Donald Trump loves Gina Haspel, particularly because of her role in torture. This week on Intercepted: As a bipartisan gaggle of spies and politicians lobby for Haspel to become CIA director, we look at how after World War II, the U.S. and its allies prosecuted Japanese soldiers for waterboarding American POWs. Journalist Matt Taibbi talks about Trump, Russia, Putin, Stormy Daniels, and the liberal embrace of authoritarianism. Sarah Jaffe reports on the teachers strikes across the U.S., the fight for unions, and the rebellion of low wage workers. Former Goldman Sachs and Bear Stearns executive Nomi Prins talks about central banks, the Federal Reserve, and economic neoliberalism. Plus, Melania Trump launches a campaign to educate her husband.
White House Official: Ladies and gentlemen, the First Lady of the United States, Mrs. Melania Trump. [Scattered applause.]
Melania Trump: Thank you. Welcome to the White House. As First Lady, it concerns me that in today’s fast-paced and ever-connected world, my husband, Donald Trump, can be less prepared to express or manage their emotions. So today I’m very excited to announce “Be Best,” an awareness campaign, dedicated to the most valuable and fragile among us: My husband. [Applause.]
There is one goal to “Be Best,” and that is to educate my husband, Donald Trump, about the many issues they’re facing today. Thank you all for being here today. Mr. President? [Melania giggles.]
President Donald J. Trump: Melania, thank you very much. That was the way she feels. Very strongly.
Jeremy Scahill: This is Intercepted.
JS: I’m Jeremy Scahill, coming to you from the offices of The Intercept in New York City and this is episode 55 of Intercepted.
Archival Newsreel: Before an international tribunal, holding court in the former war ministry in Tokyo, come the war-time leaders of Japan to be indicted as criminals.
JS: In the aftermath of World War II, the United States and its allies organized a series of war crimes tribunals to prosecute their vanquished enemies from Germany and Japan. The trials that were held at Nuremberg in Germany are probably the best-known of these. In Japan, it was the International Military Tribunal for the Far East — better known as the Tokyo Trials. And if you read some of the charging documents from these cases that were brought against Japanese military officers, soldiers, others, you might notice that among the war crimes charges was a technique referred to as water torture or water cure. This was a practice that the Japanese used against prisoners, including American POWs, and this practice involved holding down or immobilizing a prisoner and then dousing their open mouth or their nostrils with water. It simulated drowning and a sensation of dying.
The historian R. John Pritchard described the Japanese rational for using this water torture. He wrote, “The rapid and effective collection of intelligence then, as now, was seen as vital to a successful struggle, and in addition, those who were engaged in torture often felt that whatever pain and anguish was suffered by the victims of torture was nothing less than the just deserts of the victims or people close to them.”
Several Japanese military figures were executed for their role in water torture and other acts, others were sentenced to prison labor camps. Here’s Senator John McCain, himself a victim of torture as a POW in Vietnam.
Scott Pelley: Is waterboarding torture?
Senator John McCain: Sure. Yes. Without a doubt.
SP: So the United States has been torturing POWs.
JM: Yes. Scott, we prosecuted Japanese war criminals after World War II, and one of the charges brought against them, for which they were convicted, was that they waterboarded Americans.
JS: Again, what Senator John McCain is talking about here, took place in tribunals established by the U.S. and its allies. And here’s just a couple of examples of the charges that were presented at these trials, and I’m quoting: “In or about July or August 1943, the accused Yukio Asano, did willfully and unlawfully, brutally mistreat and torture Morris O. Killough, an American Prisoner of War, by beating and kicking him, by fastening him on a stretcher and pouring water up his nostrils.”
Another described the torture of, and I’m quoting: “John Henry Burton, an American Prisoner of War, by beating him, and by fastening him head down-ward on a stretcher and forcing water into his nose.”
The Japanese soldier who did these things was sentenced to 15 years of hard labor. But his official job description was interpreter. He was just following orders. That’s what he said.
Steve Doocy: So it’s all going to be about what happened regarding the waterboarding. Just keep in mind — whatever she did when she was in power at that point, she was doing it as a directive and it was all within the law.
Ainsley Earhardt: Right, doing what she was told to do.
JS: In related news, Trump’s pick to head the Central Intelligence Agency, Gina Haspel, is in the midst of her confirmation process and Haspel was just following orders to when she was involved with what the Japanese called water torture.
That is one of the lines being pushed by her CIA defenders: that what she did was lawful, she was ordered to do it, she wasn’t really in charge, she’s an apolitical professional. I’m sure there are lots of people from all sorts of countries and nations throughout history that view their role in torture the exact same way that Haspel and her defenders view it. I’m sure there are many Nazis that could have pointed to laws created in their own country to permit the heinous acts that they committed. But the tribunal said no, just following orders is not a defense.
But, you see, the United States doesn’t believe in international tribunals for its personnel. The men who dropped the atomic bombs on Japan? They were heroes, just like the CIA officers who ran black sites, oversaw kidnapping operations and, yes, waterboarded prisoners. They were just doing their jobs. The fact that they were doing it for America means that it’s right: Our waterboarding is different than the Japanese waterboarding. Why? Well, because we’re doing it.
Back in 2014, Dick Cheney was on Meet the Press, attacking the Senate torture report, and during that interview, Cheney blatantly lied and he denied that there had been any prosecutions of Japanese soldiers for waterboarding and Cheney defended this American exceptionalism.
Chuck Todd: When you say waterboarding is not torture, then why did we prosecute Japanese soldiers?
Vice President Dick Cheney: For a lot of stuff. Not for waterboarding. They did an awful lot of other stuff. To draw some kind of moral equivalence between waterboarding, judged by our Justice Department not to be torture, and what the Japanese did with the Bataan death march and the slaughter of thousands of Americans, with the rape of Nanking and all of the other crimes they committed that, that’s an outrage. It’s a really cheap shot, Chuck, to even try to draw a parallel.
JS: For Donald Trump, Gina Haspel is a great candidate for CIA Director — the best — and she’s made even greater by her role in torture and destroying evidence of torture.
DJT: I have spoken as recently as 24 hours ago with people at the highest level of intelligence and I asked them the question, “Does it work? Does torture work?” And the answer was yes.
JS: Haspel is getting support from the predictable quarters: the neoconservatives, most Republican lawmakers and people like convicted gun-runner, and Iran-Contra figure and the new head of the National Rifle Association, Oliver North.
Oliver North: Well, the folks that are currently resident down in GTMO wouldn’t be there but for what Gina Haspel and her brave colleagues did. Look, Gina Haspel is the person needed to head the CIA in this new world disorder … with numerous foreign postings. She is quite frankly admired by most of her colleagues the world over … Dianne Feinstein ought to retire now. Look, she’s grandstanding about waterboarding when it was deemed to be legal by the Department of Justice, the attorney general and the president of the United States … in other words she did her duty, it was only afterwards that they decided it really wasn’t lawful. And I think I know a little bit about what it’s like, what happens to people who do their duty and Congress disagrees.
JS: OK, it’s not a big surprise that Ollie North would love Gina Haspel and her involvement in torture. But who else is joining Ollie North and Donald Trump in supporting Gina Haspel?
Oh, look! A whole gaggle of President Obama’s senior intelligence leadership. Here’s Obama’s first CIA director Leon Panetta.
Chris Cuomo: So you support the nomination of Haspel, even though she oversaw those kinds of programs which the Obama administration and, under your watch, that you ruled were improper?
Leon Panetta: Yeah, no, I think she really ought to be judged based on her entire record, and I do believe that when you when you look at the entire record that she’s somebody who can serve at the CIA, I think, with distinction.
JS: Here’s Obama’s next CIA director, John Brennan, the man who oversaw the CIA spying on the Senate when it investigated torture.
John Brennan: As I said, she has tried to carry out her responsibilities to the best of her ability and consistent with what CIA’s legal authorities were and don’t forget the detention and interrogation program was authorized by the president of the United States and deemed lawful by the Department of Justice.
JS: Now, let’s see here is Obama’s director of national intelligence and known perjurer James Clapper.
James Clapper: I think the world of Gina. I think she’s a tremendous officer, intelligence officer. I’ve worked with her, you know, on the occasion when she served overseas. She had a second hat as the DNI representative and she was great. So I think she’ll be good for the agencies, very highly respected there, and I think will be good for the intelligence community because I think she’ll work well with the Dan Coates and Sue Gordon, his deputy.
JS: All of these former Obama officials have the exact same line: Gina Haspel was following orders. And in the same breath, they say she’s the perfect person to speak truth to power. Literally, they say, “She will speak truth to power.” Are they kidding? Someone who actively participated in a torture program and then drafted a letter that was sent to agency officials ordering them to destroy CIA torture tape evidence — that’s speaking truth to power?
No. If anything Gina Haspel’s role in torture, kidnapping, and destruction of evidence shows the opposite. It shows that no matter how heinous the orders, Gina Haspel is there to follow them.
The CIA establishment is giddy with excitement that one of their own may be the director. That’s because the CIA is primarily concerned with its own supremacy, with protecting its own ass, with making sure that the public never actually gets to see the evidence of the CIA’s dark — at times, outright evil — activities. And Gina Haspel has shown that she will do just that. And that’s why we see the CIA releasing selectively curated memos about her and using their social media platforms, including Twitter, to wage a propaganda campaign aimed at all of us.
Here is Oregon Senator Ron Wyden:
Ron Wyden: First of all, what has been going on here, Andrea, is an A to Z cover-up. There has been selective declassification of her record, there’s been a public influence campaign and there has just been out and out misinformation.
And I believe a significant amount of her record can be declassified without compromising what are called sources and methods, and the agency is just covering up and stonewalling.
JS: We know how the majority of Republicans will vote on Gina Haspel. We know that Trump pledged to bring back more torture and expand it. We know that Gina Haspel is his choice for CIA director, and we know why. And all of those Obama-era people that are now trying to say that they would have been against torture and that we need to give Gina Haspel a chance because of her other qualities, and blah blah blah — come on. I give George W. Bush’s CIA director Michael Hayden credit for at least being honest about the fact that he supports torture and he supports Gina Haspel, disgusting as his support for torture is.
Michael Hayden: Let me tell you: The one person I want in the room telling truth to power is Gina Haspel. We should not in any way blame the people who did what they were responsible to do and asked the appropriate organs of government whether or not this was constitutional, lawful and consistent with American treaty, obligation. They were given yes answers to each of those. They did their duty — and let me put out the harsh statement here — and it worked and it made America more safe.
JS: Here’s my bottom line on this: Any Democrat who votes to confirm Gina Haspel should be hounded nonstop. They should be primaried. Part of the reason that we are in this situation with someone like Gina Haspel being named CIA director is because these torturers were never held accountable — not by Republicans, not by Democrats, not by the constitutional law scholar Barack Obama, who said we need to look forward, not backward. Gina Haspel is exhibit A of how the people who conducted these torture operations have been rewarded over and over, rather than prosecuted or otherwise held accountable.
Ted Kennedy: Just on the issues of waterboarding, Yuko Asano, May 1 to 28, 1947. The story was recounted by John Henry Burton, a civilian victim: “After taking me down into the hallway, they laid me out in a stretcher, strapped me, the stretcher was then stood on end with my head touching the floor, my feet in the air. They began pouring water over my face, at a time where it was impossible for me to breathe without sucking in water. The torture continued and continued.
15 years of hard labor! 15 years of hard labor, when this was used against Americans in World War II.
JS: At some point, we are going to have to come to terms in this country with the consequences, the real consequences of what we are told is American exceptionalism. Our justifications for torturing people are no more legitimate than those of the Japanese or the Germans who did it. Gina Haspel should be held accountable for her actions, not put in charge of the very agency that ran those programs and tried to cover up or destroy the evidence.
JS: Coming up on the show, we’re going to be talking to the kick-ass labor reporter Sarah Jaffe about the teacher’s strikes that have been breaking out in this country. We’ll also talk about labor movements and the resurgence of union organizing and the rebellion of low-wage workers.
And we’re also going to be joined by the former Goldman Sachs and Bear-Stearns executive Nomi Prins. We’re going to talk about central banking, the Federal Reserve, financial meltdowns and a lot more. Nomi Prins has an important new book out about all of that.
But first: With so much news breaking and breaking so fast, it’s really tough to keep track of what it all actually means. On this show we try to regularly slow down and take an in-depth look at stories behind the news and the historical context of how we ended up where we are. Trump pulled out of the Iran deal, the summit with North Korean leader Kim Jong-un seems like it’s going to happen. The U.S. is moving its embassy in Israel to Jerusalem, which of course is going to cause all sorts of horrid violence and problems. Syria continues to burn. Afghanistan remains a graveyard of U.S. occupation.
And then there’s the shitshow at home: Is Donald Trump going to testify in front of the special counsel, Robert Mueller? Is Trump going to plead the Fifth? And what’s to be made of all the Rudy Giuliani insanity and his seemingly totally wacky media appearances?
Rudy Giuliani: Having something to do with paying some Stormy Daniels woman $130,000. I mean, which is going to turn out to be perfectly legal. That money was not campaign money. Sorry, I’m giving you a fact now that you don’t know, it’s not campaign money — no campaign finance violation. So —
Sean Hannity: They funneled it through a law firm.
RG: Funnelled it through a law firm and the president repaid it.
SH: Oh! I didn’t know. He did?
DJT: So, Rudy knows it’s a witch hunt. He started yesterday. He’ll get his facts straight. He’s a great guy.
JS: Stephanie Clifford, aka Stormy Daniels, now has this defamation case against Trump. She may actually get discovery in that. And her lawyer, Michael Avenatti, seems to be alternating between his home at a CNN studio, and his vacation spot at MSNBC. The guy is truly on television 24/7. And we are really, I think, in a very strange reality TV show, appropriate for the Trump presidency. Ollie North is going to be head of the NRA. I mean, this is exhausting for all of us.
So to sift through a bunch of these events and storylines, I decided to talk to Matt Taibbi of Rolling Stone. He is one of the great chroniclers of our political system, of economic crime bosses from Wall Street to Washington and elsewhere, and Matt also happens to know quite a bit about Russia and Vladimir Putin. His two latest books are both really great reads: “Insane Clown President” features Taibbi’s dispatches on the 2016 election, and Matt’s most recent book is a powerful telling of the life and death of Eric Garner, an African-American grandfather who was strangled to death by a New York City police officer in Staten Island. That book is named after Garner’s dying words, “I Can’t Breathe.”
Matt Taibbi, welcome to Intercepted.
Matt Taibbi: Hey, thanks, Jeremy.
JS: Let’s first talk about the Rudy Giuliani show. You know, to the layperson it sort of appears that Giuliani is just like running his mouth and hurting Trump, and yet, over the weekend Giuliani said, I’m very pleased with my media campaign.
RG: I don’t know when the president learned about it. He could have learned about it after or not connected the whole thing at that time. The reality is: Those are not facts that worry me as a lawyer. Those don’t amount to anything, what is said to the press. That’s political. What matters to me as a lawyer is —
George Stephanopoulos: It’s OK to lie to the press?
RG: Gee, I don’t know — you know a few presidents who did that. I don’t think the president has done that.
JS: What do you make of the Giuliani moment of this whole saga?
MT: You know the only thing that it reminds me of is when George H.W. Bush brought on Dan Quayle, and everybody thought it was a completely idiotic move because Quayle was so embarrassing, and yet it ended up helping him win the election because Quayle was the only person on earth who was capable of making Bush look smart, so —
JS: That great potato moment.
MT: Right. Exactly.
JS: Corrected the kid’s spelling.
MT: Corrected the kid’s spelling, got it wrong.
President George H.W. Bush: You’re right phonetically, but — there you go!
MT: Giuliani is — for one thing, he’s a media magnate. The press loves to beat him up. He is incapable of keeping his mouth shut. He’s losing it, clearly. He was much sharper years ago. I mean, even when he was still an odious person, he was capable of managing an interaction with a reporter; now he’s completely deranged. And I think this will probably end up resounding to Trump’s benefit, even though he’ll say the occasional, you know, completely stupid thing, like the thing about the payment because it’ll keep Trump out of the headlines.
JS: I wonder, and I know you know, you’ve spent a lot of time in Russia — you follow politics there, as well as covered multiple campaigns here in the United States, including the 2016 election. Just in the very biggest sense of the picture, how do you see the whole Trump-Russia saga? I mean to me it seems that there are two issues: There’s Trump, as sort of a criminal character and financial crimes and corruption, and then the other side of it where all of these sort of seemingly coincidental interactions with various influential Russians or ambassadors, et cetera. What’s going on in your view?
MT: Let me preface this by saying that when it comes to Putin, I’m willing to believe just about anything. I lived in Russia for the entire ’90s. I was there when Putin came to power. I was one of the very first American reporters to sort of investigate who this guy is, when the rumors about him coming into the Yeltsin government started to be circulated, I went up to St. Petersburg, you know, I talked to people who had worked with him. And very early on, I learned from a lot of people that Putin was basically a bag man for this corrupt mayor in St. Petersburg who went around collecting protection money, and there were all sorts of stories about him, and I knew from the start that he was corrupt and said so. I was one of the first people to counter a narrative that was forming back then that Putin was someone with whom the Americans can do business because they thought he was going to sort of continue the Yeltsin mantle.
I had friends who were Russian reporters who were investigating Putin’s alleged role in the bombings of apartment buildings in cities like Kazan. Those reporters started to be attacked by sort of local thugs, and I have nothing but negative feelings about Vladimir Putin. I am willing to believe that that crew is capable of anything.
My issue with this story with America and Donald Trump and this whole Russiagate narrative has always been that there are gaps in the story that we just can’t demonstrate. The way the story’s been reported, there’s a missing piece where we need to establish: Was it just Russia sort of interfering and engaging in these disinformation campaigns, or were they doing it in collusion with Donald Trump? I don’t think that’s been established yet. And that’s all I’ve ever said about this story is like, we need to kind of be careful about it and make sure it’s properly sourced and that we know. I mean, is that unreasonable? I don’t know.
JS: No, and I mean, I take the same position. I mean, I, more and more, am thinking that it shows that when corrupt individuals are put under a microscope, they’re going to find a lot of criminal activity.
MT: Of course!
JS: There have been more than 20 people indicted in the Mueller investigation thus far. So, I mean, there’s a lot of the financial corruption stuff that happens when you interview associates of people like Trump.
But then, on the political level, when you actually start to drill down and look at allegations like the Kislyak conversations with Flynn, what was it really about? It was about Israel, it was about that vote at the U.N., so there may be a there there. I wouldn’t be surprised if Trump, you know, was getting prostitutes to pee on a bed that he thought Obama slept in, but we may never even know the truth about that because Trump can just say it’s fake, fake, fake.
But the pushback, when you just say: Let’s see the evidence, let’s let this play out, let’s see if there really is that connection that you’re saying is there, you are a Putin apologist. Instantly! That’s the culture now.
MT: Instantly. And I’ve gotten more pushback on this story than I have on all the other stories I’ve ever written about everybody else combined. For instance, the story about the Steele report and how that story came to light and how it came out, my take on this was informed a little bit by my background covering Wall Street scams. And one of the things they do, it’s a very common scheme, is an investor will hire a private research company to dig up a whole bunch of dirt about a company, then they’ll circulate it to a bunch of investment banks and reporters, hoping that one of them will publish it. Then, if it gets published, they’ll take it to the FBI, and as soon as it’s delivered to the FBI, if the FBI takes possession of the report, they’ll then leak that, and they can say the company is under investigation by the FBI, the stock tanks, everybody makes a lot of money. Right? And this is what — this is a very common scheme on Wall Street.
Because to me, it looked on the surface a little bit like kind of the same thing. It’s — you have a private opposition report that’s created. I heard as early as September, I’m pretty sure you probably did, too, that there was this thing that was being shopped around to reporters and reporters were not publishing it and then ultimately what did they do? They gave it to the FBI, the FBI takes possession of it, that becomes the thing that David Corn reports, and then there is another moment where they hand it to Trump and to Obama and then they can report that.
Again, this just feels like the same trick. And it doesn’t mean that the report isn’t true, it just means that it reminds me of something when you’re trying to manipulate the media. And, as a reporter, that just set off my spider-sense a little bit. You know, it made me a little bit suspicious of what’s in that material, and how can we confirm it.
What you can do, as a reporter, though, is you can write a story that the FBI is looking at it, right? And so just as James Comey said in one of his memoranda, you know, that the press needed a hook to put this out there. That makes me a little suspicious of it, that’s all.
JS: You know, one of the allegations that seems to surface a lot is that Putin had long sort of identified Trump as a juicy target to try to either get close to or get compromising information on. What do you make of what we publicly know about Trump’s business efforts in Russia? And his, you know, his publicly stated views of Putin are very hilarious at times, and feed into the narrative. But what do you see when you look at what is publicly available about Trump, business, Moscow, Putin?
MT: Well, one thing that I think that Americans probably don’t understand about the Russians and the way they would look at somebody like Donald Trump is that in their eyes Donald Trump isn’t a rich person. I mean, in sort of post-communist Russia, Donald Trump is a cash-poor, sort of grasping figure who is looking for money when it comes to a place like Moscow. He’s not a whale that they’re trying to get money from, which is why he’s probably the only sort of corrupt real estate mogul scumbag in the world who doesn’t have a hotel in Moscow.
JS: Right. Juan González calls him the biggest small businessman in the world.
MT: Exactly. Exactly! And he couldn’t get a deal done there. I mean, I know that he wanted to buy the Hotel Rossiya, which is this monstrous, it was the world’s biggest hotel, it’s this huge concrete, like disgusting rat-infested thing right off the red square. Trump, I heard, you know, early on wanted in on that deal. But he couldn’t get it done — he just doesn’t have the money. And so, to the Russians, I think they probably thought of him as just sort of grasping American, weasel-type who could be easily manipulated. I’m sure that’s probably true. But the fact that he didn’t have a significant deal in Moscow, I mean, I think it tells you something. I think it tells you that they didn’t consider him a person of great importance up until very recently.
JS: Right. The way that this is all covered in the media, I mean there have been huge errors made by big media organizations, and it seems that the reason for it is because people are incredibly willing to believe any shit that involves Trump, no matter how insane it seems, if it’s about Trump, it seems like the journalistic standard goes down.
MT: Right. If all things being equal, you would expect the errors to be kind of 50/50, you know, in one direction and the other direction. Instead, we have a whole pile of errors that are all in the other direction, which kind of suggests that the press corps is overeager and also is being fed a lot of stuff.
And this is one of the things that I wrote about earlier, is, I said, this is a dangerous story for that reason. I think the press has to understand that unnamed sources from the government don’t care one way or the other whether they burn reporters or not. It’s going to be your career that’s going to suffer in the end, not theirs.
So for instance, just to take an example, you know there was that story about how the Trump campaign had repeated contacts with Russian intelligence. Remember, that was a New York Times story that came out? Sourced to four people, right? I mean they thought they had that nailed down firmly, and there’s a whole bunch of reporters who were on that byline. And then James Comey comes out a whole bunch of months later, and he’s like, “Yeah, that isn’t really true, sorry about that one.”
And, you know, and how would you feel if you’re those reporters? You know, I think that’s the thing that you have to keep in mind when you’re dealing with a story like this, and you’re dealing with a whole bunch of people who won’t put their names on the record. Sometimes they’re going to sell you something and they’re going to put you, it’s going to be your name that’s going to be on the line, not theirs. And that’s what I worry about.
JS: What do you make of this sort of merger of the Bill Kristol neo-cons with the MSNBC liberals?
MT: It’s fascinating, incredible — a huge story, it seems to me — and it’s gotten almost zero play in the media. I mean, my theory about this is that what happened in 2016 — watching the campaign happen — was that both the Republican and Democratic Party establishments saw huge sort of revolutionary attacks against their own bureaucracies. Voters revolted on both sides. I think we’re seeing the beginnings of a kind of political reorganization in this country where the reality is that people like David Frum and Michael Morell and Bill Kristol and Robby Mook and all those, they have more in common with each other than they do with the voters in their respective parties, you know? And the sort of reorganization of this Atlantic Council German Marshall Fund-type crew as a sort of single political entity is a fascinating, crazy story.
I don’t know, what do you think? I’m amazed by it.
JS: Yeah, well, it would be one thing if you sort of said: Well, on this issue, we, you know, we have a strategic sort of alliance with these people, but we are completely clear on who they are and what they stand for and that this is about unseating Trump — which some of them will say if you kind of push them and push them and push them. But you do see the neo-con worldview seeping into the Hillary Clinton echo chamber, you know, of defending the “it was her turn” line of thinking, and then attacking the left for continuing with its consistent opposition.
The Gina Haspel thing is an interesting occasion: You have all these former CIA people that are constantly on MSNBC, who were Obama administration people, and they’re the liberals from the intelligence community, they’re totally in agreement with Bill Kristol and others who say that she is, Gina Haspel is the perfect person to be heading the CIA. To me, that is the best example of what this leads to is that Bill Kristol and Stephen Hayes and The Weekly Standard people, they’re winning that game with MSNBC. They are mulling those people further to the right.
JS: You know, Rachel Maddow is not converting Bill Kristol.
JS: And I think it if you take that and you put it in combination with this lionization of the intelligence community, the FBI in particular, James Comey, what we’re seeing, I think, is a kind of pro-authoritarian movement.
MT: Absolutely. Yeah.
JS: And I keep saying to people, “When are you going to wake up and realize how far you’ve been dragged away from where you were a few years ago on core issues?” Particularly about, I mean the FBI thing is disgusting.
JS: And I’m talking specifically about Comey and his record on these issues. So I see it as: We have a new kind of elite political party, it’s like the pro-authoritarian crowd.
MT: Yeah. Absolutely. And Trump is the perfect foil to make all this happen, because Trump is legitimately horrible in pretty much every respect, and to use him as a way to kind of, you know, they wave him in front of politically liberal voters, and they say, you know, in order to oppose Donald Trump, you have to be on board with this new union of political people in the background. But I just, I find it fascinating that the one issue that they rally around, you know, against Trump is the one area where he was the least harmful — you know, Donald Trump as a candidate would occasionally say things on the stump like: War is in the Middle East it’s just not doing a whole lot for us. It’s a bad deal for us.
DJT: The war in Iraq is a big, fat mistake. All right? …We cannot be the policeman of the world … They lie! They said there were weapons of mass destruction. There were none. And they knew there were none.
MT: That was the one thing that I heard out of Donald Trump’s mouth that was a little bit true, and, yet, that’s the thing that they’re focusing on the most with him is the fact that he wants to get out of places like Syria, doesn’t see the percentage in it. Why is that the rallying point against Donald Trump? It should be everything else with this guy. It should be his domestic policies, you know?
JS: Well, and you know another thought that I’ve had as we’ve covered the various lawsuits against Trump is — and I talked to Gloria Allred some weeks back because she had this, she was the most high-profile lawyer on this defamation case, you know, when Trump gets up and says these women are liars.
DJT: These people are horrible people. They’re horrible, horrible liars.
DJT: Now, suddenly, after many, many years, phony accusers come out less than a month before one of the most important elections in the history of our country. The stories are total fiction. They’re 100 percent made up. They never happened.
DJT: I am being viciously attacked with lies and smears.
DJT: I have no idea who these women are. I have no idea!
JS: You know, he’s a very, very public figure using a huge platform, and some of these women are not Stormy Daniels, who’s out there going on Saturday Night Live, like they’re living semi-normal lives and they’re being, you know, called liars or worse by a sitting president. Those cases could produce A, a lot of discovery, but B, Trump may have to sit for a deposition in some of those cases. And the guy cannot have more than three sentences without a serious lie being told.
JS: So I think that his lawyers are wise. Like, it’s not a perjury trap. The guy is like a walking — he’s like the definition of perjury. He will just lie all the time of day.
JS: What has been done to our view of law enforcement, of the law? Look at the way the Fifth Amendment is talked about now. Oh, you know, Michael Cohen if he takes the Fifth, he must be guilty. Giuliani is saying: Well, Trump may have to take the Fifth. And it’s like we can look at it and spitball and say, he’s probably taking the Fifth because he’s going to fucking lie. Or Michael Cohen’s probably taking the Fifth because he knows he’s guilty and that’s how people are talking.
But what was the point of the Fifth Amendment? The point the Fifth Amendment was not to protect liars. The point of the Fifth Amendment and its just application should be to protect the innocent. That you can say, “Well the state is trying to railroad me and I’m not going to participate in my own destruction.”
JS: You know, it’s what every good lawyer tells any of their clients, whether it’s a low-level drug dealer or it’s like, you know, a mass killer, don’t say anything to the police ever.
MT: Right. And Clinton’s lawyers made a mistake in that case. But, they allowed him to testify about his sex life. They should never have done it.
JS: Do you want to hear Trump testify about his sex life?
MT: No, God, are you kidding me? I couldn’t think of anything more abhorrent.
JS: Don’t you think it’s kind of awesome, though, that Anderson Cooper is running around having heard a description of Trump’s genitals.
MT: I haven’t even heard this.
JS: Oh yeah, that was it was part of the interview with Stephanie Clifford, aka Stormy Daniels, is she apparently described Trump’s genitals, and Anderson Cooper on “60 Minutes” made a decision not to air that part of it.
JS: So every time I see Anderson Cooper right now kind of smirking as he describes this, I think it’s because Anderson Cooper knows something that the rest of us probably don’t want to know, but it’s kind of awesome to watch Anderson Cooper knowing that he knows whatever Trump —
MT: I love the fact that he’s burdened with the knowledge and will probably never be able to speak it out loud.
JS: I’ve sort of come around to the idea that I think they are going to get Trump on financial crimes and I think there are going to be people like Manafort, Gates, maybe some other characters who will have been seen to have kind of more official relationships with Russian entities, probably started with financial stuff and maybe there was some communications between some of Trump’s people and Russian, either government or military or cutouts, who had some agenda, as part of normal espionage, which the United States does also. I don’t see how they nail Trump on anything vaguely resembling an ordinary person’s definition of collusion.
JS: And I’m not playing the semantics about how there’s no — everybody is a lawyer now, “There’s no crime of collusion!” — we’re talking about, you know, criminal conspiracies here. If this all ends up resulting in a bunch of indictments over financial corruption cases, I think it’s going to cause a very serious problem for truth in our society because people have been groomed to believe that they’re going to see like, the pee tape, that there is going to be some smoking gun about Donald Trump and if it ends in a bunch of financial corruption stuff, which seems to be the most likely, then what do we make of everything everyone’s been told over these two years of the story?
MT: This has been my concern the entire time. It’s not about Donald Trump. It’s not about Russia for me. It’s about the bigger picture of what happens to reporting in the future. What happens to how, you know, are we politicizing law enforcement? You know, to me what’s gone on — it could turn out to be just a much more extreme version of what happened in Whitewater or with the Menendez case, right? Where you start a special prosecutor investigation in one place, based on, you know a bunch of rumors and innuendo and maybe even some private research like happened with Menendez.
JS: You’re talking about Senator Robert Menendez of New Jersey.
MT: Right, which starts off as a scandal about Dominican underage prostitutes and turns into this sort of financial crime a million years down the road. And, you know, Whitewater, again, you know it starts off with a sort of regional real estate scandal and ends up with a perjury case involving an intern.
Look, I mean, if you read Michael Wolf’s book when the special prosecutor comes down, you can hear Bannon cheering because, you know he’s like, “This is going to be money laundering, baby.”
MT: He sees right away what the end game is.
JS: He said that’s what it’s all about it.
MT: That’s what it’s all about! And Bannon, for all of his other negative qualities, is not stupid, I mean, you know, you can tell that this is a guy who has a few brain cells in his head, and if Bannon sees right away that this is going to end up in a money laundering case, and if it does end up in a money laundering case, which it easily could, because that’s what you would suspect with a cash-poor, real estate mogul like Donald Trump was not that long ago, that’s the temptation in that business, right? And I have no doubt if they dig, they’re going to find a rat’s nest of stuff like that. But does that have anything to do with the original mandate of what the special prosecutor is, and if it doesn’t, then we have a problem down the line going forward, which is that everybody’s going to do this to everybody, every political opponent and that’s very dangerous for our society and also for the media. You know? If we’re going to be taken for a ride like that every time.
JS: Matt Taibbi, thanks for all the work that you have done and continue to do. We really appreciate it.
MT: Well, thank you, Jeremy.
JS: Matt Taibbi is a contributing editor at Rolling Stone. His latest book is “I Can’t Breathe.”
JS: In 1921, an army of 10,000 coal miners marched on Blair Mountain in West Virginia, confronting several thousand coal company supporters and police deputies. After years of working and living under a repressive company town system, getting paid low wages in company currency and working under appalling conditions, workers began organizing.
In response, Stone Mountain Coal Company’s private detectives began evicting union miners from company-owned houses in the town of Matewan. This marked the beginning of rising hostilities that would lead to the battle of Blair Mountain. Coal miners clashed with about 3,000 state police and militiamen who are on the side of the coal company, and bombs containing nuts and bolts for shrapnel were even dropped on two miners strongholds.
After nearly two weeks, the fighting finally came to an end when federal troops arrived. Recognized as the largest armed insurrection in the U.S. since the Civil War, The Battle of Blair Mountain is a seminal moment in U.S. labor history. It’s a history that West Virginia teachers recently channeled when they led the first statewide teacher strike since 1990. At the end of February, for nine days, West Virginia teachers went on strike. After nearly two weeks, those teachers got a 5 percent raise and a temporary hold on health care cost increases. On average, teachers in West Virginia make about $45,000 a year.
But it was about much more than raises and health care. The West Virginia teachers’ strike was also about defending public education and expanding quality schools. And West Virginia may have inspired others. From West Virginia to Arizona, teachers across the country, conservatives, and progressives, by the way, are demanding more: Better wages and health care, resources for students, investment in schools. Many of these strikes have been happening in so-called red states.
Joining me now to discuss this wave of teacher strikes and what it may signal about labor organizing and the plight of workers today is Sarah Jaffe. She’s a Nation Institute fellow and an independent journalist covering labor, economic justice, social movements, politics, gender, and pop culture. She is the author of “Necessary Trouble: Americans in Revolt.” She also co-hosts Dissent magazine’s Belabored podcast. Oh! And she was once my intern at The Nation magazine and I’m really proud of all the great work she’s done since. Sarah Jaffe, welcomed to Intercepted.
Sarah Jaffe: Hello!
JS: So, at the end of February we had this teachers’ strike start in West Virginia. It was the first statewide strike since 1990. What sparked that strike?
SJ: The interesting thing about what sparked that strike is actually Fitbits. So the insurance issue was the big thing, and one of the things that was going to happen was that the teachers were going to be required to wear Fitbits or something like that, that like would track how many steps they took and otherwise how fit they were every day, and it would increase their insurance premiums if they did not take enough steps or whatever.
And so, I find it really interesting, because you know on one hand it’s money, right? That this was going to actually cost them more money, their insurance premiums are already sky high, which is already effectively giving them a pay cut from the previous year. But like, the thing that really made them mad was this sort of intimate surveillance kind of thing. I had this teacher Brandon Wolford from Mingo County on my podcast recently, and he said, you know once people are mad about the one thing, you can get them mad, you can go for everything.
So it went from like, “We don’t want to wear Fitbits that are going to make our insurance more expensive, to we want a 5 percent raise for every single public employee in the state of West Virginia,” which is what they ended up winning. And also things like halting a charter school bill, some other regulations and things that were moving in the state that would have made teachers’ jobs harder, all of that got stopped. But the 5 percent raise is the thing that got all the headlines.
JS: What came of that strike?
SJ: One of my favorite points of the West Virginia strike is that they were offered a 5 percent raise for teachers and school employees — and also, interestingly cops — and then 3 percent for the rest of the state employees. And they actually, the teachers stayed out on strike until they got 5 percent for every single public employee in the state, and they got a sort of panel that’s going to look at the insurance problem, which is going to be doing investigations in sort of county by county thing, and so that’s what a lot of the teachers are organizing around now, is making sure that this panel actually does something about their insurance problem.
JS: Why do you think we’re seeing this wave of teachers’ strikes hitting so-called red states or typical, you know, sort of more conservative, right-wing states like Oklahoma and Arizona?
SJ: I think the thing in those states is that you’ve got very little to lose, and you don’t have the sort of collective bargaining ritual that you have in like, New York, right? New York has a big strong teachers’ union. We have Taylor Laws that mean teachers can technically not strike. But they do have collective bargaining. They have a contract, even though they sat there without a contract for four years under Michael Bloomberg. Like, in theory, they have some rights and some power in a state like this.
In these places, the unions are functionally, basically lobbying organizations for the most part. And so, when the teachers aren’t getting anything out of that, they start to look around and go, “Well, how can we then do something about it?”
And the thing about West Virginia being the place where this started is, this is a state with an incredible, incredible labor history that the teachers were very, very aware of. So, when you saw them go to the capitol while they were on strike —
[Audio from West Virginia teachers at the Capitol.]
SJ: — they were wearing red bandanas in a callback to the mine wars. And the first few counties to go out were Mingo and Wyoming that were the counties where like Blair Mountain, where the Battle of Blair Mountain was, which was, you know, 100 years ago, give or take a few years. There are people still in those counties who, if they don’t remember it, their parents remember it. They remember when labor struggles had guns and the weight of the Pinkertons and the police and sometimes the army came down on workers.
JS: It seems also that we are in the midst of a resurgence of union organizing in a number of sectors of society, including the one that you and I work in, and you’re seeing this across the board and you’re also seeing good old union-busting tactics happening at media outlets as well.
Talk about that phenomenon of sort of the union rising again and it seemingly being rooted in real working-class struggle, but also younger people who are, you know, saying: Look, the job market sucks, the pay sucks, the benefits suck and we want to have some security here in our rights.
SJ: Yeah, I mean there’s a big, big story behind this. So, the two articles that I’m thinking about: One was that union density actually went up a little tiny bit in the U.S. last year, despite all of these attacks in state after state after state, and it was driven by, almost entirely by young people.
And the other thing was this article that I saw yesterday that was one-third of Americans can’t afford food, rent or some other life necessity. And so, you know, you look at those two things, and you’re like, “That’s a lot of people that are struggling.” And when you look at these industries where you have to go get a college degree, you have to maybe do some internships that, you know, at the time I was a Nation intern, which, again, was not that long ago, we got a couple hundred bucks a week in a stipend. Now, it’s a $15 an hour thing because those interns organized, again.
Right? So this industry relies on a lot of education and a lot of what a couple of communications scholars termed “hope labor,” which is the free work that you do in the hopes that you will eventually get paid for it.
JS: I look at, you know, things like the recent scandal with Harper’s magazine advertising for an unpaid position where you’re going to just be doing, worked around the clock for no pay at all. And not even, not even money to help your train fare.
SJ: Right. Exactly. Not even a Metro Card — come on guys, you can at least buy a Metro Card.
Yeah, and when you look at that, and there are many industries like this. We’re talking about journalism because that’s what you and I, you know, came up in. But this is true in all sorts of particularly creative industries, in tech, in all sorts of places where you have to do a whole lot of sort of investing in building up human capital so to speak, right, to get a job at all. And that stuff is expensive and it’s only getting more expensive. And so student debt, the student debt bubble passed $1 trillion in this country back in 2012, and it’s only been going up.
And so, you have people who are trying to make a living on $35,000 a year, paying, you know, $1,000 a month for a room in Brooklyn, and paying $400 in student loans. And like, excuse me? What are you eating? I mean, pizza by the slice is cheap here, but it’s not that cheap. And so, it’s not shocking then that people are saying, “We want a union.”
And also, they want to unionize because these kinds of jobs, these labors of love, they expect a lot from you, right? They expect that kind of around the clockwork. They expect that kind of devotion. And if you make any demands, sort of, individually you’re just told, “Well there’s 100 people down the street in line for this job.” Right? So, it’s really, really hard on your own as an individual to improve your work circumstances, you have to actually work collectively and this is what people are finding out. And it’s like because, right, once you understand you are part of the working class and you understand this little thing we used to call class consciousness.
JS: You know, I think it’s interesting to look at the way news organizations now cover or don’t cover these union organizing efforts or strikes. I think particularly of very low-wage workers who work for McDonald’s and Burger King and Taco Bell, and the organizing efforts of the Immokalee workers, but also of rank and file employees of big box food franchises and those struggles. I think sometimes we tend to romanticize the labor struggles of the kind of educated class, or the sort of, you know, people that already have a net of sorts, but then we kind of like sort of aren’t really there in solidarity when the truly poor workers are mobilizing.
SJ: Yeah, it’s interesting because I think that one of the things that has renewed the interest of the media in labor struggles was the fight for fifteen, which was, you know, minimum wage fast food workers who, you know, at the time in New York were making $7.25 an hour, and they would have signs that said, “Can’t survive on $7.25.”
[Audio of fight for fifteen workers rallies.]
Ashona Osborne: Low-wage workers throughout the world, which includes home health care, security guards, in-house care nurses, adjunct teachers, students, us — retail works, fast food workers, we are all striking for more wages on the job, respect on the job, consistent schedules, and consistent hours.
SJ: And are still making $7.25 because the national minimum wage still has not increased in a lot of places. And that, you know, was an effort by, you know, SIEU and community groups to —
JS: SIEU being the—
SJ: — Service Employees International Union, yeah, to bring attention to the fast food workers and to try to create a national movement to essentially force these big corporations to the bargaining table. They have not gotten any of them to the bargaining table, but what they have gotten is the wage raised by statute in a lot of places, starting in SeaTac, Washington and Seattle and then it moved through California. It’s $15 an hour or on the way to it in some of New York State.
And what that did was it sort of had this regular presence in the media of low-wage workers talking, at least to some degree, for themselves. And one of the things that that led to was one of Trump’s nominees who didn’t make it through confirmation was Andy Puzder, who was the literal like screw-you to the fast-food workers. Like, Trump nominates a fast food CEO to be his labor secretary, and not only a fast food CEO, but one who has charges against him personally for sexual harassment, a record of sexual harassment in his restaurants that used like really sexualized imagery to advertise — it was Hardee’s and Carl’s Jr — and the fast food workers sort of said, “OK, how many people who worked at these places do we have working for us? Can we talk about them? Can we get their stories out there?”
And they made his life miserable.
Jake Tapper: Sources say Andrew Puzder, the president’s pick for labor secretary, has just moments ago withdrawn his nomination. He was set to testify before a Senate committee tomorrow morning. CNN senior congressional reporter Manu Raju joins me now. Manu, what happened?
Manu Raju: Well, Jake, he didn’t have the support.
SJ: And he withdrew his nomination because a friend of his told the reporters he was quote, “Sick of the abuse.” I’m sure the workers in his restaurants were also sick of the abuse.
JS: Right. I also want to talk about Amazon. You know, Jeff Bezos, who owns the Washington Post, the model that Amazon has embraced and is building up, how would you describe this? The phenomenon of Amazon, the warehouses, the treatment of workers.
SJ: Amazon is a fascinating creature. Right?
JS: I thought you were going to say a fascist creature.
SJ: Well, I mean that may be true. And it’s also an interesting point when we’re talking about journalism and journalists organizing and the rest of the workforce, right, because you literally have the same boss if you work at The Washington Post as if you work at an Amazon warehouse.
But, so, with a lot of these warehouses they’re subcontracted out, right? So, Amazon doesn’t like, maybe directly employ the people who are working in these warehouses, they’re employed by some subcontractor, who’s maybe employed by another subcontractor, who then works for Amazon, so they have this like cushion of plausible deniability over the working conditions. So, they can say like, you know, if workers are passing out in these un-air conditioned warehouses in the summertime or getting sick from breathing the dust that comes off packages or whatever it is, the big boss at the top can sort of say, well, we don’t really — we’re not responsible for this. Incidentally, this is also the situation of like McDonald’s, where a lot of McDonald’s restaurants are owned by franchisees and so McDonald’s can sort of say, “This is not my responsibility,” you know, “this is the responsibility of the franchise owner.”
JS: Right. Mayor McCheese has nothing to do with this.
SJ: Right. Exactly. Exactly. So, there’s layers of insulation pretending that Amazon is not ultimately the thing that is setting the prices, setting the wages, setting the conditions, demanding faster and faster delivery service, right? Doesn’t Amazon promise like, you know, now delivery like same day?
JS: Yeah, you can get within two hours.
SJ: Like all of these things, right, all of these things require faster and faster and more and more work from people, and yet the companies will pretend that they don’t know who on the other end is suffering for that.
JS: This is getting to the heart of one of the things I want to talk to you about. The thing that history has taught us, the very simple concept is that when workers unite, and the threat of stopping the work that creates the profits for the bosses, then the bosses are forced to either retaliate a very violent way or to negotiate or to take their operations elsewhere. And one of the consequences of NAFTA, for instance, which both Trump and Bernie Sanders railed against, was that it pitted workers in the United States against workers abroad, and it caused this race to the bottom of the wage scale for everyone.
So, if Amazon workers were to organize en masse the same way that fast food workers have started to organize and that now journalist workers are organizing, wouldn’t Amazon just sort of say, well, we can achieve this by going elsewhere to have these warehouses?
SJ: Well, these are the questions, right? Because—
JS: Like, how do you win against such huge corporations?
SJ: If you were going to deliver packages to somebody in you know, 14th Street in Manhattan in two hours, the stuff has to come from somewhere, it has to be close. And so, on some level, this is why —
JS: Well then you create a caste system, though.
SJ: This is why these sort of logistics systems — and they already have, right, they employ a lot of undocumented people in these positions, they employ, in some cases, people who are formerly incarcerated so you get people getting just out of prison who have very few options because very few people will hire you. And so, you get like sort of super exploitable workers already in these places, because what’s already happening is that the stuff is being made somewhere else. Right? It’s being made in China, it’s being made in Bangladesh, it’s being made in a factory maybe that will, you know is on the verge of collapse somewhere else, and it’s being brought here on a ship and then that creates choke points in the process. Right? The warehouses, the ports where the things are coming in, and so what happens is you have fewer workers in the U.S. — part of this stream, absolutely, you also have automation of different functions here, so you have fewer workers period. And those things are definitely true and it’s definitely creating a sort of permanent high unemployment situation, high underemployment situation that we’ve had in this country for a while and certainly since 2008.
But the other thing you have is potentially a lot of power in certain places. So, you see the teamsters focusing on organizing these poor truck drivers in the major ports on the East and West coast, most of their work has been in Los Angeles and Long Beach, or the port workers in Oakland who sort of just regularly shut down the ports because they have this long history of radicalism in the ports in Oakland and in Seattle.
JS: Yeah, and the longshoreman’s union.
SJ: Right, and so, yeah, and so they’re like fewer longshoremen than there used to be, and mostly they’re operating, you know, cranes in an office rather than, you know, out there doing it by hand. But still that means you have fewer workers you have to organize in order to shut down the port, and so these are the questions of sort of capitalism in the 21st century is where is the power?
And this sort of brings us back to the teachers, because the other thing, you know, my friend Jane McAlevey would say that the teachers and other public sector employees, again, who are mostly women, who are mostly very connected in their community, they have the real power, not only to shut down the schools in the state which we’ve seen in first, you know, West Virginia, Oklahoma and now Arizona, but they also have the power to bring their community with them and to really change people’s view on politics. So, you’ve seen teachers in Arizona say, there was a video at the Times the other day of Republican teachers in Arizona in this case, although this is true in all of these states, who are saying, you know, I voted for these people but they’re screwing me.
Jenny Bentley Ryan: I’ve always voted Republican, but now I’m seeing first-hand what that gets us. The classrooms are falling apart, we have festering bathrooms, we have cockroaches, we have tattered textbooks. Teachers aren’t getting the resources that they need within the classroom.
ABC Newscaster: A wave of protests sweeping across the country, led by teachers who say the future of public education is at stake.
William Kimsey: Teachers, and specifically public-school teachers, really aren’t valued.
SJ: There’s nothing that will change your politics more like seeing exactly how those budget cuts are affecting your life or affecting the kids in your neighborhood. And the question that is going to haunt a lot of people who watch organized labor forever is going to be, especially right now when we look at Arizona and we look at Oklahoma and we look at West Virginia, it’s going to be: What if everybody had just not gone to work? That’s the real question of like where is the power, and how do you turn things around and how do you build it? That we really actually have to think about the solution for, and, again this is not going to be solvable in one election, or by one politician. It’s actually going to have to be solved by people like Voces de la Frontera, building this base in these cities and towns of immigrant workers and people who live there and bringing them together and actually getting them to understand that their struggles are connected, that their liberation is bound up together.
JS: Sarah Jaffe, thank you so much for the work you’re doing and thanks for being with us on Intercepted.
SJ: Thank you.
JS: Sarah Jaffe is a Nation Institute fellow and an independent journalist covering labor economic justice and social movements. She’s also the author of: “Necessary Trouble: Americans in Revolt.” With Michelle Chen, Sarah also co-hosts Dissent Magazine’s Belabored podcast.
JS: Donald Trump likes to brag that peoples’ 401k plans are growing at a rapid rate and that his policies are raining money down on Americans. But most eligible workers don’t even contribute to their 401ks, and less than 20 percent of American workers have pensions.
Trump is essentially bragging that he’s making the rich richer. His new top economic advisor, Larry Kudlow, is a cable TV personality who replaced a Goldman Sachs executive Gary Cohn. And Gary Cohn left at the exact right time for Gary Cohn’s wealth. He was able to convert his quarter of a billion dollars in Goldman Sachs’ shares into tax-deferred Treasury securities and Gary Cohen stayed in the administration just long enough to continue that deferred treatment, thus saving Gary Cohn millions of dollars in taxes. Magic! That’s the real American spirit.
We’re once again at a point in this country where the concentration of wealth at the very top resembles levels last seen 80 years ago. Today, one-third of American households can’t afford shelter, food or medical care: that’s according to the Consumer Financial Protection Bureau. Yet Donald Trump gets thunderous applause at his rallies, including from people who are going to suffer very badly under the policies that Trump is enthusiastically telling them will make them rich.
There’s a way in which Trump is sort of refreshing, though. He barely, if ever, hides his own penchant for corruption and cronyism, not to mention lying. But it’s a mistake to pin major economic crises on any one political figure, even Donald Trump, or political party. There is a shadow state that runs U.S. financial policy. And by the way — those of central banks across the world. These banks serve the richest people and punish the poor with crippling conditions for loans or other aid. Very few political figures ever talk about the role of the Federal Reserve, and a lot of calls to audit the Fed were sort of portrayed as part of the weirdness that came with the presidential runs of former Texas Congressman Ron Paul who frequently raised this issue in Republican debates.
Congressman Ron Paul: But now that we have found and we’ve gotten an audit, we have found out an awful lot on how special businesses get, you know, bailed out: Wall Street, the banks, and special companies, foreign governments. And you said that you advise those of us who are concerned, and you’d belittle. You said, “Call up the Federal Reserve and just ask ’em. Get the PR person.” So, do you still stick by this, that this is frivolous, or do you think this is very important? 64 percent of the American people want a full audit of the Fed on a regular basis.
JS: Ron Paul was right about this, as he was often right about U.S. wars and interventions. He also happens to have a horrid track record on race, on women’s reproductive rights and a bunch of other social issues which makes it difficult to hear him on these other issues where he’s right. The messenger is unfortunate, but the message is an important one. And with Trump in power in the U.S., Theresa May and Brexit in the UK, the ongoing financial crisis in Greece and the very real possibility of a major economic crash under Donald Trump, I think it’s important to look at the root causes — the root causes of financial meltdowns and of the system that favors the rich at all costs to the poor. And that means looking at the role of central banks and it means looking at the Federal Reserve.
Former Goldman Sachs and Bear Stearns executive Nomi Prins has an important new book out that is the product of years’ worth of research and on-the-ground investigation in a variety of countries. That book is called “Collusion: How Central Bankers Rigged The World.” Nomi Prins, welcome back to Intercepted.
Nomi Prins: Thank you!
JS: Let’s start with the big picture. What’s happening economically in the world under Donald Trump? I mean there’s this big to do about the tariff issue and he constantly is talking about how the president of China is his great friend and Shinzo Abe, he went golfing with, but some of these characters that now Trump is constantly bragging about are central characters in your book. So what’s happening globally?
NP: Right, so since Donald Trump has become the president, a lot of things that were in play before his presidency have actually become exacerbated and accelerated. So, for example, Shinzo Abe and Xi Jinping in China have actually become better friends and they have relationships between those two countries from a trade perspective, from a diplomatic perspective, from just people going back and forth perspective have actually become much cozier in the wake of Trump because it’s one of these situations where anyway China was rising as a superpower as an economic power and as a financing power, really, in the region and development and throughout China to Latin American countries and so forth, that’s just become accelerated.
So he might say he’s friends with all these people, but the reality is, they have become closer to each other since he’s become the president.
JS: What is the actual impact of the tariffs that Trump is using, he would say as sort of part of a trade war, and he says trade wars are, you know, it’s going to be good for us because we’re going to win it?
Abby Phillip: Now this morning he is doubling down in a tweet. He wrote: “When a country, (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good and easy to win. Example, when we are down $100 billion dollars with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!”
NP: He looks at everything in very, very, very basic terms, win-lose, black-white, whatever, but trade wars are other people’s, other countries’ diplomacy, and so though China will then place tariffs on our goods. The reality is they have bigger growing population, they have a bigger growing set of alliances throughout their region with India, with Japan, with Europe and so forth and they will be OK. Ultimately the tariffs will hurt local producers here, local people who use and import and have to import steel and aluminum in order to build things. Not every construction company has a steel mill in their backyard. They actually have to import. So it winds up hurting Americans and American workers by more than it helps them, and it winds up helping other countries establish better relationships with each other.
JS: Explain the role of central banks around the world. I want to talk about the Fed in the United States. But first, how do central banks function and what has their impact on the global economic standing of various people been?
NP: Right, so there’s what they say they do as a function and then there is what they actually do. What they are saying that they do is their official mandate is they established a level of interest rate, so they established the cost of money to their banking system and technically if the banking system is nice with the country then to citizens in those countries. That, of course, doesn’t necessarily happen. Banks like to keep the money they have. So they establish the level of money and what they’ve done is also try to make sure that the inflation rate on prices stays within a certain level to ensure a healthy economy, and the level that they want to ensure it stays around is 2 percent. It’s been lower than that in these last 10 years since the financial crisis.
What they do in practice, though, certainly the major G-7 central banks, is they provide money super, super cheaply, with no interest, to their private banks with the hopes or at least the rhetoric that money will go out to the main populations, but there are no strings attached to that money. They also have gone on a program called quantitative easing which is a wonky way of just saying: We will buy the waste that you have and the debt that you have on your books, banks, and we will keep it for you and we will give you cheap money in return. And so they have become managers of debt: government debt, corporate debt, bad mortgage debt over the last 10 years as well to the tune of $21 trillion, the level of the GDP back in the United States during the past 10 years.
JS: Back in 1999, you had this huge protest at the meeting of the World Trade Organization in Seattle, and it was called the Battle of Seattle, and I was there in the streets, and a lot of people from the global south came to the United States and it really was two worlds meeting and opposing not just the WTO, but also neoliberal economic models and policies.
TK: What’s the WTO all about?
TK: It’s all about greed. It’s all about — look at these kids up there, they have a sign up that says, “Don’t trade our future.” For these young kids in the streets today, it’s about their future being traded off by corporations who frankly, don’t give a shit what happens to them.
JS: And central to that was this fierce opposition to the imposition of what are called austerity measures, where essentially the IMF, the International Monetary Fund or the World Bank would go into a country and say, “OK, we’ll help you with X, Y, and Z things, but you’re going to have to slash all social spending, education, health care, et cetera. How does that relate to the approach that central banks take to debt?”
NP: So going back to what central banks are supposed to do versus some of the things they did.
JS: That’s not what the IMF is supposed to do either, right?
NP: Exactly, exactly. They sort of overstep their mandate and they make geopolitical economic decisions for the south, the south of Europe, the south the sort of anywhere versus sort of the core, versus the post-World War II alliances core that they were established to support.
But what central banks have done on that accord is they have created an environment where they have fabricated money to exacerbate that entire situation, so not only was there already debt inequality and economic inequality between sort of core countries and periphery or developing or southern countries, but what they’ve done is they’ve come in and they’ve given more money to the core countries and they’ve basically then also said, especially in Europe, we need to then have austerity measures on the other side. So though it is not their job, it is not their mandate to get involved with sort of the government or political decisions or the fiscal policy decisions that austerity supposedly comes under, they did.
So in a lot of these countries the central banks, by virtue of having no limitations, no regulations, no auditing, on their people, on their leaders, on the money they fabricated in last ten years and where it goes, which is mostly the private banking system in the larger countries, have basically created a wider chasm in inequality and been able to step up and say: therefore, we need austerity.
This happened in Brazil as well. All of the scandals and all the corruption and all the government shifts that happened in Brazil, the head of the central bank in Brazil who just left his ministry of finance position and might be running for president in Brazil, Henrique Meirelles, has very much talked about austerity there, even though the central bank there, to a lesser extent, was able to manufacture some money to behave like the Federal Reserve was.
JS: Speaking of the Federal Reserve, on a really basic level, explain to people what the Federal Reserve is, who controls it.
NP: The Federal Reserve was created in 1913 by the Federal Reserve Act under Woodrow Wilson, a Democrat. At the time, it came out of a real set of meetings between Nelson Aldrich, who was the head of the equivalent of the Senate Banking Committee, then the Senate Finance Committee in 1910, because there had been, they called a panic but a crisis of speculation in New York City.
Because of this crisis, J.P. Morgan, who was like the kingpin banker at the time, he gave sponsorship to a couple of bankers from some major banks that still exist today and Nelson Aldrich to go and figure out how to have a bank for banks. So the idea of the central bank was to have a place, a lender of last resort, where if the banks had another crisis and there wasn’t enough money, which there barely was at the time in the Treasury Department, so to go to the government and get a bailout for a crisis, there would be this separate institution, this separate body that would provide that extra money. And that was the concept of the Federal Reserve to begin with.
It was sold to the public as a way for farmers, for example, in the Midwest to get money if they needed it from the lending system, from the banking system in the event of a crisis because in any crisis banks, especially the core banks on Wall Street, close up. They close up to people. They don’t restructure mortgages. They don’t provide loans to small businesses or punitive costs. They don’t provide loans to farmers. And that was happening at the time. So the idea that this was sold to the public by Woodrow Wilson to help — the reality was, it was created by banks for banks as a lender of last resort and the fact that it’s also supposed to calibrate the sort of full employment level relative to the inflation level in the economy by setting the cost of what money is to the banks and to individuals is sort of a by-product of them being that sort of mothership insurance company for the banks.
JS: I feel like as someone — I’m not an economist, but I pay attention to these issues, and it seems to me that Alan Greenspan is the figure that most people associate with the Federal Reserve. What was his impact on global economics?
NP: So going back to an Alan Greenspan was the head of the Federal Reserve, he did a number of things. And he was also, at the time, an advisor to what’s now JPMorgan Chase — at the time it was it was J.P. Morgan — but anyway, Alan Greenspan had this idea that it would make sense to deregulate the banking system.
Alan Greenspan: To repeal the Glass-Steagall Act contained in S. 1886, it would allow lower cost and expanded services for consumers through enhanced competition in an area where additional competition would be highly desirable.
NP: Now, the Federal Reserve also is supposed to be the main regulator of the banking system. They are supposed to create an order in the financial system and in order to create order, and not have crises and not have havoc, you know, it is your job as a regulator to make sure things are regulated in such a way as to as to avoid crises. So under him, he decided that it would make sense for banks to have more of a carte blanche to get involved in derivatives and more complex securities, and this was in the late ’80s where, you know, they weren’t as complex as they became, but the doors were open because the head regulator was advocating to deregulate the banking system.
And also what happened is on the way to his ultimate departure, and Ben Bernanke becoming the chair of the Federal Reserve, he also decided when there was a crisis for example of Enron and WorldCom and 9/11 and a bunch of things that were going on at a confluent basis in the early part of the 2000s, that he would reduce rates, that he would make money cheap. And the idea then was, too, they said it was to help the economy, but in fact, it was to help the financial institutions get their money back at a cheap level. It wasn’t as cheap as it became under Ben Bernanke in the financial crisis, but the tool was there to use the Fed under his chairmanship to just really act as a cheap funder, a blank-check writer almost, of last and first resort for the banking system.
So he had a tremendous impact on creating from more of a stricter Fed, in the sort of ’70s, to a Fed that was really the friend of the banking system of whom it was also the regulator. And that became more of a problem.
And so the financial crisis, when everything crashed because of the cheap subprime mortgages that were allowed to be cheap because Greenspan had lowered rates and because he let banks create sort of toxic assets or you know connect them with derivatives and other things, those became a big part of the financial crisis. Banks were allowed to effectively rejigger subprime mortgages into far larger, more complex, sliced and diced pieces of assets that they then sold throughout the world, and when those all came crashing down, the financial system came crashing down, so then Bernanke comes in and does what Alan Greenspan did but on the nth Degree in terms of cheap money.
JS: I mean they essentially took a bunch of really risky products and bundled them all together and then sold them as a new product that was given very high ratings.
NP: Right, and I mean I worked at these institutions.
NP: Not only did I work, I was like the wonk, I was like the analyst. I actually from the moment I worked, my first bank that I worked at was at Chase. And from the moment I was there, I was literally checking rows of numbers that were coming in, that banks knew were coming in, on little loans, on little mortgages, on little agreements that they had with individuals or companies, and looking at if the data was correct, and looking at, you know, is this interest rate changing? Is it not changing? Is there a mistake here? And actually programming all that. And over the years what I saw and what I know is that banks saw all of the information coming in, so they knew if a set of subprime loans were having problems and people were unable to pay them or making late payments.
They saw that immediately, immediately in reports and what they chose to do is take the information that they definitely saw coming in and fake it. And basically, camouflage the money that wasn’t coming in and basically magnified that into trillions of dollars of assets. There were only half a trillion dollars’ worth of subprime assets at the time of the financial crisis in the U.S. marketplace. Not all those were foreclosing, not all of those were defaulting but many were in trouble. What they did was they took them and they created $14 trillion worth of assets, and then they lent ten times that amount to their investors, and small towns, and small banks throughout the world — so they created from a half a trillion dollars’ worth of faulty, and when I say faulty, just not payments coming in, subprime mortgages, to $140 trillion worth of stuff throughout the world. That’s what crashed.
When one tiny thing crashes at the bottom, and it’s being asked to support payments coming in to $140 trillion at the top, any mortgage will fail to be able to supplement that kind of increase in magnification.
JS: A big part of Trump’s campaign and also Bernie Sanders’ from a very different perspective, in many ways, was against these trade agreements like NAFTA or GATT or the Trans–Pacific Partnership, how does the posturing that Trump is engaged on NAFTA affect Mexico? If NAFTA was completely wiped out, how would that impact Mexico?
NP: Well, first, Mexico would probably negotiate agreements as it’s doing with other countries like China. You know we are in a global economy, and if countries can’t trade with the ones that they’re used to trading with, or negotiate trade agreements that are actually better — I mean one of the things, you know, you mentioned Bernie Sanders and sort of the platform of him and of Trump which came out, the idea of trade agreements from, I think, different perspectives, but that they basically, you know, aren’t perfect. These ideas of free trade agreements do tend to benefit the corporations that are negotiating them and that are in Washington and they’re in Mexico City and they are trying to really get their best cut of any trade agreement. This is true.
But those things can be made better. I mean those things, in terms of renegotiations of NAFTA can be made better. Workers can get a better deal on both sides of the equation from any trade agreements and should. So it’s one thing to say “abolish them!” And it’s another thing to say, “Well, let’s make them better.” But who are we going to make them better for? Trump has not articulated who he wants to make them better for in a real way. You know, he’s talked about taking credit for things that have happened in the car industry, but he hasn’t actually looked at how that, how any of that would harm or hurt the actual car industry in the U.S. and in Mexico, the agricultural industry and U.S. and Mexico and so forth. So they’re not looking at it from a perspective of strengthening an agreement between two bordering nations to be better for the foundations, the real people in those countries. They’re sort of just — he’s just sort of throwing out rhetoric.
JS: What do you see as the most likely cause and how will it manifest if there is another financial crisis in the near future or under Trump?
NP: So just the same way that the banks created out of a few mortgages this massive amount of subterfuge and assets that ultimately collapsed and they had to be bailed out and subsidized, and the central bank activity has occurred since then because of that, the same thing is going to happen with corporate loans and corporate debt throughout the world. Because of the fact that money was made so cheap, there was an awful lot of borrowing that was done. At the moment, the amount of debt in the world is 225 percent of GDP, so it’s over two times the GDP in the world. So we are not growing enough to fund twice as much debt as has been created since the time it was a lot lower before the financial crisis.
So when there start to be cracks in the ability to repay even that debt that was gone at even cheap rates, it all happens at the same time. You know, it happens for the countries that can least afford it, that have to pay back some of that debt in dollars, if the dollar becomes stronger because the Fed is raising interest rates a little bit, it happens because corporations can no longer pay their debts because they don’t have real growth, they’ve only used borrowed money to buy their stocks so they look healthy on the outside because their stock is rising. So it’s when all of this sort of picture of external health starts to have these cracks in it that are manifestations of it not being real, it’s all been about money that’s been fabricated and put into these places to make things look good. But at the bottom, when things can’t be repaid and they’ve again been by banks rejiggered until more assets throughout the world and resold again, as they were in the financial crisis about mortgages, that will start to become a crisis.
And it’s a bigger crisis this time. It’s a crash coming from a higher height than it was before because you have all this mega-mountain of debt that’s been created because of central banks’ cheap policies.
JS: What’s your sense of Larry Kudlow and his role in the administration? And is he in any way qualified to be doing — I mean, I suppose if we’re talking about Trump somehow is the president I guess anyone is really qualified to do anything in this administration, but your thoughts on Larry Kudlow?
NP: You know, what’s weird is Gary Cohn, who was his predecessor was my boss the Goldman Sachs. Larry Kudlow was the chief economist at Bear-Stearns when I worked at Bear-Stearns.
JS: You get to be around all the greats!
NP: I get to be around these people that, you know, I got to actually tell the truth. But Kudlow’s a free-market guy, he isn’t a guy who understands or was ever concerned about, you know, sort of middle America or lower America or the world, and he doesn’t and hasn’t functioned that way and he won’t function that way as the chief business advisor, economic advisor to Trump, and I think that suits Trump fine and that suits Kudlow fine, and I think that’s what we have now in Washington. We have yet another person who doesn’t understand foundational economics and how working to solidify people more in number throughout economies and throughout countries is a way to create a stronger and healthier and more stable future. He is for something entirely different that helps banks at the top, the financiers at the top, speculators at the top maintain and grow what they have.
JS: Well, Nomi Prins I want to thank you very much for your tenacity, your investigations and your willingness to make it plain for people. These are very complicated subjects and people like you in our society are incredibly valuable. Congrats on the new book.
NP: Thank you so much, Jeremy.
JS: Nomi Prins’ new book is called “Collusion: How Central Bankers Rigged the World.” Her last book, “All the President’s Bankers,” detailed the relationships of presidents to key bankers over the past century and how they impacted domestic and foreign policy.
JS: That does it for this week’s show. If you’re not yet a sustaining member of Intercepted, log onto theintercept.com/join.
Intercepted is a production of First Look Media and The Intercept. We’re distributed by Panoply. Our producer is Jack D’Isidoro, and our executive producer is Leital Molad. Laura Flynn is associate producer. Elise Swain is our assistant producer and graphic designer. Emily Kennedy does our transcripts. Rick Kwan mixed the show. Our music, as always, was composed by DJ Spooky.
Until next week, I’m Jeremy Scahill.