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I have recently launched a Kickstarter campaign to try to raise money to support my efforts to finish the first book of what will likely be a series on ‘Power Politics and the Empire of Economics’.
What I am asking of my readers is not only to consider donating to the project, but more importantly, to share and promote it through social media, by sending it to others who you think may be interested, and to help get the word out in any way you can!
Every bit helps, and a great deal of help is needed if this is to be successful!
I have collected below links to the campaign, as well as a video I made to promote it, and links to the sample introduction chapter that I published online so that potential patrons could read the kind of material that they would be supporting.
About the Project:
This book will tell the stories of the rich and powerful oligarchs and family dynasties who collectively rule our world: the global Mafiocracy, operating behind-the-scenes playing their games of power politics, globalization’s Game of Thrones where rich and influential families play their games, balancing collusion and cooperation with fierce competition to rule the world Empire of Economics.
In 1975, Henry Kissinger told President Ford: “The trick in the world now is to use economics to build a world political structure.”
This book is that story.
A small network of banks and other financial institutions dominate the global economy, its wealth and resources. This small network of corporate power functions as a global financial Mafia, complete with excessive criminal behaviour in laundering drug money, funding terrorists, rigging interest rates and manipulating markets.
Name a nation, and there are rich dynasties that rule behind the scenes. The Rockefellers in the United States, the Rothschilds in France and Britain, the Agnelli family in Italy, the Wallenbergs in Sweden, the Tata family of India and Oppenheimers of South Africa, the Koc and Sabanci families of Turkey, the Gulf Arab monarchs and the rich industrial families of Germany with dark Nazi pasts.
Germany once again rules Europe, with the European Union’s institutions of unelected technocrats undertaking a process of internal colonization as they impose their economic empire upon Greece, Spain, Italy, Ireland, Portugal and Cyprus. Finance ministers and central bankers are the agents of empire, cooperating closely with bankers, oligarchs and dynasties to create a world which best serves their interests. The global financial Mafia mingles with political leaders at forums and secret meetings like the Bilderberg group, the Trilateral Commission and the World Economic Forum.
From the streets of Athens, to Egypt, Turkey, Brazil, Spain, China, South Africa, Chile, Canada, and in the streets of Ferguson and Baltimore, people are rising up against exploitation, repression and domination.
This book is not simply a collection of stories of the ruling Mafiocracy; it is designed to encourage strategy among popular and revolutionary movements capable of creating something altogether new. It is time to do away with a world ruled by oligarchs, and save the species from itself. But first, we must know our world better.
Help me to complete the first book in a series on ‘Power Politics and the Empire of Economics’. For four years I have been doing my own research, scouring the archives of the New York Times, Wall Street Journal, Financial Times, government documents, official reports and corporate strategies, studying the world of power and empire, translating the political language of ‘economics’ into plain and simple English.
I have been published in multiple news sources, online and in print, interviewed by radio and television networks, and now I am asking for your help to raise $10,000 so that I can finish the first book in this series, to expose the Empire for all to see, its strengths as well as the weaknesses left exposed for us to exploit. Let us bring true democracy and an end to Mafiocracy. Help me to write this book, and together, let’s help each other to end the Empire.
Donate today. Thank you.
Andrew Gavin Marshall
Global Power Project: Bilderberg Group and Europe’s Technocrat Titans
By: Andrew Gavin Marshall
10 February 2015
Originally posted at Occupy.com
This is the tenth installment in a series examining the activities and individuals behind the Bilderberg Group. Read the first, second, third, fourth, fifth, sixth, seventh, eighth and ninth parts in the series.
I previously examined the functions of the Bilderberg meetings; the composition and concentration of financial markets and the Mafiocracy that rules them; the nature of technocracy, and the role of finance ministers, central banks and the IMF in managing the European debt crisis. This installment takes a closer look at the top technocrats of the European Council and the European Commission.
The “Troika” of the European Central Bank (ECB), International Monetary Fund (IMF) and European Commission (EC) was largely tasked with managing the response to the debt crisis, organizing bailouts, imposing austerity and saving the banks at the expense of the populations of Europe. The Troika reported to the Eurogroup of 17 finance ministers who represented all of the countries that used the euro as their single common currency.
The European Union project evolved and expanded over decades since the end of World War II, and always with an elite-driven, technocratic structure. As the E.U. moves through the debt crisis, its solutions and actions invariably delegate more authority to both existing and new technocratic institutions that wield immense power over nation-states within the E.U. Sovereignty is increasingly transferred from the nation and its democratically elected leaders to the supra-national technocratic structure of the E.U., and the top bureaucrats and technicians who run it.
The European Council and the European Commission are the major centers of power within the E.U.’s political structure. The European Central Bank is equally if not more powerful, but it doesn’t answer to any political authority since it’s considered to be “independent” (aka exclusively in the service of private interests). The European Council groups together the heads of state (presidents and prime ministers) of all E.U. nations, comprising the supreme governing authority of the E.U. The Council is presided over by a permanent president. Over the course of the European debt crisis, that president was Herman Van Rompuy.
Herman Van Rompuy
Herman Van Rompuy was a prominent Belgian technocrat and politician. Trained as an economist, Van Rompuy worked for Belgium’s central bank from 1972 to 1975, thereafter going into politics where he rose through the ranks to become a budget minister in the 1990s. When Van Rompuy was asked by Belgian King Albert to form a coalition government in December of 2008, Van Rompuy became Belgium’s Prime Minister, described by Reuters at the time as “a budgetary hardliner.”
As European leaders were attempting to negotiate and horse-trade to fill key appointments in the EU apparatus in late 2009, Van Rompuy was considered a “dark horse” to occupy the first-ever permanent president of the European Council. Van Rompuy was relatively unknown outside Belgium and had only been the country’s Prime Minister for 11 months when he got the top job in the E.U.
Roughly a week before European leaders announced him as their selection, Van Rompuy attended a private dinner with members of the Bilderberg steering committee on Nov. 12, 2009. Van Rompuy was invited to the dinner by then-chairman of the Bilderberg meetings, Etienne Davignon, a former top E.U. technocrat, in order “to promote his candidacy” for the top job. At the dinner, which was attended by top industrialists, financiers and even war criminals like Henry Kissinger, Van Rompuy was able to impress the group with a speech and engage in “off-the-record” talks with the unelected oligarchs. At the dinner meeting, Van Rompuy reportedly raised the issue of E.U. financing, suggesting that a continental E.U. tax could even be envisioned.
Seven days later, Van Rompuy was announced as the final choice for president of the European Council. According to The New York Times, Van Rompuy’s selection was seen as the “result of backroom negotiations among [E.U.] leaders jockeying for future and more important economic portfolios that could be more powerful in the enlarged European Union” – in some ways a similar method as how the Chinese choose who sits in the top political positions of authority within the Communist Party and State.
The Financial Times celebrated the appointment of Van Rompuy to the top spot, noting that “the art of Belgian political leadership consists of bringing consensus to a broad and fractious coalition,” which is “exactly what the president of the European Council will have to do.” As the prime minister of Belgium, the paper wrote, Van Rompuy had “demonstrated an ability to bring a laser-sharp focus to a complicated political process.”
Together with the President of the European Commission, the ECB and the Eurogroup of finance ministers, Van Rompuy indeed played an important role in the management of Europe’s debt crisis. After attending the Bilderberg steering committee meeting in 2009, just prior to getting Europe’s top job, he later attended a Bilderberg meeting in 2011 while sitting as president of the European Council.
José Manuel Barroso
José Manuel Barroso finished his second term as President of the European Commission in late 2014, after serving in that post for the previous ten years. Prior to that, he served as prime minister of Portugal from 2002 to 2004. Barroso has attended numerous Bilderberg meetings: in 1994, 2003, 2005 and 2013. On top of that, Barroso has attended meetings of the Trilateral Commission, including the one that took place in Portugal in 2003 while Barroso was prime minister. He also attended the Commission’s annual meeting in 2007 that took place in Brussels while he was the European Commission president.
Barroso courted controversy in 2003 when he became one of only a few European heads of state to support George W. Bush’s “with us or against us” war on Iraq. His position put him in good standing with the U.K. and Italy, yet he also managed to maintain good ties with France and Germany, making him an effective choice to head the EC. Barroso was at the same time, however, “unpopular at home,” noted the BBC, because he implemented “an austerity program to reduce the country’s budget deficit.” But for European leaders, the fact that Barroso was able to hold together a political coalition of opposing parties “while driving through the unpopular reforms” made him an ideal candidate to function as “a consensus politician.”
The Economist reflected on Barroso’s short time as prime minister, noting the austerity program and commenting that he “has done a good job of running Portugal.” Barroso was chosen for one of the top spots in the E.U., overseeing the vast bureaucracy of the European Commission, through a series of “backroom deals, in which various other juicy EU jobs that are up for grabs are shared around.” Those who backed Barroso were doing so under the presumption that he would “hold his liberal economic line.”
A few months into his first term, in early 2005, the Financial Times reported that Barroso had “laid out pro-business plans to revive Europe’s economy,” which Britain’s E.U. Trade Commissioner Peter Madelson described as “proposing a program for Europe that we would describe as ‘New Labour’ in Britain,” and adding that “we are seeing the best chance in a decade to restore authority to the European Commission.” Apart from not giving business interests everything they wanted, the FT conceded that in many areas, “Barroso’s agenda is unashamedly pro-business,” including “a new drive for lighter regulation.”
Barroso’s program “put pressure on countries to make labour markets more flexible and cut back on welfare spending,” noted The New York Times. As people across Europe expressed fear that Barroso was “about to pursue an excessively liberal economic agenda,” Barroso began attempting to please his critics, speaking to trade unionists and declaring his intention to “fight against poverty,” stating that Europe would “maintain and reform our European social model.” That public relations campaign in turn worried business and financial interests, so the Commission president launched “a concerted campaign to attempt to show he remains firmly committed to pro-business economic reforms.”
A couple of weeks later, Barroso delivered a speech at the Spring meeting of the Institute of International Finance (IIF), whose membership is composed of top executives from hundreds of the world’s largest banks and financial institutions. Barroso began his speech noting that “your association has achieved a lot in the last two decades,” and continued:
“It has acted as an important market place for ideas [and] has provided a clear and influential voice for change in the fields of finance, economics and governance.” The world’s “stable financial order” was, Barroso declared, “in no small part thanks to the contribution of this institute.”
Barroso explained his understanding of the global economy to his esteemed audience, noting that the rapid growth in “emerging markets” was increasing global wealth, but also increasing competition for that wealth with countries like China and India able to better exploit cheap labor while the U.S. with its high-tech boom was leaving Europe behind.
“The status quo is no longer an option for the E.U.,” Barroso continued. The E.U. must change “in order for Europe to fully reap the benefits of ongoing globalization,” and the continent had to “increase the flexibility of markets” and strengthen its “productivity.” Translation: deregulate all markets, dismantle labor rights and protections, reduce living standards so as to create a cheaper labor force capable of competing with Asia, and increase finance for research and development to spur high-tech growth. Among the major “priorities” were making workers “more adaptable and labour markets more flexible.” No doubt, Barroso’s audience of bankers and financiers agreed with him.
It should be noted that the top leadership of the IIF are frequently Bilderberg members and participants, and that other speakers invited to the IIF’s Spring meeting included “senior government officials from Brazil, Chile, China, Slovakia, Spain and the U.K.,” as well as “leading international economists,” the managing director of the IMF, and the former president of Mexico.
In 2007, Barroso publicly commented on the unique nature of the European Union, referring to it as “the first non-imperial empire,” and explaining: “We are a very special construction unique in the history of mankind… Sometimes I like to compare the E.U. as a creation to the organization of empire. We have the dimension of empire.”
Barroso became a globally influential official in the spring of 2009, as the world grappled with the repercussions of the financial crisis and the heads of central banks, finance ministries, international organizations and leaders of the Group of 20 met to reshape the global financial and economic order. The focus at the 2009 meeting was to design “the future of financial regulation.” The Telegraph noted at the meeting that “Barroso and his team have had a quiet but immensely influential role in the whole process,” as many of the words and phrases adopted in the G20’s final communiqué were drafted in Barroso’s Commission office, which had drafted an earlier report on the subject. Barroso declared that “we need open, competitive, market economies… with effective regulation and supervision.” To accomplish this, “strong international institutions” (like his) were needed as well as “corporate governance,” a global reflection of today’s “economic culture of Europe.”
The next and final installment in the series examines Barroso’s continued role, and the role of the European Commission, from 2009 onwards.
The Debtor’s War: A Modern Greek Tragedy
By: Andrew Gavin Marshall
Early on Thursday, 7 November 2013, Greek riot police stormed the offices of Greece’s main public broadcaster, which had been under a five-month occupation by workers who opposed the government’s decision to shutdown the broadcaster, firing thousands and destroying a major cultural institution. The broadcast seems to have come to an end.
The long and painful Greek tragedy continues, where society and culture are gutted, people impoverished, driven into a deep depression, with growing political and social conflicts, the rise of fascism, detention camps filled with immigrants from Africa and the Middle East, trying to escape the dictators we arm, or the wars we support, with suicide rates spiking, health and well-being deteriorate, services and support vanish, and all the people are left to be punished, humiliated, oppressed and destroyed… These are called “solutions” to an economic crisis, on the road to “economic recovery”… think about that for a moment.
Why is this done? Because some of the world’s largest banks demand it. The same banks that created the global financial crisis, and the European debt crisis, and the global food crisis (which drives tens of millions more people into hunger, and makes the banks richer in the process)., and which launder hundreds of billions of dollars in drug money, profit from arms sales, war and terror. Those banks want the people of Greece (and Spain, and Italy, Portugal, and Ireland, and everywhere, always, across the world) to pay the interest they feel they are owed.
Let me put this simply: a computer screen somewhere, at some big bank, says that some country owes that bank a certain amount of money, and thus, the people of that country must suffer and even die, so that the government can afford to pay back the bank. That’s what government’s are for, right? To serve banks… right?
Greece needs to pay the bank, because the bank and all the bank’s friends (what we call “financial markets”) have decided to punish the country of Greece by betting against the ability of the country to repay its debts, to crash its credit rating, making its ability to borrow and spend increasingly expensive and impossible. Now Greece is basically broke. Greece needs money, so it turns to the EU, the European Central Bank, and the IMF for “assistance.”
They demand that Greece – in return for the loan(s) – impoverish its population, cut all social services and health care, education, anything of benefit to the population – destroy it! – because it’s “too costly.” These are called “austerity measures.” Then, ensure that the newly-impoverished population has all their ‘benefits’ withdrawn, which were promised to them through the ‘social contract’ between the population and the government (essentially, a social agreement between people and the state which legitimizes the state’s ability to rule over them). These things must be destroyed. So things like pensions, social security, labour rights and regulations, protections and safety, industries, resources, services and anything that again benefits the population, must be dismantled and sold for cheap to foreign banks and corporations. All must be dismantled to ensure that the newly-impoverished population and country can be effectively and efficiently exploited by cosmopolitical corporations. These are called “structural reforms,” presumably because they ‘reform’ the very structure of society.
Then, with the combination of impoverishment and exploitation, comes the saintly glow of the all-encompassing human desire and civilizational drive – our goal and purpose as a species on this planet, what our societies are organized by and for – the highest stage of humanity: “economic growth.” Who wouldn’t want “growth”? Well, unless we’re talking about something like a wart, rash, infection, inflammation, or a tumour, everyone wants “growth”, right? Even if it’s at the expense of entire societies and populations of actual individual and living human beings, like any single one of us. Just so long as they suffer for “growth,” all will be well and happy.
So what does “growth” mean? It means that the banks and corporations – which worked with government agencies and officials in creating the global economic and financial crises in the first place – now have the ability to reap the benefits of destruction: massive profits, and growing global power. Large corporations have more money than most countries on earth. Their power is protected by the state, their influence unquestioned, their domination of the world’s resources, materials, culture and society is rapidly advancing, and they are – institutionally and ideologically – totalitarian. So what’s not to love, really?
They want it all. Profit and power. Our world is dominated and being re-shaped by a tiny global financial, corporate, political and intellectual elite. And all must suffer so that they can have what anyone in their position would want to have: more, they want it all. And they want you to just shut up and let them take it all. If you have a problem with that, well, that’s what riot police, prisons, and fascism are for.
This is why Greece must suffer. This is why we hear the unholy trinity economic mantra of: “austerity,” “structural reform,” and “economic growth.” The modern Greek Tragedy of ‘The Debtor’s War’ is driven by the tyrannical trio known as the ‘Troika’: the European Commission (of unelected, unaccountable supranational elite technocrats who serve the interests of global corporate and financial power), the European Central Bank (of unelected technocrats and economists who serve the interests of “financial markets” and the big banks), and the IMF (of unelected technocrats and economists who serve global financial and corporate interests). This institutional ‘Troika’ (the EC, ECB, and IMF) demanded the implementation of the ideological ‘Troika’: austerity, structural reform, and economic growth.
Together, institutionally and ideologically, they wreak havoc upon humanity.
Welcome to the most completely INSANE point in human history; the all-or-nothing. Welcome to reality.
Now please, kindly help change it.
Global Power Project: Connecting Josef Ackermann, the Institute of International Finance and the Euro Debt Crisis
Global Power Project: Connecting Josef Ackermann, the Institute of International Finance and the Euro Debt Crisis
By: Andrew Gavin Marshall
Originally posted at Occupy.com
In Part 1 of a Global Power Project exposé on the Institute of International Finance (IIF), I examined the founding the institute as a response by leading world banks to organize and manage their interests in relation to the 1980s debt crisis. When the European debt crisis hit headlines in 2010, the IIF was again on the scene and playing a major part. At the center was the CEO of Deutsche Bank, Josef Ackermann.
Josef Ackermann served as CEO of Deutsche Bank from 2002 to 2012, and over the same period served as Chairman of the IIF. Ackermann was also, and still remains, a member of the Steering Committee of the Bilderberg Group and continues to serve on the IIF’s Group of Trustees, a board which includes a number of prominent central bankers including Christian Noyer, the Governor of the Bank of France and Chairman of the Bank for International Settlements (BIS); Jamie Caruana, the General Manager of the BIS; and Jean-Claude Trichet, who was the president of the European Central Bank from 2003 to 2011.
During the early stages of the financial crisis, Ackermann served as an “unofficial adviser” to German Chancellor Angela Merkel and her then-Finance Minister Peer Steinbrueck. In December of 2009, Ackermann was speaking at a summit in Berlin attended by Chancellor Merkel and several other German cabinet ministers, corporate CEOs and others, where he explained that while the financial crisis had largely been “abated,” many “time bombs” remained — in particular, Greece, which he referred to as the “problem child” of Europe. Ackermann blamed the debt crisis on people having “lived beyond their means for years, if not decades,” warning that pensions and health care systems would “compound the problem” in the future.
The Financial Times has referred to Ackermann as a “reluctant power broker” who “has the ear of Angela Merkel, Europe’s most powerful politician.” Ackermann not only became one of the most influential bankers in the world, but a major political figure as well. As he himself explained: “Financial markets now are very political – political considerations have to play an important role.” In 2011, Ackermann warned that in terms of Europe’s crisis, “I don’t see a quick economic recovery, so we will have a longer time of somewhat lower growth – certainly three to five years.”
In October of 2011, Ackermann delivered a speech in which he said that Europe had “now entered a period of deleveraging” which “will inevitably entail a long period of austerity as governments, households and firms raise their savings.” At an economic forum in December of 2011, Josef Ackermann stated that Europe had to get its debt under control, “even at the cost of national sovereignty,” suggesting that neither “the pressure of financial markets” nor austerity measures “threaten democracy.” The real threat to democracy, according to Ackermann, was the “excessive debt” of European states.
In 2011, France and Germany agreed to negotiate directly with the “private sector” in the next planned Greek bailout agreement. The lead negotiator for the banks was the Institute of International Finance, which was brought in to discuss the potential for the banks to take a slight loss on their holdings of Greek debt. Ackermann was to be one of the lead negotiators for the IIF (also representing Deutsche Bank,a major private holder of Greek debt).
The Institute of International Finance under Ackermann’s chairmanship in turn became directly involved in major European summits, providing key input and suggestions that led to the Greek bailout. In July of 2011, the IIF warned the Eurozone countries that they would have to conclude a bailout agreement for Greece in order to avoid financial markets “spinning out of control.” The IIF delivered these warnings in a report delivered directly to European finance ministers, stating: “It is essential that euro area member states and the IMF act in the coming days to avoid market developments spinning out of control and risk contagion accelerating.”
The IIF undertook talks with Greek political leaders as well as EU officials, the European Central Bank and the IMF, with the organization noting that its managing director Charles Dallara and an IFF team “had extensive meetings with very senior European government officials over several weeks.” The three main IFF officials involved in discussions and negotiations were Charles Dallara (managing director from 1993-2013), Ackermann and Baudouin Prot, the Chairman of BNP Paribas.
According to one report, Ackermann even attended a meeting of the European Council during the EU summit to discuss the Greek bailout. Dallara was reported to have engaged in a conference call with top EU officials, including the Eurogroup chair Jean-Claude Juncker and the European Commissioner for Economic and Monetary Affairs, Olli Rehn. Dallara also reportedly met with European Council President Herman van Rompuy, then-French President Nicolas Sarkozy and Angela Merkel.
Discussions continued over the following months with little resolution. In an October meeting, EU officials reportedly hit a wall, at which point they summoned Dallara as the representative of the banks to the meeting in order “to break the deadlock.” Dallara met with Sarkozy and Merkel and other leading EU officials. While a general agreement was reached with the banks, negotiations over the technicalities continued into 2012, taking place between the Greek government, the EU, IMF and the IIF.
Ackermann explained that the banks were being “extremely generous” and then warned that failure to agree on a new program would open“a new Pandora’s box” for the debt crisis. Ackermann spoke at the World Economic Forum where he said that any agreement would have to force Greece to adhere to “harsh new austerity measures,” including cuts to wages and pensions, as well as making “the labor market more flexible.”
The final agreement had the banks holding Greek debt to take a 50% “loss” of their holdings of that debt, which would be done through a “bond swap” where they were to exchange their current junk status Greek debt for long-term Greek government bonds (debt) with a higher rating. In other words, the much-touted “write off,” or “loss,” for banks holding Greek debt amounted to a fancy financial method of kicking the can down the road.
After leaving his position as Chairman and CEO of Deutsche Bank as well as Chairman of the IIF, Ackermann spoke at the Atlantic Council, a U.S. think tank where he stated that elections in Greece were “not necessary” and “a big mistake.” What was necessary, he said, was “to make the funding of the banking system more certain,” and claimed it would require between 1 and 2 trillion euros. The European Stability Mechanism’s (ESM) ability to provide banks with $1 trillion was, according to Ackermann, “sufficient,” but he added, “we have to do more” and “we should maintain the pressure on the countries to do the necessary structural reforms and the necessary financial reforms to reduce the debt burden.” However, he noted, “if it comes to the worst,” in terms of a potential collapse of the Eurozone, “everything will be done to bail the Eurozone out.”
When Ackermann was asked why Germany did not simply come out and say that it would guarantee bank debts in the Eurozone, he explained that “it would be very difficult to get parliamentary approval for such behavior or attitude. People would not support it at all.” Further, if Germany did publicly state that it would guarantee bailouts for banks, many countries in the Eurozone would then ask, “Well, why then go on with our austerity programs? Why go on with our reforms? We have what we need.” Thus, Germany was not saying so publicly, based on what Ackermann called “political tactical consideration,” adding: “I think to keep the pressure up until the last minute is probably… not a bad political solution.”
Ackermann has never lacked as a source for controversy. He has been referred to as “a global banker and political power broker” by one financial analyst, and Simon Johnson, former Chief Economist at the IMF, referred to him as “one of the most dangerous bank managers” in the world whose advice not just to Germany and Greece but also to Belgium and Switzerland “shaped talks to bail out German lenders [banks], reduce Greece’s debt, leverage the euro-area’s rescue fund and influence regulation.” Ackermann himself stated, “Financial markets have become highly political over the past years… Politics and finance will become even more intertwined in the future. Accordingly, bankers have to think and act more politically as well.” One financial analyst stated: “He’s the most influential banker in the euro zone.” A German economics professor noted, “Deutsche Bank and its CEO are the target of all the people who feel our social or economic system is unfair or wrong.”
In 2011, Ackermann was targeted by an Italian anarchist group that claimed responsibility for sending a letter bomb to the Deutsche Bank CEO, though it was intercepted by police. When confronted by Occupy protesters during a speech he gave in November of 2011, Ackermann touted his “environmental” credentials, explaining that the UN Secretary General had referred to him as a “visionary.”
When Ackermann left Deutsche Bank and the IIF, he did not leave the world of financial and political power. He continued holding positions as a member of the Steering Committee of the Bilderberg Group; Vice Chairman of the Foundation Board of the World Economic Forum; and as a member of the Group of Trustees of the Principles for the Institute of International Finance. On top of that, he became a board member of Investor AB, Siemens AG, and Royal Dutch Shell, as well as being appointed Chairman of Zurich Insurance Group. Ackermann also sits on the international advisory boards of the China Banking Regulatory Commission, the National Bank of Kuwait, and Akbank, Turkey’s largest bank, as well as sitting on the boards of a number of other corporate and financial institutions.
When Ackermann left his position as CEO of Deutsche Bank and Chairman of the IIF, he was replaced at the IIF by Douglas Flint, the chairman of HSBC Holdings, who also sits on the board of the IIF. Flint is a member of the Mayor of Beijing’s International Business Leaders’ Advisory Council, a member of the Mayor of Shanghai’s International Business Leaders’ Advisory Council, a member of the International Advisory Board of the China Europe International Business School, a former director of BP (from 2005-2011), a participant in Bilderberg meetings (including for the years 2011-2013), a member of the European Financial Services Round Table (a group of CEOs and chairmen from Europe’s top banks), a member of the Financial Services Forum, a member of the European Banking Group (a group of over ten top European bank leaders formed to directly lobby the EU on “regulation” of the financial industry), and a member of the International Monetary Conference (IMC), an annual conference of private bankers formed to “compliment” the annual IMF meetings.
Whether through the leadership of Josef Ackermann, or now under the chairmanship of Douglas Flint, the IIF has been and will remain a major global player within the debt crisis and future financial crises, representing the organized interests of the financial markets. It’s no surprise, then, that even the Financial Times noted in 2010 that, three years after the financial crisis began, “the markets (and the bankers) still rule.”
Or as former Deputy Treasury Secretary Roger Altman noted, in 2011, that financial markets had become “a global supra-government” that “oust entrenched regimes… force austerity, banking bail-outs and other major policy changes,” whose “influence dwarfs multilateral institutions such as the International Monetary Fund” as “they have become the most powerful force on earth.”
We need look no further than the Institute of International Finance to see just how “the most powerful force on earth” is organized.
Andrew Gavin Marshall is a 26-year old researcher and writer based in Montreal, Canada. He is Project Manager of The People’s Book Project, chair of the Geopolitics Division of The Hampton Institute, research director for Occupy.com’s Global Power Project, and hosts a weekly podcast show with BoilingFrogsPost.
Read the Revolution!
In the current phase of The People’s Book Project, I have been doing extensive research and writing on the global economic crisis and anti-austerity and resistance movements worldwide.
My objective is to finish this book as soon as possible, to have it published by the end of the year. However, I do need your support in order to continue my work on this project. With an objective to raise $2,500, I have so far raised $975.00, meaning that there is $1,525 to go!
Thus, far, I have written extensively on the causes of the American housing crisis and financial collapse and bailouts; the causes and consequences of the European debt crisis; the anti-austerity movements – such as the Indignados – but also violent resistance in the streets of Athens, that have been taking place in Europe; I have already done a significant degree of work on the Quebec student movement, as well as the Chilean student movement, and have been doing a good deal of research on the U.K. student movement from 2010 as well as the Occupy movement.
While over 250 pages of detailed research have been written and compiled, there is still a ways to go! There is more work to be done on the European debt crisis. I have roughly 50 pages single-spaced just on Greece alone, roughly the equivalent for Spain, as well as Italy, and a comparable amount for an analysis of the European politics of power at the high levels (France, Germany, Brussels); however, I still need to complete research and work on Ireland and Portugal, as well as finishing up the other sections. My main problem in writing about the European debt crisis is that every week there seem to be new and dramatic events unfolding in the EU, and it is a challenge to keep up with just the surface of what’s going on, let alone all the causes and consequences. However, I am quite determined, and my research into the crisis shows me just how unbelievably important it is to do the best research I can on this subject, and to properly explain the situation in words and terms that everyone can relate to and understand. This means I have to analyze and criticize the language which is used by politicians, economists, bankers, and the media when they describe the crisis, its causes, and its ‘solutions.’
I have also done a good deal of work on the situation in Canada, in terms of Canada’s experience with the economic crisis, and a coming housing collapse in the country, approaching austerity and growing resistance. I have yet to study the Mexican student movement, but it will definitely be included as well.
There is a great deal more work to do, and as much work as I am accomplishing, I can’t seem to be going fast enough to my liking. But I also don’t want to rush through just for the sake of finishing. Your support has to go toward the development of a finished product which I can be proud of, and which I hope others may find helpful and informative.
I have not done any recent work on the Arab Spring, and due to the length and effort already put in this book so far, and considering how far I have left to go, I may have to consider leaving it out for the moment, though this would be unfortunate. But this I will not decide right now.
I have also posted several articles, samples, and research excerpts from my book and the type of information I am examining and analyzing. These are very rough drafts, but it gives readers an idea of the work that is going into the project (in terms of the detail) – for example, in the articles on Italy’s crisis – but also on some of the analytical approaches to the subject matter – such as in my piece on political language – and of course on the scope I am hoping to reach – such as in the piece on ‘world revolution.’ Here are my recent samples:
The more research and writing I do on this massive crisis and the resistance erupting around the world has me utterly convinced of two major points: first, the elite are waging unrestrained class warfare the likes of which have never before been seen on such a truly massive global scale; and second, the people of the world are sporadically and often surprisingly rising up in different contexts and through different tactics against this corrupt and archaic system. The elite are seeking all for them and nothing for all, while the people are rising up, sensing instinctively that humanity was not meant to live like this.
I feel a great sense of urgency in finishing this book as soon as possible, for the global circumstances are themselves changing so rapidly, and I feel that this information needs to be approachable and accessible as soon as humanly possible. So help me to do what I can to put words to paper so that you and others may ‘read the revolution’ before – and even as – you go out and start it!
Thank you for all of your amazing and constant support!
Thank you for your donations, for sharing my articles, for re-posting my articles, for discussing this project, and for translating my work into different languages, and for sending me information and being sources of inspiration!
Andrew Gavin Marshall
Italy in Crisis: The Decline of the Roman Democracy and Rise of the ‘Super Mario’ Technocracy
Part 1 of “Italy in Crisis”, a series of excerpts from a chapter in an upcoming book.
By: Andrew Gavin Marshall
The European debt crisis continues into its third year, with four government bailouts – of Greece, Ireland, Portugal, and Spain – and having imposed harsh austerity measures upon the people of Europe, forcing them to pay – through reduced standards of living and increased poverty – for the excesses of their political and financial rulers. Italy, as Europe’s third largest economy, with one of the largest debt-to-GDP ratios, plays a central role in the unfolding debt crisis across Europe. Part 1 of this excerpt from a chapter on the economic crisis in my upcoming book covers the “suspension” of democracy in Italy and the imposition of a ‘Technocracy’ – an unelected government led by academics and bankers – with a mandate to punish the people, facilitate the financial elite, and serve the interests of the supranational, unelected, technocratic European Union. Power centralized, power globalizes, power plunders and profits on the punishment and impoverishment of people everywhere. This is the story of Italy’s debt crisis.
This is an unedited, rough draft excerpt from my upcoming book – the Preface to the People’s Book Project – which is due to be finished by the end of the summer, and covers the following subjects: the origins, evolution, and consequences of the global economic crisis; the expansion and effects of global imperialism and war; the elite-driven social engineering project of establishing an institutional structure of ‘global governance’; and the rising resistance of people around the world to this system, as well as the attempts of the imperial powers to co-opt, control, or destroy these socio-political movements – the embodiment of the ‘Global Political Awakening’ – from the Arab Spring, to the anti-austerity movements across Europe, the Indignados in Spain, the Occupy Movement, the Chilean Winter and the Maple Spring in Quebec, among others. This project needs your support: I am attempting to raise $2,500 in donations to support the efforts to finish this book by the end of the summer, with $530 raised so far, and $1,970 left to go. Please donate today!
Bilderberg, Berlusconi, and Italian Austerity
The Italian Finance Minister, Giulio Tremonti had attended the Bilderberg meeting in early June of 2011, alongside other notable Italian participants, including Franco Bernabe, CEO of Telecom Italia (and Vice Chairman of Rothschild Europe); John Elkann, the Chairman of Fiat; Mario Monti, the president of Bocconi university and a former EU Commissioner; and Paolo Scaroni, the CEO of Eni, an oil and gas company and Italy’s largest industrial corporation. The Bilderberg meeting for 2011 took place from June 9-12 in Switzerland, and of course was attended by a host of other major European elites, including: Josef Ackermann, Chairman and CEO of Deutsche Bank; Marcus Agius, Chairman of Barclays Bank; the Swedish Ministers for Foreign Affairs and Trade; Luc Coene, the Governor of the National Bank of Belgium; Frans van Daele, Chief of Staff to the President of the European Council; Werner Faymann, the Federal Chancellor of Austria; Douglas J. Flint, Group Chairman of HSBC Holdings; Neelie Kroes, Vice President of the European Commission; Bernardino Leon Gross, Secretary General of the Spanish Presidency; George Papaconstantinou, the Greek Minister of Finance; Herman Van Rompuy, President of the European Council; and Jean-Claude Trichet, President of the European Central Bank, among many others.
In July of 2011, Silvio Berlusconi’s government announced a package of austerity measures hoping to calm markets, seeking to reduce the deficit by 40 billion euros. The package, largely designed by finance minister Giulio Tremonti, only attempted to address Italy’s debt, but markets were also concerned about the country’s “ultra-low-growth,” which has been consistent since Berlusconi returned to office in 2001. Once the austerity measures would be signed into law, several opposition politicians were suggesting the formation of a cross-party “technical government” without Berlusconi in office. The Finance Minister Tremonti announced a wave of privatizations. Apparently, the privatizations and various liberalizations were urged into the austerity package by the main opposition party, the Democratic Party (PD), not Berlusconi’s Freedom People Party. The central bank governor of Italy, Mario Draghi, who was poised to become the next President of the European Central Bank (ECB) following the end of the term of Jean-Claude Trichet, warned the Italian government that “it would have to raise taxes or make further spending cuts” if it wanted to calm markets. By July 14, the Italian Senate approved an increased austerity package worth 70 billion euros (or $99 billion), “aimed at convincing investors that the eurozone’s third-largest economy won’t be swept into the debt crisis.” Italy’s bonds (government debt) saw its borrowing rates (interest) hit record highs as investors were not calmed by the proposed austerity measures.
Even as the austerity measures were being passed, market confidence was still lacking, which was largely credited to the fact that a rift emerged between Berlusconi and his Finance Minister Tremonti, who as a Bilderberg attendee, no doubt has the confidence of markets. Berlusconi reportedly viewed Tremonti as a “rival” and has “repeatedly attacked [Tremonti] as a traitor in newspapers owned by the Berlusconi family.” After Tremonti, who was facing his own corruption charges, was caught on camera calling a colleague a “cretin,” Berlusconi told an Italian newspaper, “You know, he thinks he’s a genius and that everyone else is stupid… I put up with him because I’ve known him for a long time and one has to accept the way he is. But he’s the only one who is not a team player.” It was opined, then, that markets reacted to this rift between the Prime Minister and the Finance Minister, as articulated by an official at F&C Investments, who stated that markets view Tremonti as the “steady counterweight to the unpredictable and capricious” Berlusconi.
In July of 2011, Nichi Vendola, a popular leftist opposition political figure in Italy, wrote an article for the Guardian, in which he critiqued the austerity measures imposed by the Berlusconi government. Vendola wrote that, “Italy will not survive this crisis by listening to the very people who got us into it, especially not when they demand that the middle class and poor foot the bill for their failures.” Vendola also put blame on the European managing of the crisis, as “governments now have an obsessive fixation on employing tighter control of budget deficits to satisfy the European stability pact.” Vendola referred to Tremonti’s austerity package as a “social catastrophe,” and that instead, he suggested, what Italy must do “is turn this policy on its head,” noting that, “Italy’s problem is as much about growth as it is debt.” To do this, Vendola wrote, it “will require a new government,” and that, “Italy needs elections, because only a completely new governing class can achieve the political consensus to design and implement a plan to tackle the crisis.” He suggested that the European stability pact would need to be re-negotiated, and concluded: “It does us little good to please the out-of-touch elite of our capitals while the people have to tighten their belts and our youth are robbed of their future.”
Mario Monti, President of Bocconi University and a former European Commissioner, also agreed that Italy needed a new government, though for different reasons (and a different type of government). He wrote an article in a major Italian paper in August of 2011 in which he advocated – as a solution to Italy’s problems – the formation of a “supranational technical government” which would make all the major decisions in order to “remove the structural constraints to growth,” and opined that “an Italy respected and authoritative… would be of great help to Europe.” Vendola wanted a new government to help the people, and Monti wanted a new government to help “Europe” (read: banks and elites). Guess who became the next leader of Italy!?
Berlusconi Bows Down to the Bankers and Punishes the People
In August, Silvio Berlusconi had to approve a new austerity package, the second in less than a month. In a letter which was leaked to the Italian press, it was revealed that Jean-Claude Trichet, the President of the European Central Bank, and Mario Draghi, the President of the Italian Central bank (from 2006 to 2011, who was set to secede Trichet at the ECB in October of 2011), put pressure on Berlusconi to “implement significant austerity measures.” The letter, written by the two central bankers, demanded “pressing action… to restore the confidence of investors.” Dated August 5, 2011, it was issued just days before the ECB announced its new programme to buy Italian bonds (debt), designed to reduce the country’s borrowing costs (interest on future debt). One of the measures mentioned in the letter instructed Berlusconi to take “immediate and bold measures to ensuring the sustainability of public finances,” to achieve a balanced budget in 2013. This was adopted in the subsequent austerity package put forward by Berlusconi in August. The letter also stated that, “it is possible to intervene further in the pension system, making more stringent the eligibility criteria for seniority pensions and rapidly aligning the retirement age of women in the private sector to that established for public employees.” Further, the “borrowing, including commercial debt and expenditures of regional and local governments should be placed under tight control, in line with the principles of the ongoing reform of intergovernmental fiscal relations.”
In economic-speak, the letter asked for privatizations of public services: “Key challenges are to increase competition, particularly in services to improve the quality of public services and to design regulatory and fiscal systems better suited to support firms’ competitiveness and efficiency of the labour market.” This would require three key actions, the first of which was that, “a comprehensive, far-reaching and credible reform strategy, including the full liberalization of local public services and of professional services is needed,” and that, “this should apply particularly to the provision of local services through large-scale privatizations.” The second major step was “a need to further reform the collective wage bargaining system [meaning: undermine unions] allowing firm-level agreements to tailor wages and working conditions to firms’ specific needs and increasing their relevance with respect to other layers of negotiations.” In other words, destroy the unions so that companies can exploit labour to whatever degree they choose. And thirdly, according to Trichet and Draghi, what was needed was a “thorough review of the rules regulating the hiring and dismissal of employees [which] should be adopted in conjunction with the establishment of an unemployment insurance system and a set of active labour market policies capable of easing the reallocation of resources towards the more competitive firms and sectors.”
In other words, labour rights and laws and the rights of workers need to be dismantled so that companies can do as they please. It’s not simply the unions that need to be destroyed, but the laws for worker security in general. Of course, no advice from central bankers would be complete if it didn’t advocate that the government “immediately take measures to ensure a major overhaul of the public administration in order to improve administrative efficiency and business friendliness.” Trichet and Draghi wrote that it was “crucial” that the government take these actions “as soon as possible with decree-laws, followed by parliamentary ratification,” or, in other words: skip the democratic process because it takes too long, rule by decree, something Italy has a “proud” history of. All of this was demanded to be done before the end of September 2011. In an interview with an Italian paper, Trichet admitted that this was not the first time the ECB had sent such letters to governments (such as Greece), saying, “We have sent messages and we do that on a permanent basis, through various means, addressed to individual governments. We do not make them public.”
Indeed, the European Central Bank had demanded austerity measures be implemented by the governments of Greece, Ireland, Portugal, and Italy, and when Berlusconi submitted to the mandate from the central bankers, he complained that it made his administration look like “an occupied government.” A leading liberal MP in Italy, Antonio Di Pietro, said that, “Italy is under the tutelage of the EU, and a country under tutelage is not a free and democratic one.” An Irish MEP (Member of the European Parliament), Paul Murphy, stated that there had been a “massive shift away from democratic accountability since the start of the crisis,” and that: “There needs to be a check on the enormous power of the ECB, which is unelected, and has basically held a government to ransom.” Europe’s largest trade union federation, the European Public Sector Union, “accused the ECB of directing Italian fiscal and labour policy in secret,” which is, of course, true. The Deputy General Secretary of the federation, Jan Willem Goudriaan, said, “Europe cannot be governed through secret letters of bankers, officials or an unaccountable body.” EU officials, from Angela Merkel, Nicolas Sarkozy, to Herman Van Rompuy and Jean-Claude Trichet, have been increasing their calls for an “economic government” of Europe, tightening and deepening fiscal integration and proposing the creation of new council’s and organizations to impose sanctions on countries and “police the austerity measures of governments,” and even the creation of a European finance ministry. Paul Murphy stated that, “All these proposals, discussions about economic government, are about undermining democracy in order to impose a European shock doctrine… EU elites need to remove points of pressure that can be mounted on governments. If the mass of people are opposed to austerity, they can mount pressure on governments to hold that in check. So the only way it can then be imposed s undemocratically.” The head of a Belgian pro-transparency group stated that, “European powers [are] distancing themselves from voters while at the same time [there is] a growing tendency towards building closer relationships with corporate and specifically financial lobbies… These two trends are explosive and can only lead to a loss of legitimacy for the EU institutions.”
Shortly after, on August 12, the Berlusconi government was meeting to approve the new austerity package to meet the ultimatum from the ECB, amounting to a package of “fiscal adjustments” (i.e., spending cuts) of 20 billion euros in 2012 and 25 billion euros in 2013, with the spending cuts and tax increases to be “enacted immediately by decree, but subject to approval by parliament later,” just as Draghi and Trichet instructed. The rapid tax increases did much to damage even long-time supporters of Berlusconi who had promised that he would “never put their hands in the pockets of the Italian people.” Fiscal federalism was the policy of giving the various regions in Italy more control over their finances. With the new austerity package, the governor of Lombardy, Roberto Formigoni, stated, “It seems clear [fiscal] federalism has vanished.”
In mid-September, Berlusconi won final parliamentary approval for the 54 billion euro ($74 billion) austerity package, while police outside the parliament in Rome had to disperse protesters with tear gas. The German Economy Minister Phillip Roesler told a news briefing in Rome that, “The approval of the austerity package sends a signal of stability… I have respect for what Italy has done with its budget adjustment as this will benefit the whole euro area.” The legislation simply made legal the measures that Berlusconi’s government enacted through un-democratic decree the month before, and were formalized in exchange for the European Central Bank bond purchases which helped to reduce Italy’s borrowing costs. Silvio Peruzzo, an economist at the Royal Bank of Scotland, stated that the plan’s passage is a “very welcome step,” but that the slowing global economy still cast doubts on whether Italy could “meet its fiscal targets and will also render additional corrective measures [austerity packages] very likely.” Even with the endorsement and backing of the ECB, said Peruzzo, Italy’s debt remained “under pressure, which is indicative of a well-rooted lack of confidence in Italy and in the European policies to tackle the crisis.” One the plan was approved, said Italian Finance Minister Tremonti on September 10, “If there are things to change in our growth measures we will, and if there are things to add, we will.”
The Economist reported on the new austerity package, noting that while Berlusconi had approved the austerity package in Italy, designed to cut roughly 45.5 billion euros from the deficit by the end of 2013, he almost immediately back-peddled on 7 billion euros worth of spending cuts and tax increases, “notably a tax on high earners that would have hurt his natural supporters,” meaning, rich people. Thus, even as the package went to the Senate in early September, Berlusconi was fine-tuning the details. Thus, noted the Economist, “the markets [were] again registering alarm,” and at the same time, Italy’s largest and most militant trade union federation, the CGIL, called for a one-day strike in opposition to the austerity package, “protesting over a clause making it easier to dismiss workers and, more generally, over a budget that the CGIL’s leader, Susanna Camusso,” referred to as “unjust because it attacks the weakest.” This further worried “the market” and “investors.” The Economist wrote that: “Mr. Berlusconi had consistently failed to react unless bullied. His first emergency budget in July followed a telephone call from the German chancellor, Angela Merkel,” while the second was of course at the prompting of the ECB.
By October of 2011, the austerity measures in Italy had been wreaking havoc, as non-profit organizations lose their funding and had major bureaucratic obstacles put in their way for community projects, such as the Associazione Obiettivo Napoli, which ran two programs working with children in difficulty in Naples since 1998, helping them clean up local communities and provide counseling. As central government funding to town halls had been cut, organizations like Obiettivo Napoli, “which sit uneasily somewhere between education, welfare and rehabilitation budgets, have been the first to suffer.” Pietro Varriale, who works with the organization, commented on further obstacles put in their way: “They’re saying we need a second degree in education science to be able to do this work… It’s crazy. I have 15 years experience in this field, most of the team likewise, and we all have first degrees. A second degree is going to cost people a fortune, really a lot of money, and there’s no help or grant for that kind of thing. We’ve been given till 2013 to conform.” To add to that, the city of Naples simply stopped paying the bills for the organization, which had to then borrow money from a bank, forcing the employees such as Pietro to have to take on jobs working at bars, waiting tables, picking tomatoes and other piecemeal projects while they continue to work with the association being unpaid: “You keep going because of the kids, the relationships you build up.”
Giancarlo Di Maio, a 23-year old university graduate in Naples working at a secondhand bookshop told the Guardian that, “University here is like a car park. You stay there as long as you can, because there’ll be nothing to do when you come out,” referring to the lack of jobs for youth. As he was employed, he explained: “Every morning, I wake up with a smile… How fortunate am I? Because otherwise, the only other work around here is black. The black economy is a huge, monumental issue for Italy.” His friends might make 30 euros for 10 hours working in a bar, or 20 euros for a night waiting tables in a restaurant. Di Maio, who works at a bookshop owned by his father, said that, “I know plenty of people in their 30s, even some in their 40s, still living with their parents… That’s not normal. For me, that’s one of the biggest problem [sic] in Italy – opportunities, any kind of prospects for young people.” When asked about Italian politics, he replied, “We have the worst political class in Europe, no question… Twenty years of Berlusconi, and not a single reform, nothing for the unemployed, nothing to address the economic crisis. Instead we talk about his sex life… we have a political class who do nothing. They don’t have solutions, and even if they did they wouldn’t try to do anything. They just speak air, it’s all they can do. Posturing.” Expressing some hope at the Occupy movement, though lamenting how it turned to violence in Italy, he explained that people were “finally starting to get angry. They are beginning to see that really, we can’t carry on like this. Italy really is sick. We can’t pretend to be the doctor any more; we need curing ourselves.”
The Technocratic Coup
By early October 2011, it was clear that the “markets” were not satisfied with Berlusconi’s efforts at implementing a program of social genocide (fiscal austerity) which was to their liking. Thus, on October 5, the international ratings agency Moody’s cut Italy’s credit rating for the first time in two decades, adding to the downgrading from Standard & Poor’s two weeks prior. The Italian government responded that the actions of the ratings agencies were “politically motivated.” Even Moody’s acknowledged that the political situation within Italy played a part in its decision, including Berlusconi’s sex scandals, and the growing protests against the austerity measures.
The effect of the downgrades is to make Italian bonds (government debt) less attractive to buy (as it is a riskier investment), and thus, Italy would have to pay higher interest rates. As a result of that, as we have seen with Greece, this makes the country’s overall debt larger (as it amounts to borrowing money to pay back borrowed money), except with the higher yields (interest rates), the future payments will be even more costly, likely to create potential for a bailout (again, just taking more debt to pay interest on older debts). All the while, the overall debt to GDP ratio increases, and austerity measures become the “conditions” for receiving bailouts, and the country is essentially taken over by the IMF, the ECB, and the EC (named the “Troika”), as occurred in Greece. This creates a permanent spiral of expanded debt, economic crisis, and social genocide. This is what is often called “market discipline.”
In mid-October, opposition to Berlusconi’s harsh austerity measures from within Italy was increasing, just as “market pressure” and EU-opposition from outside Italy was building against Berlusconi for his austerity measures being perceived as ‘too little, too late.’ Nine members of Berlusconi’s own coalition said the austerity package “unfairly targets the middle class and fails to tackle Italy’s massive tax evasion problem.” Susanna Camusso, the head of Italy’s largest and most militant labour federation, CGIL, said that a strike is the only way to “change the inequity of this package.” During a global “day of rage” partly inspired by the Occupy Wall Street movement in the United States and the Indignados movement in Spain, October 15 saw various Occupy and other protests erupt around the world, in 950 cities in 80 different countries. In Italy, Rome saw roughly 200,000 protesters come out into the streets, protesting against the austerity measures, the government, the EU, the ECB and the IMF. The protests erupted into violence as hundreds of those assembled began fighting with riot police, who were using tear gas and water cannons against the protesters, and several hundred erupted in urban rebellion (what is often called “riots”) in which banks were destroyed, they set cars and garbage bins on fire, hurled rocks, bottles, and fireworks at the police who continually charged the crowd. Roughly two dozen demonstrators were injured, with one reported to be put in critical condition, and at least 30 riot police were injured.
As Berlusconi’s own government began to fracture in the face of the austerity package, disagreeing on what and how and if to cut, one of Berlusconi’s main coalition partners, the center-right Northern League, hinted that new elections were a possibility. Considering the popularity of the anti-austerity leftist leader Nichi Vendola, this was perhaps too much to bear. European leaders Angela Merkel and Nicolas Sarkozy lost their patience, and in late October, demanded that Berlusconi move forward with the austerity package. In a series of EU summits in late October on handling the economic crisis, discussing specifically the plan to boost the funds of the European Financial Stability Facility (EFSF), there was concern, reported Der Spiegel, “that the current size of the (recently expanded) fund isn’t sufficient should additional countries, particularly Spain and Italy, be infected with debt contagion.”
Following these meetings, it was made “abundantly clear” to the Italians that their “leadership is no longer taken seriously.” Italian papers and TV shows were overwhelmed with covering the “condescending smile” of Angela Merkel to Berlusconi, and comments made by Sarkozy. Merkel and Sarkozy and other EU leaders told Berlusconi in the talks that he had to present a plan within three days “for reducing Italian debt more quickly than current plans call for.” European Council President Herman Van Rompuy said that Berlusconi had “promised to do so.” The following evening, Berlusconi stated, “No one is in a position to be giving lessons to their partners.” European leaders were frustrated that even the austerity package passed earlier in the summer had not been fully implemented, and the government’s stability was continually threatened over debating each new measure. The European Commissioner for Economic and Monetary Affairs, Olli Rhen, said that all the details of the new plan were “unclear.” With the EU summits proposing increasing the EFSF bailout fund from 440 billion euros to 1 trillion, a central feature to the demands of the EU leaders was that countries like Italy impose more stringent austerity measures. As Der Spiegel reported, “A clear Italian commitment to austerity is a key component of that plan.” There was then a good deal of conjecture over the possible departure of Berlusconi. The Italian paper Corriere della Serra reported that Angela Merkel called the Italian President Giorgio Napolitano the previous week “to discuss concerns about Italy’s political leadership.”
In fact, Angela Merkel did make such a phone call to Italy’s president Napolitano in October, violating “an unwritten rule” for Europe’s leaders “not to intervene in one another’s domestic politics.” But this is a new, changing EU, one in which democracy – even the withering façade Western governments maintain – simply no longer matters. Merkel was “gently prodding Italy to change its prime minister, if the incumbent – Silvio Berlusconi – couldn’t change Italy.” The Wall Street Journal reported on the events that led to this incident, explaining that at the annual meeting of the IMF in September, China, Brazil, and the U.S. “berated” Europe for its small bailout fund, and told Europe to borrow “hundreds of billions of euros from the ECB,” something Merkel had long been against, and which was refused by Jens Weidmann of the German central bank, explaining that the bailout fund “was an arm of the governments… and lending to governments was against the ECB’s charter.” On October 19, Sarkozy left his wife who was in labor at a clinic in Paris to fly to Frankfurt to confront Jean-Claude Trichet at a party being held for the President of the ECB to honour him as he prepared to leave the ECB at the end of the month (to be replaced by the president of the Central Bank of Italy, Mario Draghi). Sarkozy argued that the ECB needed to intervene in the bond markets (buying government debt), stating that, “Everything else is too small.” Trichet said that it wasn’t “the ECB’s job to finance governments.”
The ECB had engaged already in certain bond purchases, which “had caused a political backlash in Germany,” and as Trichet said, “I did a bit, and I was massively criticized in Germany.” Merkel, who was present during the shouting match between Trichet and Sarkozy, was frustrated at Sarkozy’s pressure on Trichet, as she had always opposed the ECB printing money to handle the crisis, telling Trichet, “You’re a friend of Germany.” It was the following day, on October 20, that Merkel made her “confidential” phone call to the Italian President in Rome, “the man with authority to name a new prime minister if the incumbent were to lose parliament’s support.” President Napolitano informed Merkel that it was “not reassuring” that Berlusconi had only “recently survived a parliamentary vote of confidence by just one vote.” Merkel then thanked Napolitano for doing what was “within your powers” in promoting reform. Within days, Napolitano began “sounding out Italy’s political parties to test the support for a new government if Mr. Berlusconi couldn’t satisfy Europe and the markets.” It no doubt did not help Berlusconi when he wrote in an Italian paper in late October that the word austerity “isn’t in my vocabulary.”
In early November, at a G20 meeting in Cannes, President Obama and other leaders were “effectively ordering Silvio Berlusconi to accept surveillance of Italy’s austerity measures by the International Monetary Fund,” reported the Guardian. Berlusconi was advised by Merkel, Sarkozy, Herman Van Rompuy and other EU leaders the previous week to come to the G20 with “a specific austerity package,” but due to divisions within his cabinet, Berlusconi “arrived empty-handed.” It was reported that Berlusconi would likely not survive a vote of confidence in the Italian parliament set for the following week. The ECB had been purchasing Italian bonds since August in order to push the yields lower, which dropped to below 5%, but by early November they had been driven up to 6.5%, “levels that make it difficult to pay back debt.” Italian President Napolitano had been holding meetings with party leaders to discuss the possibility of “constructing an interim government if Berlusconi’s collapses.” The G20, which was discussing the possibility of adding $300 billion to the IMF’s bailout fund of $950 billion, and G20 leaders pressured Italy “to sign up to a more specific austerity package or else the US and other countries would not put extra funds into the IMF.”
Just prior to heading to the G20 meeting, Berlusconi had attempted to issue a decree which would pass various austerity measures, “thus bypassing the parliament,” but, reported the EUobserver, he “was held back by [President] Giorgio Napolitano,” as well as the Finance Minister Giulio Tremonti. Instead, Berlusconi was pressured to attempt an amendment to a “law for stability” to be approved the following week, at which time he would likely face a vote of confidence. Enrico Letta, the deputy general secretary of the center-left Democratic Party (PD), the main opposition party, said that, “We think that next week will be a week in parliament where we try to force the situation if Berlusconi does not resign before.”
As Jean-Claude Trichet retired from the ECB at the end of October, and Mario Draghi left the Bank of Italy to take up his new job as President of the ECB, the newly-appointed governor of the Bank of Italy, Ignazio Vasco, said that Italy “needed to take urgent action to boost confidence in the economy and initiate structural reforms,” insisting that the commitments already given to the EU in a “letter of intent” in late October (following Berlusconi being castigated by Merkel and Sarkozy), “must be honoured quickly and consistently.” At the G20 conference, Berlusconi agreed under pressure to have the IMF oversee Italy’s implementation of austerity measures, following late-night talks with G20 leaders. Jose Manuel Barroso, President of the European Commission (EC), said that, “Italy had decided on its own initiative to ask the IMF to monitor. I see this as evidence of how important Italy’s commitment to reform is.” The EC would also monitor Italy’s progress, and was set to visit Italy the following week to undertake a more detailed study. One EU source told the Telegraph that, “We need to make sure there is credibility with Italy’s targets – that it is going to meet them. We decided to have the IMF involved on the monitoring, using their own methodology, and the Italians say they can live with that.” The chief financial officer of Commerzbank, Eric Strutz, said that, “The whole stability of Europe depends on whether Italy gets its act together.”
On November 8, Berlusconi suffered a party revolt in parliament which failed to deliver him a majority, and would likely lead to a vote of non-confidence a few days later. Upon this defeat, Berlusconi announced that he would resign as Prime Minister “as soon as parliament passed urgent budget reforms demanded by European leaders.” President Napolitano announced that he would begin consultations on the formation of a new government, and stated that he would prefer a “technocrat or national unity government.” At the same time, the “markets” had pushed Italy’s bond yields (debt interest) to nearly 7%, figures that saw Greece, Ireland, and Portugal getting bailouts. The leader of the main opposition Democratic Party (PD), Pier Luigi Bersani, said, “I ask you, Mr. Prime Minister, with all my strength, to finally take account of the situation… and resign.” Berlusconi and some of his close allies, however, warned that appointing a technocratic government, the option which was said to be favoured by “markets,” would amount to an “undemocratic coup.” Naturally, that’s just what happened.
Writing for the Guardian, John Hooper suggested that one of four scenarios would take place upon the event of Berlusconi’s resignation: one envisions Berlusconi leaving but the right gaining a broader majority, specifically under Umberto Bossi’s Northern League, who was in Berlusconi’s coalition but had advised him to resign, and was pushing for him to be replaced with the next in command in Berlusconi’s party, Angelino Alfano; another scenario envisioned a “grand coalition,” or a “government of national emergency or salvation,” bringing together all the parties; a third scenario had Italy calling an election, urged by both Berlusconi and Bossi; or the fourth option, “a cabinet of technocrats,” which Hooper wrote was “favoured by the markets and the Italian centre left,” which would consist of “a government filled with specialists who could pass the unpalatable legislation needed to revive Italy’s flagging economy without having to worry about re-election.” This happened before in Italy, when Berlusconi’s government fell in 1994, at which time he was replaced by Lamberto Dini, a central banker, who headed a government of “professors, generals and judges.” In this scenario, suggested Hooper, the likely prime minister would be Mario Monti.
Upon Berlusconi’s failure to achieve a minority during the budget vote on November 8, many officials from the financial community began making their observations, such as Jan Randolph, the head of sovereign risk analysis at HIS Global Insight, who said that, “Berlusconi has effectively lost political capital to carry the country through a period of austerity and structural reform,” and that, “Berlusconi will have to resign.” He went on to suggest that it was possible “that a broad National Unity government headed by a respected technocrat like ex-EU commissioner Mario Monti could be formed.”
As Berlusconi officially resigned on the night of November 12, 2011, he left the president’s palace through a side door as a crowd of over 1,000 people outside yelled, “buffoon,” “Mafioso,” and for him to “face trial.” A poll from early November reported that 71% of Italians favoured his resignation, and upon hearing of his official resignation, the crowd erupted in roars of “Halleluja.”
On November 16 of 2011, Mario Monti was appointed as Prime Minister of Italy. Monti accepted the mandate to form a new government, and was expected to appoint technical experts as opposed to politicians to his cabinet. President Napolitano told Italian politicians that, “it is a responsibility we perceive from the entire international community to protect the stability of the single currency as well as the European frame work.” Berlusconi’s political party, the People of Liberty, said it would accept a Monti government for a short while before elections would have to be scheduled, and Berlusconi referred to his resignation as “an act of generosity.”
Mario Monti is an economist and academic who served as European Commissioner for the Internal Market, Services, Customs and Taxation from 1995 to 1999, and European Commissioner for Competition from 1999 to 2004. Monti is founder and Honorary President of Bruegel, a European think tank he launched in 2005, based in Belgium, and which represents the interests of key European elites. Monti has also been a member of the advisory board of the Coca-Cola Company, and was an international advisor to Goldman Sachs, was a former member of the Steering Committee of the Bilderberg Group, having previously attended the meeting in Switzerland in June of 2011, and was European Chairman of the Trilateral Commission until he resigned when he became Prime Minister of Italy.
Monti’s think tank, Bruegel, represents key elite European interests. The Chairman of the Board of Bruegel is Jean-Claude Trichet, the former President of the European Central Bank (ECB) from 2003 to 2011, who is also a member of the board of directors of the Bank for International Settlements (BIS), and has joined the boards of a number of major corporations, including EADS. Other board members of Bruegel include: Jose Manuel Campa Fernandez, who was the Spanish Secretary of State for Economic Affairs at the Ministry of Economy and Finance from 2009 to 2011, and has been a consultant for the European Commission, the Bank of Spain, the Bank for International Settlements (BIS), the Federal Reserve Bank of New York, the Inter-American Development Bank, the International Monetary Fund and the World Bank; Anna Ekström, the president of the Swedish Confederation of Professional Associations, Saco, and formerly the Swedish State Secretary for the Ministry of Industry, Employment and Communication; Jan Fisher, Vice President of the European Bank for Reconstruction and Development (EBRD), former Prime Minister of the Czech Republic; Vittorio Grilli, the Deputy Minister of the Ministry of Economy and Finance of Italy (whom Monti appointed to his technocratic government in November of 2011), and a former Managing Director at Credit Suisse First Boston; Wolfgang Kopf, Vice President at Deutsche Telekom AG; Rainer Münz, head of Research and Development at Erste Group and Senior Fellow at the Hamburg Institute of International Economics (HWWI), former consultant to the European Commission, the OECD, and the World Bank; Jim O’Neill, Chairman of Goldman Sachs Asset Management; Lars-Hendrik Röller, the Director General of the Economic and Financial Policy Division of the German Federal Chancellery, and is President of the German Economic Association; Dariusz Rosati, former consultant economist at Citibank, former Minister of Foreign Affairs for Poland, former adviser to the President of the European Commission, and was a member of the European Parliament from 2004 to 2009; and Helen Wallace, a British academic expert on European integration.
In October of 2009, Mario Monti was asked by the President of the European Commission Manuel Barroso to draw up a report on how the EU should re-launch its single market. Barroso advised that the report, “should address the growing tide of economic nationalism and outline measures to complete the EU’s currently patchy single market.” Mario Monti was President of the Bocconi University at the time he was asked to write the report. In May of 2010, Monti produced the report and officially handed it in to European Commission President Barroso. The report recommended ways to fight the potential of economic nationalism and to preserve and protect the regional bloc and to advance the process of integration, with Monti arguing that, “There is now a window of opportunity to bring back the political focus of the single market.” The report eventually became the EU’s Single Market Act of 2011.
After becoming the technocratic and unelected Prime Minister of Italy, Monti quickly appointed his new cabinet, of which more than a third of the 17-member cabinet consisted of professors and other technocrats. The cabinet position of Minister of Economic Development, Infrastructure and Transport was given to Corrado Passera, the chief executive of Italy’s largest bank, Intesa Sanpaolo. Passera told the Financial Times upon his appointment as “superminister” that, “If you want to build the wide consensus that is needed, we have to share sacrifices and benefits among all the segments of society with a balanced set of actions and with the right mix of austerity and development programmes.” British hedge fund manager Davide Serra stated, “Monti and Passera are the right guys for the job. They are the dream team.” Upon appointing his new technocratic government, Monti declared: “We feel sure of what we have done and we have received many signals of encouragement from our European partners and the international world. All this will, I trust, translate into a calming of that part of the market difficulty which concerns our country.” On the lack of party representatives in his cabinet, Monti commented, “The absence of political personalities in the government will help rather than hinder a solid base of support for the government in parliament and in the political parties because it will remove one ground for disagreement.”
A former ambassador who worked with Monti when he was an EU Commissioner recalled Mario’s style of governance, stating, “He didn’t have a very Italian way of going about things… His nickname in those days was ‘The Italian Prussian’.” An article in Reuters described Monti as “a convinced free marketeer with close connections to the European and global policy making elite, Monti has always backed a more closely integrated euro zone,” and went on to mention his leadership positions within the Bilderberg Group of “business leaders” and “leading citizens” and the Trilateral Commission, which “brings together the power elites of the United States, Europe and Japan.” Monti’s government would be given roughly 18 months to push through “reforms” and austerity measures, as another election would not be due until 2013. However, as one outgoing minister commented in November of 2011, “The decisions which Monti will take must pass in parliament and I think that with such a heterogeneous majority he will have many problems. I believe this solution will lead to many problems.”
Monti of course received abundant praise from Europe’s leaders on becoming the new unelected technocratic Prime Minister of Italy. An article by Tony Barber in the Financial Times explained that Italian party politics was simply too problematic, as: “Even a centre-left government with a mandate from the voters would find it hard to maintain the unity and resolution required to implement the unpopular austerity measures and structural economic reforms demanded by Germany, France, the European Commission, the European Central Bank and the International Monetary Fund.” And with the prospect of labour resistance from workers and pensioners, “it is easy to see why Europe’s leaders were eager for Mr Monti to inherit the premiership.” Thus, wrote Barber, “technocracy has an irresistible appeal.” Mario Monti himself had acknowledged that “irresistible appeal” in August of 2011, when he wrote an article in a major Italian paper advocating the formation of a “supranational technical government” which would make all the major decisions in order to “remove the structural constraints to growth,” and opined that “an Italy respected and authoritative… would be of great help to Europe.” And as it turned out, a great help to Monti.
In early December of 2011, after forming his cabinet and being approved by Italy’s lower chamber of Parliament with a rare majority, Mario Monti received the endorsement of Angela Merkel and Nicolas Sarkozy, declaring their “absolute trust” in Monti and in “his structural changes” to his governing of Italy. Monti, upon assuming power, warned Italians in a speech that, “It is not going to be easy, sacrifice will be required.” As Monti’s “technocratic government” is full of appointments from the ruling class, including bankers and other executives, many in Italy were raising concerns that this suggested an inherent conflict of interest in his government, as those who helped create the crisis are brought in to solve it, a highly political government, despite all the claims of an apolitical ‘technocracy’ (technocracies are always political entities, but instead of pushing party ideologies, they push ultra-elite ideologies in the management and maintenance of society). Monti replied that, “There is no conflict of interests… The fact that many of us have played a role in the institutions before doesn’t mean that we will not be totally transparent.” And with that note, Monti appointed Carlo Malinconic as undersecretary for publishing affairs, after having previously served as president of the Italian Federation of Publishing and Newspapers.
Writing in the journal of the Council on Foreign Relations, Foreign Affairs, Jonathan Hopkin, a professor of comparative politics at the London School of Economics, commented that the replacement of Berlusconi with Monti “marks a new stage in the European financial crisis,” in which “the crisis now seems to be wiping out democratically elected governments.” Largely under pressure from bond markets, “Italian politicians have opted to hand power to technocrats, expecting that they will somehow enjoy greater legitimacy as they impose painful measures on an angry population.” Hopkin stated: “This will not work.”
In early November, as democratically-elected governments in Greece and Italy were replaced with unelected and unaccountable technocratic governments, essentially run by and for the European Union and global banks, Tony Barber, writing in the Financial Times, suggested that this is but one of several responses to the economic crisis. Specifically, this response “involves the surgical removal of elected leaders in Greece and Italy and their replacement with technocratic experts, trusted within the EU to pass economic reforms deemed appropriate by policymakers in Berlin, the bloc’s top paymaster, and at EU headquarters in Brussels.” Barber referred to the “sidelining of elected politicians in the continent that exported democracy to the world” as a “momentous development.” In short, “eurozone policymakers have decided to suspend politics as normal in two countries because they judge it to be a mortal threat to Europe’s monetary union.” Thus, these policymakers “have ruled that European unity, a project more than 50 years in the making, is of such overriding importance that politicians accountable to the people must give way to unelected experts who can keep the show on the road.” In Greece, the government was put under the technocratic leadership of Lucas Papademos, a former vice president of the European Central Bank, and upon accepting his appointment, stated: “I am confident that the country’s participation in the eurozone is a guarantee of monetary stability.” In Italy, Mario Monti came to power, a technocrat who “is revered in Brussels as one of the most effective commissioners for competition and the internal market that the EU has known.” One prominent Italian banker commented: “We need a strong national unity government for one to one and a half years to do what the politicians haven’t had the courage to do.”
Running the ECB can be such a ‘Draghi’
In late October of 2011, at a gala event to mark the end of Jean-Claude Trichet’s eight years as president of the European Central Bank, Mario Draghi, the governor of the Bank of Italy, who was selected to take over for Trichet at the start of November, was “working the room” of high-powered European elites, including Angeal Merkel, and IMF Managing Director Christine Lagarde. Between 1984 and 1990, Draghi was the Italian Executive Director at the World Bank, and in 1991, he became the director general of the Italian Treasury until 2001. Between 2002 and 2005, Draghi was the Vice Chairman and Managing Director of Goldman Sachs International, thereafter becoming the governor of the Bank of Italy from 2006 until 2011, also putting him on the Governing Board of the European Central Bank and the Bank for International Settlements (BIS). Draghi is not simply one of the individuals who has been most responsible for handling and managing the economic crisis, but he also played an important role in causing it. As Vice Chairman of Goldman Sachs, and in Italy at the Treasury and the central bank, “Draghi was a proponent of nations and other institutions like pension funds using derivatives to more efficiently manage their liabilities.” This means that Draghi advised that governments should essentially hide their debts in the derivatives market, where they would not be viewed as liabilities, but rather, transactions. These “transactions” were very popular in Greece and Italy, and had a great deal to do with accumulating and hiding the massive debts of these countries.
When Draghi led the Italian Treasury in the 1990s, he “oversaw one of the largest European privatization efforts ever and paved the way for Italy’s entry into the euro,” earning him the nickname, “Super Mario.” Italy liberalized its financial markets, allowing for massive speculation, derivatives, and other banking excesses, and he privatized roughly 15% of Italy’s economy. While Italian governments came and went during this period, Draghi always remained. While both Draghi and Goldman Sachs said that “Super Mario” did not have anything to do with the especially controversial Greece-Goldman Sachs transactions, one Goldman Sachs executive in Europe, “who was not authorized to speak publicly,” told the New York Times that, “Mr. Draghi had discussed similar initiatives with other European governments.” When asked about his involvement at Goldman Sachs, Draghi once replied, “I was not in charge of selling stuff to the governments… In fact, I worked in the private sector even though Goldman Sachs expected me to work in the public sector when I was hired.” However, in a paper which Draghi wrote in 2002 just a couple months after being hired by Goldman Sachs, at which his job description was “to win investment banking business from European governments,” Draghi argued in favour of governments using derivatives “to stabilize tax revenue and avoid the sudden accumulation of debt,” which the New York Times politely described as “faithful to the spirit” of the Goldman-Greece deal.
In an interview with the Financial Times in December of 2011, European Central Bank president Mario Draghi reflected upon the financial crisis and the actions taken to manage it. He explained that the ECB’s long-term refinancing operation (a half-trillion euro bank bailout) was not designed to give banks an incentive to buy government bonds from the “periphery” nations, but rather, that, “the objective is to ease the funding pressures that banks are experiencing,” and that the banks “will then decide what the best use of these funds is.” Draghi stated that, “we don’t know exactly” what banks were doing with the money, but that, “the important thing was to relax the funding pressures.” Draghi reiterated that the banks “will decide in total independence what they want to do.”
It’s interesting to note that when governments get bailouts, they are told what and how to spend the money, and are forced to impose austerity measures that destroy the social fabric and punish the populations of their countries, and then, of course, have to pay back the money at exorbitant interest rates; but when banks get a half-trillion euro bailout, the banks will “decide what the best use” of the money is, and where it goes is not important, it’s only important to “relax” the pressure on the banks, who will repay the debt over a long-term period (3 years) with extremely low interest (averaging 1%). So people get pressure, and banks get pressure “relaxed.”
Draghi told the Financial Times that what is needed most is to “restore confidence,” and for this, there are four answers. The first one “lies with national economic policies, because this crisis and this loss of confidence started from budgets that had got completely out of control.” The second answer, explained Draghi, “is that we have to restore fiscal discipline to the euro area,” which means to impose austerity, “and this is in a sense what last week’s EU summit started [in mid-December 2011], with the redesign of the fiscal compact.” The third answer “is to have a firewall in place which is fully equipped and operational,” meaning a massive bailout fund, which “was meant to be provided by the EFSF.” The fourth answer, according to Draghi, is for countries “to undergo significant structural reforms that would revamp growth,” implying things like liberalization, privatization, and further deregulaiton. When Draghi was asked about the critics of the fiscal compact who suggest that it amounts to a “stagnation and austerity union,” Draghi replied that, “they are right and wrong at the same time.” Draghi repeated the mantra of pro-austerity voices, who always suggest with no historical evidence to support, that there is “no trade-off between fiscal austerity, and growth and competitiveness.” However, Draghi contended, “I would not dispute that fiscal consolidation [austerity] leads to a contraction in the short run.” The correspondent with the Financial Times asked: “But these austerity programmes are very harsh. Don’t [you] think that some countries are really in effect in a debtor’s prison?” Draghi replied: “Do you see any alternative?”
In an interview with the Wall Street Journal in February, Mario Draghi warned European countries “that there is no escape from tough austerity measures and that the continent’s traditional social contract is obsolete.” Draghi said that Europe’s social model was “already gone,” and that the only way to return to “long-term prosperity” was “continuing economic shocks [that] would force countries into structural changes in labor markets and other aspects of the economy.” As European people were suffering through the increased austerity measures, Draghi warned that, “Backtracking on fiscal targets would elicit an immediate reaction by the market.” This of course implies that the market has the ‘right’ to determine the fate of Europe’s people. For Draghi, “austerity, coupled with structural change, is the only option for economic renewal.” The European Commission, headed by Jose Manuel Barroso, agreed with Draghi, stating that despite forecasting a deepened recession brought on by austerity measures, governments “should be ready to meet budgetary targets.” Simon Johnson, the former chief economist of the IMF, said that Draghi was “just sugarcoating the message.” Johnson explained: “A lot of this structural reform talk is illusory at best in the short run… but it’s a better story than saying you’re going to have a terrible 10 years.”
In the interview, Draghi commented on the “positive changes” which had been taking place in the previous few months: “There is greater stability in financial markets. Many government shave taken decisions on both fiscal consolidation and structural reforms. We have a fiscal compact where the European governments are starting to release national sovereignty for the common intent of being together.” When Draghi was asked what his view was “of these austerity policies in the larger strategy right now, forcing austerity at all costs,” Draghi replied: “There was no alternative to fiscal consolidation, and we should not deny that this is contractionary in the short term.” Then, he added, it was necessary to promote growth, “and that’s why structural reforms are so important.” The interviewer asked Draghi what the “most important structural reforms” were for Europe at that time. Draghi replied:
In Europe first is the product and services market reform. And the second is the labour market reform which takes different shapes in different countries. In some of them one has to make labour markets more flexible and also fairer than they are today [in other words: more easily exploited]. In these countries there is a dual labour market: highly flexible for the young part of the population where labour contracts are three-month, six-month contracts that may be renewed for years. The same market is highly inflexible for the protected part of the popuation where salaries follows seniority rather than productivity. In a sense labour markets at the present time are unfair in such a setting because they put all the weight of flexibility on the young part of the population.
When central bankers and politicians and others talk about “labour flexibility,” what they really mean is “worker insecurity.” This was bluntly stated by Alan Greenspan back when he was Governor of the Board of the Federal Reserve System, when in testimony before the US Senate in 1997, he discussed how America’s “favorable” economy was constructed. Greenspan discussed how wage increases for workers did not keep pace with inflation, which was, he explained, “mainly the consequence of greater worker insecurity.” He elaborated: “the willingness of workers in recent years to trade off smaller increases in wages for greater job security seems to be reasonably well documented.” Greenspan credited the creation of “worker insecurity” with technological changes, corporate restructuring and downsizing, as well as “domestic deregulation.” The New York Times reported on this, stating that Greenspan described “job insecurity” as “a powerful recent force in the American economy,” and that Greenspan, “clearly elevated this insecurity to major status in central bank policy.” How does worker insecurity influence central bank policy? The article explained: “Workers have been too worried about keeping their jobs to push for higher wages… and this has been sufficient to hold down inflation without the added restraint of higher interest rates.” However, Greenspan warned that even though job insecurity continues to rise, once “workers become accustomed to their new level of uncertainty, their confidence may revive and the upward pressure on wages resume.”
In his interview with the Wall Street Journal, Mario Draghi was asked if “Europe will become less of the social model that has defined it,” to which Draghi replied: “The European social model has already gone.” Draghi, repeating the mantra of so many in power, stated that, “there is no feasible trade-off between” austerity and growth: “Fiscal consolidation is unavoidable in the present set up, and it buys time needed for the structural reforms. Backtracking on fiscal targets would elicit an immediate reaction by the market.” In terms of “progress” – as Draghi defines it – throughout the crisis, he praised the fiscal compact treaty as “a major political achievement because it’s the first step towards a fiscal union. It’s a treaty whereby countries release national sovereignty in order to accept common fiscal rules that are especially binding, and accept monitoring and accept to have these rules in their primary legislation so they are not easy to change. So that’s a beginning.”
In further testimony in 2000, Alan Greenspan again addressed the issue of “worker insecurity,” which he stipulated was the “consequence of rapid economic and technological change,” which in turn created a “fear of potential job skill obsolescence.” Greenspan stated that, “more workers currently report they are fearful of losing their jobs than similar surveys found in 1991 at the bottom of the last recession,” and that, “greater workers insecurities are creating political pressures to reduce fierce global competition that has emerged in the wake of our 1990s technology boom.” While Greenspan admitted that “protectionist policies” would “temporarily reduce some worker anxieties,” he felt this was a bad idea, as “over the longer run such actions would slow innovation and impede the rise in living standards.” Greenspan elaborated:
Protectionism might enable a worker in a declining industry to hold onto his job longer. But would it not be better for that worker to seek a new career in a more viable industry at age 35 than hang on until age 50, when job opportunities would be far scarcer and when the lifetime benefits of additional education and training would be necessarily smaller?.. These years of extraordinary innovation are enhancing the standard of living for a large majority of Americans. We should be thankful for that and persevere in policies that enlarge the scope for competition and innovation and thereby foster greater opportunities for everyone.
This is called “labour market flexibility.” Of course, as Greenspan was full of praise for the fact that “job insecurity” is a necessary factor in “enhancing the standard of living for a large majority of Americans,” which “fosters greater opportunities for everyone,” what he really meant was that it benefits a tiny minority and creates better opportunities for exploitation. Ironically, this wonderful “boom” in the economy turned out to be a bubble, and it popped within a year of his giving this speech, and then of course, he resorted to building up the housing bubble thereafter… and we know how that went: more worker insecurity, more labour market flexibility, and thus, more benefits to a tiny minority and more opportunities for exploitation and profits. Isn’t the “free market” wonderful?
In April of 2012, Mario Draghi advised the eurozone to adopt a “growth compact” in order to boost economic prospects as he “scaled back his hopes for an early economic rebound,” stating that the eurozone bloc was “probably in the most difficult phases” in which the austerity measures were “starting to reverberate its contractionary effects,” he told the European Parliament. Austerity had, according to Draghi, “taken a larger than expected toll.” A “growth pact” was promoted by the front-runner in the French presidential elections, Francois Hollande, who would go on to win the May 6 elections against Sarkozy. Hollande had called for a “new Europe” stressing “solidarity, progress and protection,” warning against a North-South split in the EU countries. Angela Merkel also approved of Draghi’s call for a “growth pact,” agreeing that austerity was not “the whole answer” to the crisis, but insisted that growth would be “in the form of structural reforms,” which implies liberalization and privatization. She added: “We need growth in the form of sustainable initiatives, not simply economic stimulus programmes that just increase government debt.” While acknowledging the “economic weakness” created by the austerity packages across Europe, Draghi continued to say that, “Europe’s leaders should stay the course on fiscal consolidation.”
European leaders were quick to endorse the calls from Draghi for a “growth pact” for Europe, including Angela Merkel in Germany, and France’s new Socialist president, Fancois Hollande, as well as EC President José Manuel Barroso. Following Draghi’s suggestion, Barroso stated that, “Growth is the key, growth is the answer.” Francois Hollande commented in references to Draghi’s proposal, “He doesn’t necessarily have the same measures in mind as me to foster growth,” as Draghi’s position was closer to that of Angela Merkel, who viewed the pact as consisting of “structural reforms,” not a stimulus which would “again increase national debt.” An analyst at the Cutch bank ING said: “For the ECB, a growth compact does not mean more fiscal stimulus,” which is, of course, only reserved for banks, not people. Instead, stated the analyst, Carsten Brzeski, it entails “structural reforms with a vision.”
In May, this vision was publicly endorsed by Jorg Asmussen, the governor of the Bundesbank (the German central bank), and a member of the Executive Board of the European Central Bank, and was just previously the deputy finance minister of Germany. In a speech on May 21, Asmussen stated that, “we need both” austerity and growth, but that: “Talking about more growth does not mean moving away from the fiscal policy strategy pursued so far. It is not a matter of boosting growth over the next one to two quarters with credit-financed spending programmes, but of increasing potential growth. No one is against growth. The crucial and rather difficult question to answer is how, in ageing societies, to increase potential growth.” As to the question of ‘how’, Asmussen suggested three main components: product market reforms, labour market reforms, and financing of reforms. Product market reforms could include, according to Asmussen, “the completion of the internal market for services… [as] 70% of the EU’s GDP comes from services, but only 20% of services are provided on a cross-border basis.” As for labour market reforms, Asmussen suggested they should be “inspired by the Agenda 2010 programme in Germany,” and that, ultimately: “labour mobility needs to be increased in the euro area (the theory says, we remember, that an optimal currency area requires full mobility of labour). Mobility could be increased through broader recognition of qualifications within Europe, greater portability of pension rights, language courses and a European network of job centres.” The Agenda 2010 programme was, explained Der Spiegel, “a series of labor market and social welfare reforms introduced by former Chancellor Gerhard Schröder that completely restructured Germany’s welfare state,” which included, “easing job dismissal protections, lowering bureaucratic hurdles for starting businesses, setting a higher retirement age and lowering non-wage labor costs,” all of which are “typical examples of structural reforms.”
The Crisis Continues…
And so the European debt crisis continues, and so the austerity measures continue to punish the populations of Europe, and so Italy remains at the forefront of a growing global power grab: a ‘Technocratic Revolution’ in which even the trappings of formal democracy are pushed aside in favour of a government subservient to unelected councils of supranational institutions and global financial interests. In Par 2 of this excerpt on the Italian debt crisis, we examine the austerity programs and structural adjustments undertaken by the technocratic government of Mario Monti.
Andrew Gavin Marshall is an independent researcher and writer based in Montreal, Canada, writing on a number of social, political, economic, and historical issues. He is also Project Manager of The People’s Book Project. He also hosts a weekly podcast show, “Empire, Power, and People,” on BoilingFrogsPost.com.
Please donate to The People’s Book Project to help this book be finished by the end of summer:
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