Thursday, August 23, 2007

Democracy Now! | "The Media Dissector" Danny Schechter on Karl Rove's Resignation, the Subprime Mortgage Crisis and AT&T's Censorship of Pearl Jam

Democracy Now! | "The Media Dissector" Danny Schechter on Karl Rove's Resignation, the Subprime Mortgage Crisis and AT&T's Censorship of Pearl Jam

AMY GOODMAN: Well, let’s talk about the subprime crisis. Plummeting stocks on Wall Street have forced the mainstream media and economists to finally take notice of the housing bubble and the related dangers of the subprime lending industry. The New York Times laments what it calls the “spiraling credit crisis.” The Wall Street Journal points to the “debt bomb.” The Center for Economic and Policy Research says many journalists and economists have long ignored the facts. The housing market has been seriously overvalued for the past ten years. Its collapse will cause a severe recession with grave consequences for millions of families. The subprime loan industry has emerged as a major and controversial player in the housing market. A recent study by the Center for Responsible Lending indicates subprime loans have led to one million American families losing their homes in the past decade. Danny, you’ve been writing extensively about this.

DANNY SCHECHTER: I’ve been writing about it, and I also made the film In Debt We Trust, and we have a website,, to try to organize a campaign for debt relief in America. In other words, Bono has called for debt relief in Africa. We have to start fighting for debt relief in America. A moratorium on these foreclosures would be a first step, and also an investigation into the profiteers on Wall Street. We're talking about literally billions of dollars that have just been spent by the Federal Reserve and by central banks around the world to try to prop up the system. A lot of that is really benefiting the people who created the problem in the first place: the hedge funds, the financial analysts who went ahead with this effort.

This subprime thing is really serious. I don't know if your viewers are all clear of it, or your listeners, but basically people who didn't have adequate credit to get homes were told, “No problem. Just pay us a little bit more, and we will give you the mortgage.” Then they took the mortgage. They resold the mortgage back into Wall Street into what are called securitization trusts. These trusts then not only financed more acquisitions and buyouts and the like, but they also basically made incredible amounts of money for these people.

So we're now facing a situation, the New York Times -- I love this phrase -- just the other day talked about a “moral hazard,” meaning that the risk takers who brought on this panic would feel bailed out again. And they are being bailed out again. And the problem is the opposition is not saying much about it. The Democrats are not talking about it. Activists are ignoring it, maybe because economics is the dismal science.

But we have been getting a lot of response to our film, In Debt We Trust, and to this issue, because it’s an issue that brings together people across the partisan lines, across class lines, across racial lines. It could be the issue that could lead to a fight for economic justice in this country.

AMY GOODMAN: You talk about the hedge funds, for example, and how they're connected to this. Do you think that it's not a major issue in the presidential race, because the very moneyed class that these politicians are both coming from, some of them, but also appealing to for money are those that are a part of this?

DANNY SCHECHTER: Yeah, well, we saw this, and I document this in my film, In Debt We Trust, about the bankruptcy reform bill, where tremendous amounts of money were spent on lobbyists, $151 million to try to get this “reform” passed, and Democrats supported it, as well as Republicans. So it wasn't just, you know, the big bad Bushies here, but it was sort of the Democrats, as well, who were implicated. And part of the reason was, is because their campaign donors include these very wealthy companies and financial institutions and real estate developers. So it's very much a part of the deeper corruption of our financial and economic system.

AMY GOODMAN: How do you think it has to be dealt with right now?

DANNY SCHECHTER: Well, it has to be dealt with -- first of all, we have to become more aware of it and put this issue more on our agenda. I mean, the military has just tried to spur reenlistments to Iraq by saying, “We'll help you pay off your debts. If you have college loans, we’ll help you pay them off.” So debt is central and part of that crisis, as well. So what we need to do, it seems to me, is (a) inform ourselves -- screenings of In Debt We Trust might help in that process -- secondly, we need to push for regulation. We need an investigation. We need to have prosecution of these big corporate guys who have been making so much money off the misery of so many Americans and to try to put an end to these processes. So it's a -- you have to stop talking about subprime, you have to start talking about subcrime, which is an article that I wrote on the other day, and it’s gotten a tremendous response. We have to criminalize these practices, not just nod at them and bail out the people who have put us in the situation.


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