt bankers, and they are buying real assets to protect themselves. And as they do so, this exacerbates the problem, because now you don't have wages, plus the cost of food and energy are going up.
So, you have a double whammy affecting this middle class who you are relying on to supply the growth to pay the debt. So, it is a complete non-starter, there is no ideology, it is anarchy put forward by psychopaths.
Press TV: I think the average citizen of this global village would like to know why they are not profiting from this global village but, especially a lot of people now feel that they are under a lot of pressure.
Keiser: Well, America should stop starting wars of convenience, and should stop acting as a war profiteer. Look at the information that was just revealed recently, that America was running guns to Mexican drug cartels, and this has come out in the press and has been verified by a number of resources including sources inside the US government. So, they are actively staring that war.
Look at that case of Wachovia bank, they were caught red-handed laundering $230 billion worth of Mexican drug cartels money. And Warren Buffett, a minority share holder, simply scoffed it out and said “well that is business as usual, drugs are a part of our business I guess.”
So, America should maybe stop staring wars for convenience and profits, and maybe they should rebuild cities like Detroit that have been decimated by shipping job overseas, maybe they should spend a few bucks on infrastructure because it is all collapsing. And you know less than 10 percent of Americans own passports. If American went overseas, [and] came here to Paris or they visited Europe and saw how middle class people lived, they would have been shocked at how great people lived relative to the average American to countries around the world because they have a functioning government and they operate under a republic. It is not a Kleptocracy run by neo-fascists following some neo-straussian ideologies from the seventies that is completely bankrupt and is a non-starter.
Press TV: How will you answer Mr. Arms who say that Americans pay far less taxes than the average middle class person in other developed countries max?
Keiser: In return for those taxes, people in France pay taxes, they get infrastructure, they get education, they get hospitals, they get health, and they get something back forth their taxes. Americans get nothing back for their taxes. What they get are wars, a failed governments and a complete Kleptocracy. And that's of course you are talking about reported taxes because let's take a company like General Electric [Company] which is one of the biggest war profiteers in the world. How much did they pay in taxes last years? Virtually, zero. So, the top fortunate 100 companies, what's their average tax rate last year? Almost, zero. What did Goldman Sachs pay in taxes last year? 2 percent. The top tier of 1000 companies, top fortunate 100 companies, they don't pay taxes, so they take it out of things like social security.
And let me point out that this debt ceiling issue has resulted in the federal government already dipping into social security, they are already taking money out of these programs, they are already stealing more money than they have stolen. They don't need a mandate from passing a debt ceiling to continue stealing from the general population, they are doing so ... right now, and they will continue to do so, and the average Americans quality of life will continue to collapse, and you will see civil unrest and social unrest in America, like you have seen all over the world, because you have these banking crooks that have co-opted the government, and are wholesale committing larceny.