interview dr ruegemer english 20091212

8/14/2019 Interview Dr Ruegemer English 20091212

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Interview with Dr. Werner Rgemer regarding the

issue "The causes of the financial crisis - or whywe should not pay back the state debts"

This interview is published by the editorial staff of Gulli under Creative Commense License. It may bepublished without notification of the originator (editorial staff of Gulli). It may be published shortened in anon sophisticated manner. If it gets published shortened, the unshortened PDF of the interview must belinked in the article. It can be published commercially as long as the editorial staff of Gulli has beeninformed. Download the interview as PDF here. Information about republishing is requested.contact: [email protected]

Interview:

Your name: Dr. Werner Rgemer

School / study / profession: Elementary school and secondary school in the Rhn area, study ofliterature, pedagogy and philosophy in Munich, Tbingen, Berlin and Paris; philosophy doctorate at theUniversity of Bremen on "Philosophical Anthropology and Crisis of Epoch ", publicist and consultant.Lecturer at the Department of Political Science in humanities faculty (education of teachers) at theUniversity of Cologne. Priorities are privatization, public-private partnership, Cologne clique, nationbuilding.

Career Milestones: 1969 to 1973 CEO of the German section of the voluntary organization "Service Civil

International", from 1974 to 1989 editor of the journal "Democratic Education", since then an independentjournalist, consultant, lecturer and city guide.

Age: 67

Your website?http://www.werner-ruegemer.de/

Interviewer: Dr. Rgemer, thank you very much for the nice meeting some time ago at Caf Goldmund inCologne. We have prepared this interview for more than 3 hours, drinking milk, latte macchiato andmineral water. In this interview we would like to reveal causes and origins of the current financial crisis toour readers. Obviously, there are important points the mass media do not mention.

This requires, in advance, a crash course concerning the central bank- and reserve system, because weneed this basic knowledge for understanding the interview. Therefore we could recommend the movie"Money as Debt" or the first part of the movie "Zeitgeist 2 - Addendum ", which is produced somewhatmore complex. Of course we also could read the book "Mankiw - Economics". As a lecturer at theUniversity of Cologne, would you endorse these recommendations?


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Figure: Dr. Werner Rgemer (Source: Gulli)

Dr. Werner Rgemer: I dont know these films and the book you named. But I can recommend the

documentary "Let's make money" I was involved in, also the movie "The Company". At the Universitythere are two books that are on my recommended list: David Harvey, A Brief History of Neoliberalism, andNaomi Klein, The Shock Doctrine. In my books on privatization, public private partnerships, cross-borderleasing and the consultants, I described mechanisms and protagonists in detail.

Interviewer: Please describe what the financial crisis is and what it means for the public.

Dr. Werner Rgemer: The financial crisis is that the theoretically endless pyramid scheme, which thefinancial operators themselves have built up among each other, has collapsed almost simultaneously inseveral places in the central capitalist countries. The financial operators dont give out loans to each otherany more, they dont buy their financial products and now they ask the nation states to take over so many

debts that the system can be rescued. Because the "real economy" in this neo-liberal race fore yield hasbecome so dependent on loans, it struggles already the slightest cyclical fluctuation. If these rescue effortsby the state go on like this, the result for the public is as follows:: even more public debt, even morecutbacks in social services, in education and infrastructure, an increase of direct and indirect taxes andfees, income reduction and unemployment in particular.

Interviewer: In this interview we would like to describe through which circumstances this crisis evolved.As you said, basic conditions would be a FIAT monetary system as described in both movies inconnection with an uncontrollable reserve requirement system. How can those bubbles evolve?

Dr. Werner Rgemer: The financial crisis was caused by the creation of money by the financial players,

which have not been controlled by the nation states. I consciously say "financial players" because it's not


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just about banks. The financial players include hedge funds, private equity funds, financial subsidiaries ofconglomerates and the likes. And it's not just about private commercial banks but also about state-run, inGermany mainly regional state banks and the federal bank, the Kreditanstalt fr Wiederaufbau (KfW), they

have imitated the private commercial pattern and in some cases even tried to surpass it.Their activities, especially during the last decade, werent primarily giving out loans to corporations, states,communities, house builders and buyers of refrigerators. Their most extensive activities consisted ofmaking loans a financial product, to hand and sell out loans to each other, to make mutual bets and this ina open pyramid scheme. Plus investment banking, therefore financing mergers and acquisitions by loanswhile collecting high fees at the same time.

"The relative regulation of the financial system has been abolished"

The relative regulation of the financial system, which was established after the first Great Depression1928-1932, has been gradually abolished, "deregulated", since the early 90s of the last century. Two

financial centers, Wall Street and City of London, the English and the U.S. Government lead this. Plus ofcourse the U.S. banks, the U.S. auditors and U.S. law firms. All European banks oriented on that. Inaddition, the US banks, accountants and law firms have offices in all key nations already.

The main general principles of this deregulation:

1. Financial operators can create money through mutual business (at banks say they "inter bankingbusiness") without depending on central bank money and without being monitored by the centralbanks or state agencies

2. These transactions are not listed in the balance sheets, but processed through "off-balance sheetspecial purpose entities", which have their legal domicile mostly in financial havens like the U.S.state of Delaware, the Cayman Islands, and so forth; thereby they avert even the internal controlbodies such as the boards of management, but achieve accredition by the certified publicaccountants.

3. These transactions, referred to as "structured financial products", have been backed by a self-referential system of "reputable" specialists: internal managers of financial players, as well asrating agencies, insurers, lawyers, accountants; they confirm each other that everything is okay,the insurance companies collect premiums for a more or less fictitious insurance. Therefore, theproduct descriptions and contracts have hundreds, sometimes thousands of pages.

Interviewer: Which financial products exactly have brought the world economic system to the brink ofcollapse?

Dr. Werner Rgemer: The essential financial products:

- Securitization, therefore the resale of loans. In most cases, this has been done without eveninforming the original borrowers. So any long-term payment obligation (rental agreement, leasingcontract, public-private partnership agreement, future fee revenue of a waste or water company,etc.) can be made to a tradable financial product;

- Collateralized debt obligations (CDOs), that is the aggregation of different bundles of securitizedloans and the resale of these bundles of securitized loans;

- Asset Backed Securities (ABS): long-term capital cycles based on real values, one example iscross-border leasing;

- Derivatives, i.e. financial derivative products, e.g. betting on the development of equity and


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exchange rates;

- Finance-driven mergers and acquisitions;

- Short selling of securities;

- In a broader sense, also various forms of privatization of public property and public-privatepartnership are included.

We can say that some of these financial practices do make some sense in their original form. However, itall gets perverted by the main feature, that the capital which is required for such products and for suchtransactions, is raised essentially not by equity of the buyer, but through loans from other financialoperators, and that from each transaction a new financial product gets created. Not only private equityfunds act that way, but all financial operators.

Interviewer: Whats the relationship of those financial products to the public debt?

Dr. Werner Rgemer: Most of these transactions have been freed from taxes by the governments. Due tothe exhaustion of the economic substance jobs get destroyed, causing further tax deficits. But the maincontribution to the public debt is that the lobby of financial operators was so strong, and still is, that now,during the financial crisis, the states take over the financial obligations of the financial operators.

Figure: Development of the public debt of Germany from 1960 to 2007 - Source:Federal Statistical Office Germany (Source: Wikipedia)

Comment to figure by Dr. Rgemer: The table showing the German public debt is a typical Wikipediaunderstatement. The debt is much higher: the mentioned 480 billion bank bailout empowerment (later inthis interview) is outsourced from the federal budget, but will show up there at the end of the operation. Itsthe same thing with all other bank rescue operations, e.g. the 10 billion (Euro) to the IKB bank (it was

before the 480 billion package) and with the guarantees for the "bad banks"; was legalized by the


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European Commission and then allowed/prescribed for the whole EU (so that they could cosmeticallymeet the Maastricht criteria). Even the provinces and communities have shadow budgets, even the PPPcontracts (30-year leases) must be considered as hidden debts.

Interviewer: How do you judge the public debts for the nation states? Can those debts ever be paid off -or, more likely, does that lead to blackmailable nation states or the collapse of the system?

Dr. Werner Rgemer: All major countries of the "western community of values" have long beenoverindebted. In a perverse way, so to speak, its part of the core values of the "West. In a conventionalway these debts can never ever be paid off.

The already existing excessive overindebtedness was one of the conditions that the banks, where thestates are in debt and where they still need more and more loans, could become so powerful that theycould put out of force the existing regulations. This unequal balance of power is determined to becomeeven more unequal by the bailouts, the states become even more susceptible to blackmailing or morewilling to cooperate. Thats a state of corruption, even if you grasp at nothing if you do it juridical. With it,the political will of peoples majority gets broken. This is the ultimate meaning of corruption.

But this leads, as now, not to a "collapse of the system", at least not of the interlocking flowing systemstate/financial operators, but to further depletion of economic substance, of democracy, of quality of lifeand of citizens life safety.Even in the so-called rich states millions of people starve and die prematurely.

"5 reasons to stop the payoff of public debt immediately"

Interviewer: In what context do you see public debt and the FIAT - monetary system? You consider (laterin this interview, the editors) that the central banks of the countries actually are banks under privatecontrol. We could assume that these banks have driven the public debt into the air deliberately. More andmore people refer to the monetary system as a fraud. The logical consequence would be to stop therepayment of public debts to private banks immediately and to reclaim the money already paid, at leastpartially. Additionally, we must bring causers and supporters of the plight to court. What do you think aboutthese provocative claims?

Dr. Werner Rgemer: Not all central banks are as directly under private control as in the USA. But thedifference is shrinking precisely by the current bank bailout. Whether the banks have deliberately driventhe public debt - deliberately in a criminal sense - I dont know, we need internal documents from thebanks for that, which we dont have yet.

But this is clear:

1. The banks have given loans to states and continue to do so, without negotiating a professionalrepayment plan. So they lend recklessly, irresponsible. Therefore, they can not demand that suchcredit will be repaid to them "as usual".

2. Some practices aided and funded by the banks lead to additional debt, as I will explain on thebasis of PPP (Editor's note: later in this interview.) This also applies to other forms of privatization;it is also true, as stated before, for the present form of bank bailouts.

3. As we also know from trading in CDOs and similar financial products, many bankers in their franticpursuit of profit didnt even know themselves about the consequences of their actions. They put

this pyramid scheme in motion without knowledge of the consequences. Also from this can be


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deduced that the nation states should not bear the consequences.

4. Lawyers have, with high-juridical expenses, fraudulently concealed financial products in their

nature,such as the cross-border leasing. Disinformation is part of the neo liberal paradigm.

5. During the long term campaign on debt relief for developing countries, the criterion of "illegitimatedebts" has been developed, such as when luxuriant loans had been given out to dictators where itwas obvious that they enrich themselves. The criterion of "illegitimate debts" is to be applied to theindebtedness of the "developed" countries also, with the result that such debts are not repaid, oronly partially.

Civil law would be sufficient to bring bankers to the courtroom, if policy and justice would be willing to doso. The state could even adopt a moratorium: no repayment of debts for one year, for example. The statecould go through all single PPP projects, privatizations, credit initiations etc. and decide: this and thatwont be repaid.

Interviewer: To what consequences might this lead?

Dr. Werner Rgemer: Some cities and states would begin with a debt-repayment stop, with good publicjustification.

Interviewer: You have written one of the few books on Cross-Border Leasing (CBL) (available here, theeditor). This financial product is downplayed in the mass media as simple tax-saving opportunity forcompanies. Could you explain in general, understandable terms, what this is all about?

Dr. Werner Rgemer: I think I wrote the only book on cross-border leasing, where this financial product

has been described fully and independent from the financial operators. Cross-border leasing is a"structured finance product," classified as asset backed securities. At the beginning, when I unexpectedlyencountered it in 1999, I didnt know much about its meaning. At that time, the Cologne City Councilannounced that it would sell the municipal sewer to an "investor" from the U.S. for 100 years and lease itback.

The investor would do that, because for this foreign investment he would get a significant tax benefit bythe U.S. government, and subsequently share a small proportion of it with the city of Cologne. That wouldbe easy money which the indebted communities could use to supplement their household budgets. Therewould be no changes in operator duties of the communities, the investor wouldnt intervene, he would justbe interested in the financial transaction and the tax advantage. Moreover the contract wouldnt last 100years, after 30 years there would be an option of premature cancellation of the contract. There would beno risk and potential risks were "manageable", it said.


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Figure: Cologne (Source: Wikipedia)

Dozens of cities in Germany and Western Europe have made such transactions. I found out what it was allabout only after long research. All the media, such as the "Spiegel", the "Sddeutsche Zeitung" and thepublic broadcasters, therefore including those deemed "critical", which have far moreresearch opportunities than I have, believed the statements of the municipalities for many years.

Regarding cross-border leasing, the real issue is the following: The "investor" is a U.S. bank or thefinancial subsidiary of a U.S. energy company. In the case of the Cologne sewer it was the First UnionBank in North Carolina. To raise the main part of the purchase price of 2 billion DM ("Deutsche Mark",German currency back in 1999), it took out a 30 years long-running credit at two other banks, at the"Norddeutsche Landesbank", for example.

The First Union Bank paid 2 billion DM to an off-balance sheet "special purpose vehicle" in the f inancialhaven Delaware, which was the underlying contractor of the city of Cologne. This mailbox company,managed by a trustee company in Wilmington/Delaware, did not pay the $ 2 billion to the seller, the city ofCologne; The city received only 4 percent of the purchase price, 80 million DM, immediately on the firstday. The "rest" of 1,920 billion DM was immediately paid to three other banks for 30-year trusteeship; fromthis money, on behalf of the city, they pay for 30 years the lease rates to the investor. At least that was theagreement.

"The banks create mutual benefit schemes at the expense of thepublic."

To cut a long story short: regarding cross-border leasing, the tax advantage is only a side aspect to a bankoccurring as "sponsor". The essential point is that 6 banks organize a capital cycle over a 30 year term.

Each bank has an advantage in this money creation:


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- The investor bank has a tax advantage

- The two lending banks can collect interest for 30 years

- The three banks which get the sales money get a free credit

- Nice fees wait for the mailbox company manager

- As fees for the lawyers who author the 2,000-page contracts

- Fees for accountants and engineers who evaluate the value of the sewer

- Fees for tax consultants

- and then still substantial fees for the so-called arrangers between the city, investor, banks andconsultants. In Cologne, the Deutsche Bank was the arranger, the lawyers came from Allen & Overy.

Which is also essential for the structured financial products: a whole horde of "reputable" consultantssecures the deal, lends seriousness and makes money. By the way, arrangers in Germany wereespecially the Deutsche Bank, Daimler Chrysler Financial Services and the Australian banks Macqarieand Babcock & Brown.

"Disinformation to the public and absolute secrecy"

Regarding cross-border leasing, we meet further typical features of neoliberal financial practices. Firstthere is disinformation of the public, combined with absolute, criminally sanctioned secrecy.Representatives and municipal councils were not allowed to see the contracts. There is, secondly, the factthat there is no real investment; The "investor" uses thesewer only as a vehicle for a financial business, he doesnt invest a single cent in his property, the sewer,rather he subjects it to an 30 year straightjacket; profound technical innovations are prohibited becausethe original structure must be maintained.And there is, third, another feature: the state liability. The 4 per cent payment to the public sector, called"cash benefit", was, in reality, an insurance premium. Therefore, in our case, the City of Cologne hasgiven the guarantee that the 30-year capital cycle wouldnt be interrupted or that the city would step inwith new security if the cycle begins to cease.

Interviewer: Let's stay with this example CBL. You claim that by the fractional reserve banking systemCBL is a tool to enable a "virtual financial carousel". Could you explain to us the mode of action,the consequences and the context of the current financial crisis? Before that, a definition of "virtualfinancial carousel" would be important.


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Figure: The Frankfurt banking district as seen from the Zeil Gallery (source: Wikipedia)

Dr. Werner Rgemer: There are just no rules for fractional reserves in this case. They are bypassed,undermined by interbank transactions and their outsourcing to off-balance sheet special purpose entities.And the "financial carousel" or the "carousel business" only apears to be virtual. First, it actually looks likethat. But through the public hand guarantee the virtual demand becomes a real claim to the state, if one ofthe participating banks gets in trouble. Thats exactly what we experience right now in this so-calledfinancial crisis and in the way the state saves the financial players.

The financial product cross border leasing collapsed because courts in the United States ruled in 2008,after lengthy disputes between tax authorities and investors, that the tax advantage is definitely illegal.Therefore, the investors got out of the contracts. Because of the state liability the other participating bankswere in the easy way out to present their loss to the cities first and then to the state emergency operations.

Interviewer: There are no fractional reserve ratios in these transactions?

Dr. Werner Rgemer: The off-balance sheet interbank transactions nullify the traditional rules offractional reserve requirements. This is materially-juristic not illegal, because the states permitted that andthe auditors, who actually make the accounting rules on their own, have sanctioned this.

Interviewer: Describe other scenarios how this system you called "virtual money carousel" threatensordinary people.

Dr. Werner Rgemer: The best known are the mortgage loans, which have been fraudulently contracted

out by banks to millions of U.S. citizens. It was lured at low interest rates, which only were valid in the


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early years. There have been no tests of whether the borrowers are financially solvent for the times tocome. New loans were issued on leveraged homes and apartments, with speculation on properties risingvalues. Actually the banks didnt set out that the loans would be repaid regularly in 20, 30 or 40 years, but

the banks have made these loans financial products and resold them as fast as possible to further banks.It was obviously that this pyramid scheme had to collapse, like any pyramid scheme. The consequencesare threefold: the insolvent borrowers are facing foreclosures and poverty, the state fills in, in many cases,and takes over a portion of the payments to the bank and gets even further into debt; some banks gobankrupt.

"The banks inflate, totally uncontrolled, the money supply andgenerate periodic crises"

Interviewer: You said, the banks would do, through this system, business among each other, inflate thestate-uncontrolled money supply extremely. Please describe these complex issues.

Dr. Werner Rgemer: Let's stick to those mortgage loans mentioned before. If a bank bundles andsecuritizes e.g. 10,000 single loans into a financial product, therefore resell it to another bank, the secondbank takes out loans at a third bank to purchase the bundle. But the second bank resells the bundle on toa fourth bank, which raises the purchase price by taking out a loan at a fifth bank, asf. All this is donethrough the mentioned off-balance sheet special purpose entities which are not subject to supervisory,neither by the central bank, nor the supervisory boards of banks.

Interviewer: What are the current claims of private banks to the world's governments and how are theymet?

Dr. Werner Rgemer: After the pyramid schemes collapsed, as in the case of cross-border leasing and ofmortgage lending, losses occurred for the financial operators. These losses are now presented to thegovernments, which are to step in for the no longer solvent contractors and pay. How and whatdemands are met exactly and to what extent - we know just lit tle about this, because the rescueoperations are carried out under the highest secrecy. The rescue measures are carried out by the partiesthemselves. The arsonists have rapidly turned into fire-fighters, as if they had prepared themselves for thisfor years.

"The control commission of the Bundestag gets blackened reports onthe whereabouts of the money"

Interviewer: How can it be kept secret how the taxpayers' money is spent on? How can the arsonists turninto firefighters, say, quickly transfer from the private banking industry side to policy side?

Dr. Werner Rgemer: For example, the German Bundestag has, after a short discussion, decided a lump480 billion euro bail out plan to save the banks. The execution was left to an outsourced new authority(Soffin, special funds financial market stabilization), that can distribute these 480 billion Euros without t imerestriction outside the federal budget. There is no need for the Soffin for any public accountability. If theSoffin ends operations its debts simply will be transferred to the federal budget. There is a parliamentary"control commission" with 9 Bundestag representatives, but they are sworn to secrecy; and even they onlyget reports which are partially blackened. However, secrecy is, as I already described it regarding cross-border leasing, a constitutive element of neoliberal economics, which is also for privatization and PPP.


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Interviewer: Whats the role of "Wall Street"?

Dr. Werner Rgemer:Wall Street is known as the traditional U.S. financial center in New York. But, WallStreet these days also includes the World Bank and the International Monetary Fund in Washington, andthe outsourced offshore centers of U.S. financial operators, like Delaware, the Cayman Islands, theBahamas, etc. Wall Street now includes not only banks but also the relevant consultancy industry as thebusiness law firms, accountants, management consultants, rating agencies. And meanwhile you have toinclude the City of London to Wall Street, for many Wall Street companies have build branches in Londonbecause of extreme deregulations in the UK during the 80s in the reign of Margaret Thatcher.

Figure: The Bull in Bowling Green Park near Wall Street (New York) as a sign of "Exchange-optimism"(Source: Wikipedia)

For example, the largest insurance company in the world, American International Group (AIG), hasconducted a large part of its crisis-causing transactions through the London office. So the actuallyanachronistic term "Wall Street" is about the conceptual and worldwide radiating center of the neo-liberalglobal world of finance, which obtains several locations and many accomplices there.

"The state aid against the crisis goes directly to the causer of the


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crisis"

Interviewer: Where does the state aid go, which many mill ions of people have worked hard for every dayand have paid in taxes?

Dr. Werner Rgemer: It goes to the causers of the financial crisis. By the way, now the consultants arepretty busy again, too. Regarding cross-border leasing, they advised the cities and authored the contracts,now they are playing fire department and advise the cities again.

Law firms like Freshfields and Linklaters, who authored contracts for cross-border leasing and other crisis-causing products and acted as a politically active lobby, now make money by authoring bank andcompany rescue laws for the federal government. The investment banks, who have earned a lot of moneyon corporate mergers, are now making big money again by advising the merged companies in the sale ofpreviously purchased companies.

Interviewer: Are the consequences drawn by the governments sufficient, or is there a risk that after apause of shame everything goes on as before?

Dr. Werner Rgemer: The consequences drawn by the government are wrong, above all. The practiceswhich caused the crises should be banned. But thats not the case.Therefore the financial operators, again, proceed with their actions, securitization, off-balance sheetspecial purpose entities, derivatives, as if nothing had happened. The pause of shame ist already over,even ifs about distribution of bonuses.

Interviewer: You said the worst bankrupt banks are, for example, AIG, IKB or the HRE. As you alreadydescribed, both inside of the government and inside of the central banks are operating the same sort ofpeople who are also sitting on the bankrupt bank boards. Isnt that kind of mashup extremely scandalous?Can you call names? Analyze this problem, restful, from the bottom up.

Dr. Werner Rgemer: With Mr. Rehm at the top of SoFFin - Financial Market Stabilization Fund, so theauthority in Germany, who shall distribute the bank rescue flat rate of 480 billion euros the Bundestagadopted - there is a banker who has contributed to the financial crisis himself. Before the crisis, he waschief of the Norddeutsche Landesbank, which has been, as described, strongly involved in cross-borderleasing.

Vice-Secretary of Finance in Germany, Asmussen, who was an extremely aggressive proponent ofderegulation - he vigorously supported the securitization - is still, on behalf of the federal government,

responsible for rescue management.

But even in the major banks like Deutsche Bank, Commerzbank, as in the insurance companies Allianzand Munich Re - to name only the largest crisismongers - the same executives and board members are inpositions of "responsibility" as before the crisis. No auditor was changed. No rating agency wasreprimande for wrong and convenient ratings.

Interviewer: Let's take the example of Hypo Real Estate (HRE). In the media, there is an incredibleamount of reports about it. The state puts out billions, but where does this money go? Who are thecreditors of HRE?

Dr. Werner Rgemer: There is secrecy. Only by chance and a short-term leak in the investigating


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commitee of Bundestag a part of the HRE creditors' list became known: Bayerische Landesbank, GermanBank, Commerzbank, DZ Bank, Allianz AG, Munich Re.

"Strict confidentiality of the policy towards the public"

Interviewer: Why are there almost no reports about the creditors?

Dr. Werner Rgemer: The banks insist on absolute secrecy, and the governments, as accomplices, playtheir part. The shareholders of IKB on their annual general meeting had decided that a specialinvestigation should be conducted. In a year's work, a special investigator compiled a report. TheDeutsche Bank has ensured that the report wont be published. The Deutsche Bank has sold U.S.-mortgage-crap to the IKB and even gave the IKB the loans for that. That, too, came out by accident, at thevery beginning of the financial crises, in first-shock, so to speak. The large,

"business-friendly" media does not report on it.

Interviewer: But there is banking supervision, the BaFin, for example. How can it be that such financialproducts are approved and legalized? They were not audited previously or adequately?

Dr. Werner Rgemer: Banking supervisors historically are a result of regulation. They come from a timewhen governments once had the opinion that states do have a certain duty of control. Thus, for example,the most competent supervision in the capitalist world is the Security Exchange Commission (SEC) in theU.S.. This was a consequence of the U.S. reform government of Roosevelt, after the first GreatDepression. Previously, there was no Banking Supervision. In 1931 it was clear that accountingmanipulation had been a key reason for the crisis. The SEC has prosecutorial powers, may organize raids,penalties, meanwhile, however, rather theoretical, because since the early 90s, under the presidency ofWilliam Clinton - and a finance minister from Wall Street - and then under George W. Bush, it wasgradually deprived of power, its staff was thinned.Through a series of laws -- approval of hedge funds and off-balance sheet transactions, securitization, etc.- banking supervisors and FSAs were weakened, undermined. So the Bafin in Germany. Though, from theoutset, it actually hadnt been as powerful as once the SEC.Now, at the investigative committee-hearing of the Bundestag concerning the HRE, Bafin-Chief Saniocomplained that, according to Bafins law, he wouldnt be allowed to intervene, allthough he had knownabout the problems of HRE early.


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Figure: Timothy Geithner, the current finance minister and previous boss of the U.S. Federal ReserveBank of New York (Source: Wikipedia)

Interviewer:Hank Paulsen, former boss of Goldman Sachs, became Minister of Finance under Bush.According to your opinion, do private sector interests get mixed up with the position as peoplesrepresentative (not only in the USA)? How do you assess the current U.S. Minister of Finance, Tim

Geithner? He is blamed for misusing the state budget for senseless bank rescues.


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Dr. Werner Rgemer: Geithner previously was head of the Federal Reserve Bank of New York State,

therefore, a branch of the U.S. central bank, but also of the main branch at the site of Wall Street.Because the Federal Reserve Bank (FED) is owned by the major private banks, the mix-up, in fact theidentity of private banking interests and state interests is given immediately. Geithners banking rescueoperations is only senseless to people and state, but makes strong sense for the banks.

"Private bankers control the Federal Reserve Board and thus theDollar as key currency in the world"

Interviewer: The Fed is not property of the state, but of private banks? And they are in control of the worldfinance system, by means of the leading currency, the U.S. dollar? How can this be? What banks are they?

Dr. Werner Rgemer: The Fed is owned by the big U.S. banks, so the well-known investment banksGoldman Sachs, Morgan Stanley, JPMorgan, Citigroup and so on.

Figure: The "Eccles Building, headquarters of the Federal Reserve in Washington, DC (Source:Wikipedia)

Interviewer: What do you say about the Bilderberg Group, the Trilateral Commission and the Council on


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Foreign Relations?

Dr. Werner Rgemer: The major bankers, politicians and corporate bosses, who didnt agree withregulations and reforms of economy and banks since the end of World War II (banking supervision, anti-trust laws, participation, employment, minimum wages, exchange control, ...), have early joined forces inthat kind of insider circles. In Germany, for example, you also have to name the Atlantikbrcke. There theydid, more or less in secret, agree themselves, consulted neoliberal economists, then started lobbying thedevelopment that lead to more and more unrestrained self-enrichment of the elites and ultimately to thecrisis -- while for them its not a crisis at all, as we see, but an additional source of self-enrichment.

Image: Hotel de Bilderberg in Oosterbeek, Holland. Meeting place of the first Bilderberg - Conference(Source: Wikipedia)

Interviewer: For our economists - which neo-liberal economists are they? Can you call names?

Dr. Werner Rgemer: These are the well-known neo-liberal economists like Milton Friedman, whobelongs to the periphery of the Mont Pelerin Society.


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Image: Milton Friedman (Source: Wikipedia)

Interviewer: When you look at the Obama administration, it consists, to a large extent, of Wall Streetofficials, members of the Trilateral Commission, the Council on Foreign Relations or the Bilderbergers.What do you think of that?

Dr. Werner Rgemer: Obama is, as the Cologne people would say, "an nette kl" a nice guy, a niceyoung person. Most of the donations - not in number, but in sum - were raised by the usual system in theUSA, as in case of other presidential candidates, including Republicans: by large law firms, who acted ascollection points in the financial andbusiness world. But I actually cannot judge whether Obama, with his announced reforms, e.g. health care,subjectively wanted to go further than his Wall Street Boys, or wether he was aware, from the first day on,of his limits as elected President, e.g. in military or security issues, too. He brings in, on the surface, somesort of change in style of politics. But the decisive issue is the result, of course.

"Obama did not bring `change` in financial and military policy. It goeson as before, as as under the Bush administration"

Interviewer: Do you think there are substantial differences between the Bush and Obama Governments?

Dr. Werner Rgemer: There are important differences in the outward appearance. The ObamaGovernment appears to be more diplomatic, more social. However, due to this, the world's leading role ofthe U.S. shall be maintained, its image, shattered by Bush, shall be improved. In hard-core politics, asfinancial and military policy, there are no significant differences noticeable so far. Obama took over the

Wall Street-Boys, including the Secretary of Defense, from the Bush administration, no high-rankedGeneral was dismissed, the intelligence services, with their practices, remain untouched.


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Image: U.S. soldiers of the 141st Infantry Regiment [4] near Bagram (Afghanistan) in June 2005 (source:Wikipedia)

Interviewer: "Public Private Partnership (PPP) is being pushed in the mass media more and more.Please explain this financial product. Can it really help in the current situation?

Dr. Werner Rgemer: PPP is a financial product that has been developed in interaction by the City ofLondon and Tony Blair. When Blair was campaigning with his trimmed-to-neoliberal party "New Labour"during the mid-90s, he was being confronted with the results of the brutal privatizations of the Friedman-pupil Margaret Thatcher: the trains crashed, rails and signals were ramshackle, electricity and waterbecame more expensive, water pipes and sewers of London were to leak, many citizens protested.Therefore, Blair said: this privatization was a mistake, we wont sell anything any more, we makepartnerships with the corporations. With consultants such as Price Waterhouse Coopers and Ernst &Young and with banks such as Warburg, Barclays and United Bank of Switzerland PPP was invented.

Through PPP the public authorities award contracts to private investors, mostly construction companies,to build or renovate schools, also hospitals, tunnels, roads, prisons, recreational facilities, in principle, theentire publicly used infrastructure. The investors take over everything that belongs to an "all-inclusivepackage". Planning, construction / rehabilitation, operation and financing, and this is usually for 30 years,as long as the public sector pays a rent, at the end the public hand redeems the facility at an agreed price.Two reasons have been essentially given:

First, the public sector cannot, and should not, take on any more loans because of its indebtedness,second, the private companies make things better anyway. I have analyzed in my book "Locusts in publicspace. Public Private Partnership - Anatomy of a Global Financial Instrument" the some 700 PPP projectsin the UK and then a dozen of already existing PPP projects in Germany - schools, tunnels, halls, roads --in particular:

at the end PPP is least twice as expensive and usually only half as good as if the state does it itself. In


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addition, the acting capacity of the state is severely restricted. Because of the confidentiality of thecontracts, the democracy is put to shame.

Figure: J.P. Morgan, one of the (still unofficial) Founder of the Federal Reserve Bank of USA. The FEDconcept was developed in 1910 in strictest secrecy on Jekyll Iceland, the implementation of the FederalReserve was waved through in 1913, shortly before Christmas, when the major part of attributabledeputies were already in Christmas holidays. (Source: Wikipedia)


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Interviewer: How do you get this in conjunction with the housing crisis, the current Caused financial crisis?

Dr. Werner Rgemer: The housing crisis has not caused the financial crisis, but marked the beginning. Itwas, strictly speaking, not even the real estate crisis, but it was resold real estate loans. And that was onlythe first of many pyramid schemes, that broke down in the course of two years. After the financial product"securitized Real estate loans", the financial products cross-border Leasing, collateralized debt obligations,etc. collapsed due to completely other reasons.

Figure: Example of a pyramid scheme (Source: Wikipedia)

The financial crisis was caused only in this combination. Also the PPP-contracts, which are usually validfor 30 years, are being sold as structured financial product ("Forfaiting with plea waiver"), so is anotherPonzi scheme, which can collapse when single cities or state contractors become insolvent in 10 or 20years. Thats not so unlikely if you take the substantial additional debt, which will be caused, now and inthe coming years and decades, by the current form of bank rescue. Its clear, as well, that the "financialcrisis" is a long term process with uncertain outcome and further risks.

"The financial operators are in control of the worlds states debts"

Interviewer: Do you think after national bankruptcy complete states or state conglomerates, including thecitizens, could be "bought up" oder "taken over" by companies in mid-distant future?

Dr. Werner Rgemer: In some ways we're already in a state that especially the biggest countries aretributary to the banks, because the debts cannot be repaid any more in a regular manner. The formalpurchase of the state would be actually no complete new step. As the current bank rescue indicates, thefinancial operators have a strong grip on the states.


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Interviewer: How do you define the word "Neoliberalism"?

Dr. Werner Rgemer: First, Neo-liberalism is not an analytical, scientific term, but user-produced by theoperators. "Liberal" sounds more positive after all, kind of nice, right? However, I didnt find a moresuitable term, which is also an indication that the critical scientific study of the topic did not come off theground for decades. We are still on the defensive, unfortunately. I want to change that.

Image: Alexander Rstow 1938, coined the term neoliberalism (Source: Wikipedia)

Neoliberalism is a concept that can assume various ideological forms. The Italian Fascism, the GermanNational Socialism, the Chilean dictatorship of General

Pinochet were manifestations of that, as well as the capital-democracy, which is, originated in the U.S.,


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dominating the "western community of values" today.

The consistent core is as follows: The money side is, in extreme cases, being strengthened to the point of

political and economic dictatorshipthe side, the side of work is being weakened down to fainting, toanesthesia.Thereby the financial operators take the lead in the field of private property receive all the degrees offreedom, including those freedoms, which are in conflict to recent government regulations. With it, thefinancial operators dont necessarily abide by the laws which provide them with so much freedom, butviolating tendencially any law, any Human Right, and any interpersonal convention that comes in their way.

Most of the critical voices identify neoliberalism especially with the deregulation of financial markets. Thisanalysis I consider to be incomplete. To me, the deregulation of labor law and social rights seems equallyimportant. According to Milton Friedman, neo-liberals scientific guru, the classic social state leads tomoral degradation and to sloth of transfer recipients. In the eye of neo-liberals, also minimum wagesnegotiated by unions, employment protection, the minimum wage, etc. have such consequences for theemployees. Therefore in Neo-liberalism the unemployed are being controlled ruthlessly, spied out,punished, being set up to an existence of hunger. For the same reasons, the (still-)employed are beinglowered financially morally, legally, degraded. The day laborer status is the neo-liberal ideal of theworkforce. This has contributed to the impoverishment of broad layers, but also to the undermining ofdemocracy. In the anthology "labour injustice" (German: ArbeitsUnrecht) that comes out in November2009, I have pictured, together with 20 other authors and for the first time, the deregulation of labor andsocial legislation in a systematic manner.

Besides that, we come here to another cause of the financial crisis, which often has been complied notstrictly enough. Incidentally, one could say anyway: The current financial crisis is a crisis for the rich. Thepoor had a financial crisis long before:stagnation and reduction of labor and social income since the early90s, increasing poverty, growing unemployment, declining state performance for the less affluent e.g. inthe educational and cultural sector.

Because neo-liberalism demands more and more from the employees, but is paying less and less for that,

consumption was maintained more and more by credits.

"People are being paid less and less for their work, but at the sametime they are expected to spend more and more for consumption"

Neo-liberal economy divides people into two very contrasting roles: as workers they are beingdowngraded, as consumers they are being upgraded. People are being paid less and less for their work,but at the same time they are expected to spend more and more for consumption. This affects not only thepurchase of housings, but also everyday devices such as televisions, cars, vacations. To keep the livingstandard and to be able to afford the new products, millions of households have indebted themselves in a

"quite normal" manner. It was and it is just a question of timing when this house of cards will collapse, too,divided into millions of individual breakdowns. By the way, also loans for refrigerators, etc, were made afinancial product, securitized, sold by the banks.

Interviewer: How would you design a backlash?

Dr. Werner Rgemer: Many individuals and groups are laboring on that, more than it is publicly visible sofar. It seems important to me, to make an inventory-control, respectively many different inventories, whichgeneralizes in the first place, but secondly get in touch with the various mechanisms much more closerthan before. Previous general reviews of "globalization",the "market radicalism", etc. not seem too helpful to me. Such inventories should also be made in public,in public places, in important public buildings, include many stakeholders, who can express themselves in


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simple language. Businesses and facilities that are actually dedicated to democracy, have to beappropriated, ostentatiously be taken into public ownership. The secrecy must be broken. Betrayal ofsecrets is a civic duty, just as for employees of banks, to whom state resources have been made available.

People learn the best, the quickest, in action, in conflict, when they reflect on their own interests.

"Betrayal of secrets is a civic duty, such as for employees of bankruptbanks"

Interviewer: You say, that lobbying is an important component of the system that ousts the people of theworld. Can you describe this operation?Dr. Werner Rgemer: In addition to lobbying, the consultants areimportant as well. The present-day neo-liberal shaped lobbying works differently than traditional lobbying,as it was represented in Germany through organizations like the Federation of German Industries (BDI),the National German Employers' Associations (BDA), the German Industry and Commerce Chamber(DIHKT), the chambers of trade, many trade and regional business and banking associations, and of

course still is today. The neo-liberal lobbying has produced an enormously wide range of different forms ofaction:Representations of individual corporates near to the government, corrupt journalists, media prizes, specialagencies, phony citizens' groups, etc. For simplicity, I refer to the organisation Lobby Control, that workson this issue very closely and successfully.

Key operators are the consultants. I call them the civic private army of neo-liberalism. They are thehundreds of thousands, mostly highly qualified academic staff members and partners of consulting firms,like McKinsey, Boston Consulting Group, Accenture, Bain Capital, etc., of the accounting firms includingKPMG, Price Waterhouse Coopers, Ernst & Young and Deloitte Touche Komatsu and large law firms suchas Freshfields, White & Case, Clifford Chance, Shearman & Sterling, Allen & Overy, Linklaters, etc. Theyare involved in privatizations, structured financial products, mergers and acquisitions, derivatives, during,before and after the crisis.

For example, the law firm Freshfields, which was a front runner in crisis-causing practices, now drafts, onbehalf of the Government, legislations for bank rescue, for the Financial Market Stabilization Fund and forthe "nationalization" of Hypo Real Estate (HRE).

"The media e.g. Der Spiegel cover up the truth and are completelyopaque"

Interviewer: You claim that the "Spiegel" would still felt by the citizens als "critical", just because of merelynostalgic reasons. What exactly prevents the other media considered as critical, such as the "Zeit", the"Sddeutsche Zeitung" and the like, to disclose the true state of affairs?

Dr. Werner Rgemer: Even those media, that actually have the task to establish transparency andeducate the public, are completely opaque. It is through their success as critical media, which had much todo with the 1968 crack, they became interesting to yield hunters.In general, we can say that even thosemedia considered to be critical, are owned by investors who want to get as much profit as possible fromthem and who also frame their companies according to neoliberal principles, with highly paid executivesand an army of poorly paid slave writers who provide textual raw material, which is being processedfurther by full-time editors.More and more journalists earn their money as full-time PR agents, some

journalists are working as "independent" journalists and additionally, at the same time, they are working asPR agents for companies.


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Figure: Building ot the Spiegel Group in Hamburg. On the left: the editorial building built in 1969, on theright: the so-called publishing house, which was obtained from IBM (source: Wikipedia).

The companies, both private and public, have upgraded their media departments into high ranking staffpositions and produce, by themselves, professional documents, videos, photos, movies, documentariesand supply other media. Corporations engage journalists, employed in the media, for reports,

presentations and the shaping of events.


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In no major German media, also not in the public service broadcasters, there is released which editorshold which stocks and which corporate investments, and which company they run on the side. In addition,print media today largely consist of the prefabricated, barely modified information from global operating

news agencies, who are themselves media global players. Especially in times of upheaval, and underconditions of general secrecy and disinformation, the media play an incredibly important role, and that iswhy they can become such highly lucrative and also system-safeguarding operators.

Interviewer: What experience did you make in the media itself?

Dr. Werner Rgemer: I would just like to address a more recent development. In 2006 I published thebook "The Banker. Uninvited obituary of Alfred Freiherr von Oppenheim " in Frankfurt's small publishinghouse "Nomen". Therein I have portrayed some practises of Europes largest private bank, SalOppenheim, which hadnt been made public until then. Since then, the bank has put in motion more thantwo dozen legal proceedings against me, against the publishing house and against others, who publiclyspoke about it. Currently, the book is still published in its second blackened edition yet. That means, eventhe smallest stirrings of truth are pursued merciless, meticulous and with great effort.After a number of blackening was lifted in severalcourt hearings, I filed criminal charges against the banks boss Matthias Graf von Krockow for makingfalse affidavits. For the blackening was based on his affidavit, which in case offalsehood would be under threat of severe punishment. But even against the short report, that thesecriminal charges have been filed, the bank has issued a temporary injunction, therefore a publication ban,and on the ground of an alleged lack of public interest for this news. Mind you: the fact of the complaintcould not even be disputed and its content could not be criticized, too.

On the other hand we can say: how nervous these people must be, how insecure they must feel on theirso secured seats, if they want to dispose such simple facts by going through the courts.

Interviewer: Are there actually any media you would like to suggest (sure with a link)?

Dr. Werner Rgemer: Some years ago I co-founded the new online news magazin "Neue RheinischeZeitung", www.nrhz.de. I often write in the Berlin daily paper "Junge Welt", sometimes in the monthlymagazine "Bltter fr deutsche und internationale Politik". On my website there is a current permanent link(RSS) to www.nachdenkseiten.de.

"Secret services are the most savvy producers of reasons for war"

Interviewer: What do you think of theories that the 11th September was staged as a pretext for war? And,

in this case, who would be interested?


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Image: Official plane crash site of "United Airlines Flight 93" near Shanksville, Pennsylvania, 11September 2001.

Dr. Werner Rgemer: I didnt examine the backgrounds of the September the 11. However, its a simplefact of history that the U.S. intelligence services, military and government are among the most savvyproducers of reasons for war, of course, above all, there has to be mentioned, in a temporal and causallink with the 11th September, the fabricated excuses for the wars in Iraq and Afghanistan. But does itreally matter under what pretext, or on what grounds a criminal war is being waged?


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Figure: A cruise missile is being fired at Iraqi positions from a U.S. destroyer in the Mediterranean.

Interviewer: On our planet less than 1% of the population possesses more than 40% of the wealth - set torise. 20%, the "Western world" consume more than 80% of the resources. In the Western world food isbeing destroyed, which the starving population in the countries of the Third World would urgently need.How do you consider the connection to the global financial system?

Dr. Werner Rgemer: The financial operators are key operators in the unequal distribution of createdwealth and in waste, destruction and rise in price of resources. Just think of the speculative rise in price ofstaple foods like rice and cereals.

"There must be created a new financial system that enables anequitable distribution of created wealth."

Interviewer: We have now dealt with what happened and still happens. What solution proposals do youhave? You spoke of "good banks", the "biobanks" of the world. Whats this all about?

Dr. Werner Rgemer: The necessary response to the financial crisis is the following: the crisis-causingfinancial practices, the money pushed sales of companies andprivatization must be prohibited, as well as the described interbank operations. The public funds andguarantees have to be spent to create a financial system that carries the equitable distribution of thecreated wealth, that benefits to the national economy and to direct creation of products and services.Instead of taking over the guarantees for the revival of the "toxic papers" of the old failed system in newlyspun bad banks, the state should contribute to the development of a system of good banks.


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Interviewer: Why is it, according to your opinion, that there is, cross-party and cross-national, onlydiscussion about a rescue of the system?

Dr. Werner Rgemer: There are many more alternative visions and proposals as publicly known.Therefore, part of the development of an alternative is the development of new media and networks.

Interviewer: Why arent you Chairman of "Business Crime Control" any more?

Dr. Werner Rgemer: I was elected in 2007 at the suggestion of the longtime chairman. I had announcedthat during the first time my main project would be the issue "work-unjustness" and that I would like toorganize a conference regarding that issue. But the Conference then was hampered by the previouschairman, massively and schemingly, the rest of the board and the members were just watching it, initiallyI was absolutly stunned.

The conference was held in March 2009, the results will be published in autumn, as already mentioned, inan anthology with the same title, the campaign against various forms of work-unjustness is about tocontinue.

But that caused so many frictions in the organization BCC, that I just didnt want to do this any longer.Moreover, my second proposal, to conduct a Bank Tribunal, was not taken up. However, the BankTribunal will be performed in another context. Well, thats the way it is: the current crisis is so profoundthat even initially good organizations are not able to find an adequate answer.

Figure: Dr. Werner Rgemer (Source: Gulli)


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Interviewer: You would like to get connected to fight against the misapplications. Could you describe withwhom you would would like to connect?

Dr. Werner Rgemer: The campaign against injustice is carried out with lawyers, works councils,journalists, union groups, grassroots initiatives, etc. The organization attac now has decided to take uponitself a Bank Tribunal; I hope that we will find, beyond attac, many cooperators, supporters, evenwhistleblowers. We need to shatter the secrecy, the legitimacy of the bank rescue, and to feed the moneyto meaningful alternatives.

"The secrecy must be broken, the legitimacy of the Bank rescue mustbe shattered and money must be fed to meaningful alternatives"

Interviewer: Certainly there are critics who fight you and your thoughts. Can you call names and some of

their methods?

Dr. Werner Rgemer: I already mentioned the bank Oppenheim. It lost money in many projects, such asthe main shareholder of the Karstadt department store chain, through local real estate projects, derivativestrading, the purchase and sale of medium-sized companies. I have already disclosed their practices in mybook in 2006. Because the chancellor, for whom the bank Oppenheim was the largest single donor duringher 2005 election campaign, could not afford to rescue this bank of the super rich (the bank only acceptsclients who have 5 Million Euro cash, or more) through state aid, the Deutsche Bank has taken theopportunity and is buying this expensive bargain. Im afraid, my favorite opponent gains even more powerhere.

Because I paled the Cologne coterie in my book "Colonia Corrupta" in 2002 - in which the Cologne

banking Oppenheim plays a central role, of course - the book was banned from all major bookstores, anappearance ban was imposed on me in Cologne museums and in city archives, in all three major Colognedaily papers - all owned by the same publishing house of the Klner Stadt-Anzeiger - I became a non-person whose name is not mentioned. The book, like all my books, is not mentioned in these papers, notby a single word.


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Image: Salomon Oppenheim Jr., founder of Bank Sal Oppenheim (Source: Wikipedia)

Interviewer: So, did we forget to ask you about something you would like to add?

Dr. Werner Rgemer: Let me mention a fact which pleases me anyway, and which is, in his ambivalence,maybe also instructive for our present situation: although I officially do not exist in Cologne, the 5th Editionof "Colonia Corrupta" has been published by now and has been completely sold out. And because thedemand has even increased yet, the publisher - who is not located in Cologne, of course, but in Munster -has given me the possibility of an extended6. Publish edition. That`s what Im working on right now.


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Interviewer: Thank you for this interview.

Participation in this interview: Dr. Werner Rgemer (Cologne), Jrgen Bloehs (Munich) and the Interviewer(Dsseldorf) in December 2009

Translated by Daniel Neun fromRadio Utopie, Berlin

interview dr ruegemer english 20091212

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