'US economic recovery accounting sham'

Press TV talks with Paul Sheldon Foote, professor at California State University, who explains why the US is forced to keep a lid on interest rates from rising and that talk of recovery is falsely masked by accounting tricks.

Press TV: US debt is over 14 trillion dollars. What exactly does that mean for the country and for the average American?

Paul Sheldon Foote: It has meant a tremendous negative impact on average Americans. The federal government does not dare to allow interest rates to go up. If the interest rates in this country go up, then they couldn't pay the massive amounts of interest payments owed on that debt.

And so the average American who in the past depended upon savings accounts for safe investments no longer has that option because interest rates are nearly zero on those savings accounts so average Americans have been paying very dearly for this.

Press TV: We continue to hear news that the US economy is recovering. With official unemployment rates almost at 10 percent and counting, and those who are underemployed that figure is closer to 20 percent. What kind of recovery is this? And if it is not in a state of recovery, how is the administration allowed to get away with saying that it is?

Paul Sheldon Foote: It's a very feeble recovery if any. A lot of it has been done with accounting tricks. Max Keiser has done a wonderful job on his website and on his TV programs in revealing what the banks have been doing.

I mean how is it possible for example for American banks to report increases in income and have their stocks go up when all they're doing is releasing reserve accounts on their balance sheet. American companies are de-leveraging; that means they're not seeking loans. How is it possible to have such profitable banks? How much of this is real? And if people go to Max Keiser's website, they'll learn that very little of this is real.

Press TV: How much is real. What do you mean exactly when you say that?

Paul Sheldon Foote: Well, as an accounting professor, I teach my students that the purpose of accounting is to make honest representations of the economic well-offness of companies. If in fact you are playing games with the accounts creating reserve accounts and releasing reserve accounts and playing other accounting tricks you are publishing false financial statements.

This is what has been happening. The external auditors have not done a good job of policing this. Obama himself was brought in by Wall Street. Wall Street contributed far more money to Obama than they did to McCain - I think he's a willing partner at the dance. He wanted to be president; they paid for him to go to the dance; and he's dancing with them.

Press TV: What do you see as being the key to solving this economic dilemma taking place in the US?

Paul Sheldon Foote: Step number one is to end the endless wars we have around the world. Cut the defense spending big time, bring the soldiers home is the first thing that should be done.