Bloomberg’s Hit Job on Venezuela – and Me
By Michael Hudson
April
03, 2017 "Information
Clearing House"
- I just had a disastrous and embarrassing
interaction with Bloomberg, and feel that I was
ambushed and sandbagged by having my comments
taken out of context
in a hit
piece Bloomberg’s journalists wrote on Venezuela
– evidently trying to distort my own views in a
two-for-one job.
On
Monday, March 27, I received a message from a
Bloomberg reporter asking me about a very nice
compliment that the President of Venezuela and
Secretary General of the Non-Aligned Movement,
Nicolás Maduro, had said about me:
I
was reading one of the greatest American
economists, Michael Hudson, I don’t know if
you know him, I recommend reading his work.
He is an economic thinker, worked as an
economist for a long time on Wall Street,
knows this world very well, and has been
insisting on the need for construction of a
real economy. He’s been alerting for a long
time through conferences, writings, books
and interviews of the danger that the world
has, because he says in his research that of
every $20, $19 arise from the speculative
economy and only $1 arises from the real
economy.
More than 90% of the country’s economic
apparatus is in the hands of private
companies.
The reporter, Christine Jenkins, asked if I knew
President Maduro or could explain what he found
of value in my writing. I said that I thought he
probably was referring to my discussion in
Killing the Host
of a September 2014 Harvard Business Review
article by William Lazonick, “Profits without
Prosperity,” calculating that for the decade
2003-2012, the 449 companies publicly listed in
the S&P 500 index spent only 9% of their
earnings on new capital investment. They used
54% to buy back their own stock, and 37% to pay
dividends. I told the reporter that I thought
the President’s point was that the financial
sector was not financing capital formation and
employment to increase output.
I
told her that I had not followed Venezuela’s
economy closely in recent years. I did say that
I had discussed how Argentina and Greece were
subjected to austerity as a result of foreign
debt, and my belief that no sovereign nation
should be obliged to impose austerity on its
population to pay foreign bondholders. That has
indeed been the problem confronting Latin
America for decades, and is a central theme of
all my books since
Super Imperialism
in 1972.
And to
cap matters, of course, U.S. foreign policy has
mobilized the World Bank and IMF to back
creditor interests, foreign investment and
privatization – while isolating countries from
Cuba through Venezuela (and now Greece) to
demonstrate that neoliberal diplomacy will make
such a country a pariah if it makes a serious
attempt to oppose austerity and financialization.
Apart
from that, we had no substantive discussion. The
reporter ran down some recent economic facts
about Venezuela’s economic crisis, and I replied
to the effect that it sounded like a real
quandary. She said that the country looked like
it was straining to pay its foreign debts and
might soon default. I replied with the same
advice that I had given Greece: If you are
inevitably going to default on sovereign debt,
it’s best to stop paying now and keep what
foreign exchange you have, and try to
renegotiate the debt to bring it within the
ability to be paid. Otherwise, you will end up
suffering the legal tangle of default, but be
stripped of funds needed by the domestic economy
to survive.
I said
that I didn’t have a solution to this problem. I
haven’t studied the legal status of Venezuela’s
foreign debt, or what alternatives the
government might have had open to it in the face
of strong opposition from its domestic oligarchy
as well as foreign pressure.
The
reporter, Christine Jenkins, said that she would
read my books to see how they might have
attracted the attention of President Maduro. On
Wednesday, she got back to me, and said that she
was going to write up an article for Bloomberg.
I asked
for a copy, and she wrote back that “Hi – so we
actually aren’t allowed to send articles before
publication!” That’s what raised a red flag in
my head. My impression is that every serious
reporter checks back with his or her source to
ascertain that the report is accurate. This
seems to be basic journalistic ethics.
The article was to appear at 6 AM Thursday
morning. She tried to allay my fears by telling
me “a little bit about what it says … we make it
very clear that you don’t consider yourself a
Venezuelan expert, like you said, but that if
the government sees that default is inevitable,
that its better to get it over with. We mention
your recent book, and also that
Killing the Host
is the one that probably got Maduro’s attention.
And we talk about how you’ve gotten an
international following, advising some
governments, but the one thing I wanted to give
you a heads up about is that we call you a
somewhat obscure economist – and I hope you
agree that’s fair, that you’re definitely not in
the mainstream, not a household name, and like
you talked about your area of coverage not being
taught at the typical universities, etc.”
But by
noon I still had not received a copy. I asked
for it, and when I got it, it was nothing at all
like what I had said. It made me appear to be
criticizing Venezuela’s politicians and, by
implication, President Maduro. But at no point
had I criticized Venezuela’s attempts at reform.
Rather, I had criticized the problem of
neoliberal opposition to countries trying to
uplift their populations along the lines that
Venezuela had done, using debt leverage to force
countries to impose austerity. It looks to me
like Venezuela is getting the “Greek treatment.”
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I was
appalled to find the article a hit-piece on
Venezuela, and to make me appear to criticize
President Maduro by implying that the country is
not helpable. I never said that I was not “a
fan of the socialist leader.” I applaud his
attempts to maneuver as best he can within the
corner into which Venezuela has been painted. I
did indeed repeat the headlines of the day –
that the country “has entered a period of
anarchy.” There were riots going on, and a
constitutional crisis led to the Supreme Court
suspending its congress. That wasn’t a
criticism, just my “umm-hmm” comment on what the
reporter was telling me about the situation.
Venezuela has made herculean efforts to pay its
bondholders in recent years. This has been a
political decision to avoid the even deeper
problems that default would cause. I’m in no
position to second-guess President Maduro or
other Venezuelan policy makers. They’ve probably
steered the best course available to them – bad
as all the choices are.
The
article concluded that I would “be disinclined
to add an advisory role to his busy schedule if
asked to.” That’s not my language. I said that I
hadn’t been following the situation and have
hardly spent any time in Latin America. Of
course I would help in any way that I could, if
asked.
The
real damage came from the right-wing paper
Caracas Chronicles, which did a
guilt-by-association attack piece by Jose
Gonzales Vargas, “Hudson on the Guaire.” Asking
rhetorically “Who the hell is he?” the article
identified me with
“anti-establishment outlets across the
political spectrum like
CounterPunch —who
not long ago was posting apologetic pieces
on chavismo − and Zero
Hedge,
which … was called by a former contributor a
cheerleader for “Hezbollah,
Tehran, Beijing, and Trump.”
Speaking of things that may be linked to
Russia, he has also been on
RT a couple of times.”
I
have never written for Zero Hedge,
although they sometimes reprint articles that I
publish on Naked Capitalism and
CounterPunch. The nasty quip about being “a
cheerleader for “Hezbollah,
Tehran, Beijing, and Trump”
was not about me; it was written by a Zero Hedge
member who was criticizing his own publication
when he left it.
Neither
publication noted that I’ve written numerous op-eds
for the Financial Times, the New
York Times, 3 cover articles for
Harpers, and have been featured on the BBC
and on Bloomberg radio.
The kicker of the article was its last sentence:
“Well, at least they’ve still got Weisbrot and
Ciccariello-Mahler and those Podemos guys. They
would never turn against the Bolivarian
revolution, right?… Right?”
The
implication is that I’ve broken ranks and that
“the left” is turning against President Maduro.
For my part, I can’t think of a better advisor
than Mark Weisbrot. I have no advice to give
Venezuela in its current economic straits that
its leaders have not already thought of. But of
course I would like to help if asked. As I wrote
to the Bloomberg reporter after reading her
story: “The problem is that I AM sympathetic
with the AIMS of Chavez etc. The problem is the
hostility all around him that is undercutting
the economy. That’s what makes the problem
insolvable.”
None of
my beliefs are what Bloomberg and
Caracas Chronicles implied.
Michael Hudson is one of the world's leading
economists. Michael acts as an economic advisor
to governments worldwide including Greece,
Iceland, Latvia and China on finance and
taxation.
The
views expressed in this article are solely those
of the author and do not necessarily reflect the
opinions of Information Clearing House.
