Interview with Dr.

Werner Rügemer regarding the

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

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Interview:

Your name: Dr. Werner Rügemer

School / study / profession: Elementary school and secondary school in the Rhön area, study of
literature, pedagogy and philosophy in Munich, Tübingen, Berlin and Paris; philosophy doctorate at the
University 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 the
University of Cologne. Priorities are privatization, public-private partnership, Cologne clique, nation
building.

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 independent
journalist, consultant, lecturer and city guide.

Age: 67

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

Interviewer: Dr. Rügemer, thank you very much for the nice meeting some time ago at Café Goldmund in
Cologne. We have prepared this interview for more than 3 hours, drinking milk, latte macchiato and
mineral water. In this interview we would like to reveal causes and origins of the current financial crisis to
our 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 we
need 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 somewhat
more complex. Of course we also could read the book "Mankiw - Economics". As a lecturer at the
University of Cologne, would you endorse these recommendations?
Figure: Dr. Werner Rügemer (Source: Gulli)

Dr. Werner Rügemer: I don´t 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 University
there are two books that are on my recommended list: David Harvey, A Brief History of Neoliberalism, and
Naomi Klein, The Shock Doctrine. In my books on privatization, public private partnerships, cross-border
leasing 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 Rügemer: The financial crisis is that the theoretically endless pyramid scheme, which the
financial operators themselves have built up among each other, has collapsed almost simultaneously in
several places in the central capitalist countries. The financial operators don´t give out loans to each other
any more, they don´t 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 has
become so dependent on loans, it struggles already the slightest cyclical fluctuation. If these rescue efforts
by the state go on like this, the result for the public is as follows:: even more public debt, even more
cutbacks in social services, in education and infrastructure, an increase of direct and indirect taxes and
fees, 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 in
connection with an uncontrollable reserve requirement system. How can those bubbles evolve?

Dr. Werner Rügemer: 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
just about banks. The financial players include hedge funds, private equity funds, financial subsidiaries of
conglomerates and the likes. And it's not just about private commercial banks but also about state-run, in
Germany mainly regional state banks and the federal bank, the Kreditanstalt für 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, weren´t primarily giving out loans to corporations, states,
communities, house builders and buyers of refrigerators. Their most extensive activities consisted of
making loans a financial product, to hand and sell out loans to each other, to make mutual bets and this in
a open pyramid scheme. Plus investment banking, therefore financing mergers and acquisitions by loans
while 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 Depression
1928-1932, 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 of
course the U.S. banks, the U.S. auditors and U.S. law firms. All European banks oriented on that. In
addition, 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 banking
business") without depending on central bank money and without being monitored by the central
banks or state agencies

2. These transactions are not listed in the balance sheets, but processed through "off-balance sheet
special 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 control
bodies such as the boards of management, but achieve accredition by the certified public
accountants.

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 as
rating 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, the
product descriptions and contracts have hundreds, sometimes thousands of pages.

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

Dr. Werner Rügemer: The essential financial products:

- Securitization, therefore the resale of loans. In most cases, this has been done without even
informing the original borrowers. So any long-term payment obligation (rental agreement, leasing
contract, 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 securitized
loans and the resale of these bundles of securitized loans;

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

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

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

Interviewer: What´s the relationship of those financial products to the public debt?

Dr. Werner Rügemer: Most of these transactions have been freed from taxes by the governments. Due to
the exhaustion of the economic substance jobs get destroyed, causing further tax deficits. But the main
contribution 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. Rügemer: The table showing the German public debt is a typical Wikipedia
understatement. The debt is much higher: the mentioned 480 billion bank bailout empowerment (later in
this interview) is outsourced from the federal budget, but will show up there at the end of the operation. It´s
the 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
European Commission and then allowed/prescribed for the whole EU (so that they could cosmetically
meet the Maastricht criteria). Even the provinces and communities have shadow budgets, even the PPP
contracts (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 Rügemer: All major countries of the "western community of values" have long been
overindebted. In a perverse way, so to speak, it´s part of the core values of the "West”. In a conventional
way these debts can never ever be paid off.

The already existing excessive overindebtedness was one of the conditions that the banks, where the
states are in debt and where they still need more and more loans, could become so powerful that they
could put out of force the existing regulations. This unequal balance of power is determined to become
even more unequal by the bailouts, the states become even more susceptible to blackmailing or more
willing to cooperate. That´s a state of corruption, even if you grasp at nothing if you do it juridical. With it,
the political will of people´s 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 system
state/financial operators, but to further depletion of economic substance, of democracy, of quality of life
and 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 (later
in this interview, the editors) that the central banks of the countries actually are banks under private
control. We could assume that these banks have driven the public debt into the air deliberately. More and
more people refer to the monetary system as a fraud. The logical consequence would be to stop the
repayment of public debts to private banks immediately and to reclaim the money already paid, at least
partially. Additionally, we must bring causers and supporters of the plight to court. What do you think about
these provocative claims?

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

But this is clear:

1. The banks have given loans to states and continue to do so, without negotiating a professional
repayment plan. So they lend recklessly, irresponsible. Therefore, they can not demand that such
credit 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 the
basis 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 frantic
pursuit of profit didn´t 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
 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 "illegitimate
debts" has been developed, such as when luxuriant loans had been given out to dictators where it
was obvious that they enrich themselves. The criterion of "illegitimate debts" is to be applied to the
indebtedness of the "developed" countries also, with the result that such debts are not repaid, or
only partially.

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

Interviewer: To what consequences might this lead?

Dr. Werner Rügemer: Some cities and states would begin with a debt-repayment stop, with good public
justification.

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

Dr. Werner Rügemer: 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 unexpectedly
encountered it in 1999, I didn´t know much about its meaning. At that time, the Cologne City Council
announced that it would sell the municipal sewer to an "investor" from the U.S. for 100 years and lease it
back.

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

Dozens of cities in Germany and Western Europe have made such transactions. I found out what it was all
about only after long research. All the media, such as the "Spiegel", the "Süddeutsche Zeitung" and the
public broadcasters, therefore including those deemed "critical", which have far more
research 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 the
financial subsidiary of a U.S. energy company. In the case of the Cologne sewer it was the First Union
Bank 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 financial
haven 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 of
Cologne; The city received only 4 percent of the purchase price, 80 million DM, immediately on the first
day. The "rest" of 1,920 billion DM was immediately paid to three other banks for 30-year trusteeship; from
this money, on behalf of the city, they pay for 30 years the lease rates to the investor. At least that was the
agreement.

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

public."

To cut a long story short: regarding cross-border leasing, the tax advantage is only a side aspect to a bank
occurring 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:
 - 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 and
consultants. 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" consultants
secures the deal, lends seriousness and makes money. By the way, arrangers in Germany were
especially the Deutsche Bank, Daimler Chrysler Financial Services and the Australian banks Macqarie
and Babcock & Brown.

"Disinformation to the public and absolute secrecy"

Regarding cross-border leasing, we meet further typical features of neoliberal financial practices. First
there 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 fact
that there is no real investment; The "investor" uses the
sewer only as a vehicle for a financial business, he doesn´t invest a single cent in his property, the sewer,
rather he subjects it to an 30 year straightjacket; profound technical innovations are prohibited because
the 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 has
given the guarantee that the 30-year capital cycle wouldn´t be interrupted or that the city would step in
with new security if the cycle begins to cease.

Interviewer: Let's stay with this example CBL. You claim that by the fractional reserve banking system
CBL 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 "virtual
financial carousel" would be important.
Figure: The Frankfurt banking district as seen from the Zeil Gallery (source: Wikipedia)

Dr. Werner Rügemer: 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 like
that. But through the public hand guarantee the virtual demand becomes a real claim to the state, if one of
the participating banks gets in trouble. That´s exactly what we experience right now in this so-called
financial 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 banks
were 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 Rügemer: The off-balance sheet interbank transactions nullify the traditional rules of
fractional reserve requirements. This is materially-juristic not illegal, because the states permitted that and
the 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" threatens
ordinary people.

Dr. Werner Rügemer: 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
early years. There have been no tests of whether the borrowers are financially solvent for the times to
come. New loans were issued on leveraged homes and apartments, with speculation on properties’ rising
values. Actually the banks didn´t 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 consequences
are 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 go
bankrupt.

"The banks inflate, totally uncontrolled, the money supply and

generate periodic crises"

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

Dr. Werner Rügemer: Let's stick to those mortgage loans mentioned before. If a bank bundles and
securitizes e.g. 10,000 single loans into a financial product, therefore resell it to another bank, the second
bank takes out loans at a third bank to purchase the bundle. But the second bank resells the bundle on to
a fourth bank, which raises the purchase price by taking out a loan at a fifth bank, asf. All this is done
through 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 they
met?

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

"The control commission of the Bundestag gets blackened reports on

the whereabouts of the money"

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

Dr. Werner Rügemer: For example, the German Bundestag has, after a short discussion, decided a lump
480 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 time
restriction outside the federal budget. There is no need for the Soffin for any public accountability. If the
Soffin 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 only
get 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.
Interviewer: What´s the role of "Wall Street"?

Dr. Werner Rügemer: Wall Street is known as the traditional U.S. financial center in New York. But, Wall
Street these days also includes the World Bank and the International Monetary Fund in Washington, and
the outsourced offshore centers of U.S. financial operators, like Delaware, the Cayman Islands, the
Bahamas, etc. Wall Street now includes not only banks but also the relevant consultancy industry as the
business law firms, accountants, management consultants, rating agencies. And meanwhile you have to
include the City of London to Wall Street, for many Wall Street companies have build branches in London
because 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), has
conducted a large part of its crisis-causing transactions through the London office. So the actually
anachronistic term "Wall Street" is about the conceptual and worldwide radiating center of the neo-liberal
global world of finance, which obtains several locations and many accomplices there.

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

Interviewer: Where does the state aid go, which many millions of people have worked hard for every day
and have paid in taxes?

Dr. Werner Rügemer: It goes to the causers of the financial crisis. By the way, now the consultants are
pretty 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 and
company rescue laws for the federal government. The investment banks, who have earned a lot of money
on corporate mergers, are now making big money again by advising the merged companies in the sale of
previously purchased companies.

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

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

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

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

Vice-Secretary of Finance in Germany, Asmussen, who was an extremely aggressive proponent of

deregulation - 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 Allianz
and Munich Re - to name only the largest crisismongers - the same executives and board members are in
positions of "responsibility" as before the crisis. No auditor was changed. No rating agency was
reprimande for wrong and convenient ratings.

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

Dr. Werner Rügemer: There is secrecy. Only by chance and a short-term leak in the investigating
commitee of Bundestag a part of the HRE creditors' list became known: Bayerische Landesbank, German
Bank, 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 Rügemer: The banks insist on absolute secrecy, and the governments, as accomplices, play
their part. The shareholders of IKB on their annual general meeting had decided that a special
investigation should be conducted. In a year's work, a special investigator compiled a report. The
Deutsche Bank has ensured that the report won´t 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 the
very 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 financial
products are approved and legalized? They were not audited previously or adequately?

Dr. Werner Rügemer: Banking supervisors historically are a result of regulation. They come from a time
when 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 the
U.S.. This was a consequence of the U.S. reform government of Roosevelt, after the first Great
Depression. Previously, there was no Banking Supervision. In 1931 it was clear that accounting
manipulation 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 of
William Clinton - and a finance minister from Wall Street - and then under George W. Bush, it was
gradually 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 the
outset, it actually hadn´t been as powerful as once the SEC.
Now, at the investigative committee-hearing of the Bundestag concerning the HRE, Bafin-Chief Sanio
complained that, according to Bafin´s law, he wouldn´t be allowed to intervene, allthough he had known
about the problems of HRE early.
Figure: Timothy Geithner, the current finance minister and previous boss of the U.S. Federal Reserve
Bank 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 people´s
representative (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.
Dr. Werner Rügemer: 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 the
identity of private banking interests and state interests is given immediately. Geithners banking rescue
operations is only senseless to people and state, but makes strong sense for the banks.

"Private bankers control the Federal Reserve Board and thus the
Dollar 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 world
finance system, by means of the leading currency, the U.S. dollar? How can this be? What banks are they?

Dr. Werner Rügemer: The Fed is owned by the big U.S. banks, so the well-known investment banks
Goldman 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
Foreign Relations?

Dr. Werner Rügemer: The major bankers, politicians and corporate bosses, who didn´t agree with
regulations 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 in
that kind of insider circles. In Germany, for example, you also have to name the Atlantikbrücke. There they
did, more or less in secret, agree themselves, consulted neoliberal economists, then started lobbying the
development that lead to more and more unrestrained self-enrichment of the elites and ultimately to the
crisis -- while for them it´s 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 Rügemer: These are the well-known neo-liberal economists like Milton Friedman, who
belongs to the periphery of the Mont Pelerin Society.
Image: Milton Friedman (Source: Wikipedia)

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

Dr. Werner Rügemer: Obama is, as the Cologne people would say, "an nette kääl" a nice guy, a nice
young person. Most of the donations - not in number, but in sum - were raised by the usual system in the
USA, as in case of other presidential candidates, including Republicans: by large law firms, who acted as
collection points in the financial and
business 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, some
sort 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 goes
on as before, as as under the Bush administration"

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

Dr. Werner Rügemer: There are important differences in the outward appearance. The Obama
Government appears to be more diplomatic, more social. However, due to this, the world's leading role of
the U.S. shall be maintained, its image, shattered by Bush, shall be improved. In hard-core politics, as
financial 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-ranked
General was dismissed, the intelligence services, with their practices, remain untouched.
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 Rügemer: PPP is a financial product that has been developed in interaction by the City of
London 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 water
became more expensive, water pipes and sewers of London were to leak, many citizens protested.
Therefore, Blair said: this privatization was a mistake, we won´t sell anything any more, we make
partnerships 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, the
entire publicly used infrastructure. The investors take over everything that belongs to an "all-inclusive
package". 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 public
space. Public Private Partnership - Anatomy of a Global Financial Instrument" the some 700 PPP projects
in 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
addition, the acting capacity of the state is severely restricted. Because of the confidentiality of the
contracts, the democracy is put to shame.

Figure: J.P. Morgan, one of the (still unofficial) Founder of the Federal Reserve Bank of USA. The FED
concept was developed in 1910 in strictest secrecy on Jekyll Iceland, the implementation of the Federal
Reserve was waved through in 1913, shortly before Christmas, when the major part of attributable
deputies were already in Christmas holidays. (Source: Wikipedia)
Interviewer: How do you get this in conjunction with the housing crisis, the current Caused financial crisis?

Dr. Werner Rügemer: The housing crisis has not caused the financial crisis, but marked the beginning. It
was, strictly speaking, not even the real estate crisis, but it was resold real estate loans. And that was only
the 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 valid
for 30 years, are being sold as structured financial product ("Forfaiting with plea waiver"), so is another
Ponzi scheme, which can collapse when single cities or state contractors become insolvent in 10 or 20
years. That´s not so unlikely if you take the substantial additional debt, which will be caused, now and in
the coming years and decades, by the current form of bank rescue. It´s clear, as well, that the "financial
crisis" is a long term process with uncertain outcome and further risks.

"The financial operators are in control of the world´s states debts"

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

Dr. Werner Rügemer: In some ways we're already in a state that especially the biggest countries are
tributary to the banks, because the debts cannot be repaid any more in a regular manner. The formal
purchase of the state would be actually no complete new step. As the current bank rescue indicates, the
financial operators have a strong grip on the states.
Interviewer: How do you define the word "Neoliberalism"?

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

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

Neoliberalism is a concept that can assume various ideological forms. The Italian Fascism, the German
National Socialism, the Chilean dictatorship of General
Pinochet were manifestations of that, as well as the capital-democracy, which is, originated in the U.S.,
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, to
anesthesia.
Thereby the financial operators take the lead in the field of private property receive all the degrees of
freedom, including those freedoms, which are in conflict to recent government regulations. With it, the
financial operators don´t necessarily abide by the laws which provide them with so much freedom, but
violating 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. This
analysis I consider to be incomplete. To me, the deregulation of labor law and social rights seems equally
important. According to Milton Friedman, neo-liberal´s scientific guru, the classic social state leads to
moral degradation and to sloth of transfer recipients. In the eye of neo-liberals, also minimum wages
negotiated by unions, employment protection, the minimum wage, etc. have such consequences for the
employees. 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 being
lowered financially morally, legally, degraded. The day laborer status is the neo-liberal ideal of the
workforce. This has contributed to the impoverishment of broad layers, but also to the undermining of
democracy. In the anthology "labour injustice" (German: “ArbeitsUnrecht”) that comes out in November
2009, I have pictured, together with 20 other authors and for the first time, the deregulation of labor and
social legislation in a systematic manner.

Besides that, we come here to another cause of the financial crisis, which often has been complied not
strictly enough. Incidentally, one could say anyway: The current financial crisis is a crisis for the rich. The
poor had a financial crisis long before:stagnation and reduction of labor and social income since the early
90s, increasing poverty, growing unemployment, declining state performance for the less affluent e.g. in
the 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 same
time they are expected to spend more and more for consumption"

Neo-liberal economy divides people into two very contrasting roles: as workers they are being
downgraded, 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 the
purchase of housings, but also everyday devices such as televisions, cars, vacations. To keep the living
standard 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 a
financial product, securitized, sold by the banks.

Interviewer: How would you design a backlash?

Dr. Werner Rügemer: Many individuals and groups are laboring on that, more than it is publicly visible so
far. It seems important to me, to make an inventory-control, respectively many different inventories, which
generalizes in the first place, but secondly get in touch with the various mechanisms much more closer
than 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
simple language. Businesses and facilities that are actually dedicated to democracy, have to be
appropriated, ostentatiously be taken into public ownership. The secrecy must be broken. Betrayal of
secrets 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 bankrupt

banks"

Interviewer: You say, that lobbying is an important component of the system that ousts the people of the
world. Can you describe this operation? Dr. Werner Rügemer: In addition to lobbying, the consultants are
important 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 of
action:
Representations of individual corporates near to the government, corrupt journalists, media prizes, special
agencies, phony citizens' groups, etc. For simplicity, I refer to the organisation Lobby Control, that works
on this issue very closely and successfully.

Key operators are the consultants. I call them the civic private army of neo-liberalism. They are the
hundreds 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 including
KPMG, Price Waterhouse Coopers, Ernst & Young and Deloitte Touche Komatsu and large law firms such
as Freshfields, White & Case, Clifford Chance, Shearman & Sterling, Allen & Overy, Linklaters, etc. They
are 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, on
behalf of the Government, legislations for bank rescue, for the Financial Market Stabilization Fund and for
the "nationalization" of Hypo Real Estate (HRE).

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

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

Dr. Werner Rügemer: Even those media, that actually have the task to establish transparency and
educate the public, are completely opaque. It is through their success as critical media, which had much to
do with the 1968 crack, they became interesting to yield hunters.In general, we can say that even those
media considered to be critical, are owned by investors who want to get as much profit as possible from
them and who also frame their companies according to neoliberal principles, with highly paid executives
and an army of poorly paid slave writers who provide textual raw material, which is being processed
further 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 as
PR agents for companies.
Figure: Building ot the Spiegel Group in Hamburg. On the left: the editorial building built in 1969, on the
right: 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 staff
positions and produce, by themselves, professional documents, videos, photos, movies, documentaries
and supply other media. Corporations engage journalists, employed in the media, for reports,
presentations and the shaping of events.
In no major German media, also not in the public service broadcasters, there is released which editors
hold 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 under
conditions of general secrecy and disinformation, the media play an incredibly important role, and that is
why they can become such highly lucrative and also system-safeguarding operators.

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

Dr. Werner Rügemer: I would just like to address a more recent development. In 2006 I published the
book "The Banker. Uninvited obituary of Alfred Freiherr von Oppenheim " in Frankfurt's small publishing
house "Nomen". Therein I have portrayed some practises of Europe´s largest private bank, Sal
Oppenheim, which hadn´t been made public until then. Since then, the bank has put in motion more than
two dozen legal proceedings against me, against the publishing house and against others, who publicly
spoke about it. Currently, the book is still published in its second blackened edition yet. That means, even
the smallest stirrings of truth are pursued merciless, meticulous and with great effort.
After a number of blackening was lifted in several
court hearings, I filed criminal charges against the bank´s boss Matthias Graf von Krockow for making
false affidavits. For the blackening was based on his affidavit, which in case of
falsehood would be under threat of severe punishment. But even against the short report, that these
criminal 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 complaint
could 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 their
so 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 Rügemer: Some years ago I co-founded the new online news magazin "Neue Rheinische
Zeitung", www.nrhz.de. I often write in the Berlin daily paper "Junge Welt", sometimes in the monthly
magazine "Blätter für 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?
Image: Official plane crash site of "United Airlines Flight 93" near Shanksville, Pennsylvania, 11
September 2001.

Dr. Werner Rügemer: I didn´t examine the backgrounds of the September the 11. However, it´s a simple
fact of history that the U.S. intelligence services, military and government are among the most savvy
producers of reasons for war, of course, above all, there has to be mentioned, in a temporal and causal
link with the 11th September, the fabricated excuses for the wars in Iraq and Afghanistan. But does it
really matter under what pretext, or on what grounds a criminal war is being waged?
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 to
rise. 20%, the "Western world" consume more than 80% of the resources. In the Western world food is
being 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 Rügemer: The financial operators are key operators in the unequal distribution of created
wealth and in waste, destruction and rise in price of resources. Just think of the speculative rise in price of
staple foods like rice and cereals.

"There must be created a new financial system that enables an

equitable distribution of created wealth."

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

Dr. Werner Rügemer: The necessary response to the financial crisis is the following: the crisis-causing
financial practices, the money pushed sales of companies and
privatization must be prohibited, as well as the described interbank operations. The public funds and
guarantees have to be spent to create a financial system that carries the equitable distribution of the
created 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 newly
spun bad banks, the state should contribute to the development of a system of good banks.
Interviewer: Why is it, according to your opinion, that there is, cross-party and cross-national, only
discussion about a rescue of the system?

Dr. Werner Rügemer: 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 aren´t you Chairman of "Business Crime Control" any more?

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

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

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

Figure: Dr. Werner Rügemer (Source: Gulli)

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

Dr. Werner Rügemer: 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 upon
itself a Bank Tribunal; I hope that we will find, beyond attac, many cooperators, supporters, even
whistleblowers. We need to shatter the secrecy, the legitimacy of the bank rescue, and to feed the money
to meaningful alternatives.

"The secrecy must be broken, the legitimacy of the Bank rescue must
be 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 Rügemer: I already mentioned the bank Oppenheim. It lost money in many projects, such as
the main shareholder of the Karstadt department store chain, through local real estate projects, derivatives
trading, the purchase and sale of medium-sized companies. I have already disclosed their practices in my
book in 2006. Because the chancellor, for whom the bank Oppenheim was the largest single donor during
her 2005 election campaign, could not afford to rescue this bank of the super rich (the bank only accepts
clients who have 5 Million Euro cash, or more) through state aid, the Deutsche Bank has taken the
opportunity and is buying this expensive bargain. I´m afraid, my favorite opponent gains even more power
here.

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, an
appearance ban was imposed on me in Cologne museums and in city archives, in all three major Cologne
daily papers - all owned by the same publishing house of the Kölner Stadt-Anzeiger - I became a non-
person whose name is not mentioned. The book, like all my books, is not mentioned in these papers, not
by a single word.
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 Rügemer: 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 Edition
of "Colonia Corrupta" has been published by now and has been completely sold out. And because the
demand has even increased yet, the publisher - who is not located in Cologne, of course, but in Munster -
has given me the possibility of an extended
6. Publish edition. That`s what I´m working on right now.
Interviewer: Thank you for this interview.

Participation in this interview: Dr. Werner Rügemer (Cologne), Jürgen Bloehs (Munich) and the Interviewer
(Düsseldorf) in December 2009

Translated by Daniel Neun from Radio Utopie, Berlin