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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
A Teaser to ‘The Empire of Poverty’: The First Volume of The People’s Book Project
By: Andrew Gavin Marshall
The following is a little teaser to some of the ideas, approach and perspective being pursued through the research and writing of the first volume of The People’s Book Project, ‘The Empire of Poverty.’ Please consider donating to the Project to help these efforts come to fruition.
It’s important to try to understand the global economic and financial system – the banks, corporations, central banks, economic policies (and effects) of governments, trade agreements, the creation and value of currencies, the function of the oft-heard ‘markets’ – as daunting as the task may seem. One might think that they need a degree in Economics in order to understand the complexities of the global economy, to comprehend the correct choices and policies which achieve the desired results. One might think that this is true, but it isn’t. The truth is that if most economists understood the global economy, and knew the ‘correct’ choices to make, we wouldn’t be where we currently are.
Economics – both theory and practice – is an illusion. There are no concrete rules on which to base economic thought; there is no ‘gravity’ to its physics. Economics is not science, it’s sophistry; the sleight of hand, the quick and slick tongue, the wave of the wand, the theatrics of the stage set for all to see, and the effects – as destructive as they may be to the real world and all life within it – are largely hidden from view; the illusion keeps the population enraptured in awe, aspiration, and fear.
This is not to say that there cannot be anything real produced or given growth by what we call ‘economics’: there are of course exchanges made, resources used, products created, lives benefitted, and entire societies and peoples changed. The effects are very real. However, they have a disproportionately destructive, oppressive, and dehumanizing effect upon the vast majority of humanity: they bestow upon a tiny fraction unparalleled power, and thus, dehumanization in another form; while creating a comparably minimal buffer of generally satiated and malleable middle classes, educated well-enough to work and survive the horror show that is the global economic order, but consumed by a culture lacking in substance and meaning, and thus, left morally, psychologically, and intellectually lobotomized, physically paralyzed, and thus, once again, dehumanized.
So our global economic order has the effect of generally dehumanizing all who are subject to its whims and whammies; which is to say, almost everyone, everywhere. Those peoples and societies that are not integrated into the global economy tend to be bombed, invaded, overthrown or droned. Those who remain are doomed to slow death: one in seven people on earth live in urban slums – more than the combined populations of Canada, the United States, and the European Union – while the majority of humanity lives in deep poverty, in hunger, and malnutrition; with 18 million people being killed from poverty-related causes every year, including over 9 million children. Every year.
During the Holocaust, approximately six million Jews were killed. Take that number, add 50% to make 9 million, and just think: this is how many children die every year from poverty. Every year a new Holocaust.
These deaths are preventable. Truly. It has been estimated that less than the yearly Pentagon budget would lift the poorest 3 billion people of the world out of extreme poverty. In fact, in the twenty years following the end of the Cold War in 1991, there were roughly 360 million preventable deaths caused by poverty-related issues, more than the combined deaths of all of the wars of the 20th century.
But this is not our priority. Our priority is that banks and corporations make as much profits as possible, because this – by some unknown and unseen magic – will (it is said) benefit everyone else. It is propagated and believed that this system, as it exists, or even with the proper tinkering and toiling, can represent the totality of life and being on this world; to be humanizing, and to represent ‘human nature’ at its best. But if this system were ‘human nature,’ why would it be so dehumanizing? How many organisms grow by destroying that which their existence depends upon? Parasites, cancers and various diseases can kill the host before transferring to another.
We have no other host to go to. Those who sit atop the global structure know this, which is why they express such an interest in finding new planets to escape to (and presumably, plunder and destroy). The billionaires have given up pretending to care for the world’s billions of people suffering, which is why they are looking to space travel, mining asteroids, and searching for hospitable environments elsewhere. Their long-term ‘exit strategy’ is to abandon ship, not to change the direction we currently traverse.
Are we – as a species – a cancer upon the earth? Looking at the big picture, it may often seem that way. But it is in the small moments, the single acts, exchanged emotions, interacting individuals, in the every day life – those moments of joy, love, wonder – in which we find our own personal meaning, in which we discover that humanity – and human nature – can be so much more than destructive, petty, and pestilent behaviour. We are told we are a society of ‘individuals’ – that we are free, democratic and equal. If that were the case: why are we so isolated? We are individuals, yes, in the physical sense: but we are disconnected from the collective, separated from the species as a whole.
We think and act individually, but do so ignorantly, and arrogantly. Our thoughts and feelings are collected and collated by our commanding culture of irrelevance. The immense gift of a human mind – with all of its possibilities and capabilities, both known and unknown – is largely squandered on pop culture, sports, celebrities, consumer items and entertainment. So long as we remain distracted by the ‘celebration of irrelevance’, we are lobotomized of our meaning.
Is this how you see yourself as an individual? As the world you live in? It’s not an appealing thought. So why, then, do we live in a world in which as individuals we may act morally, purposefully, passionately, and proudly; though as a collective species, we are petty, parasitic, power-mad, pathological, and pretty much evil?
Is it ‘human nature’ that our personal values and priorities are not reflected in the collective – institutionalized – expression of humanity? Or, is it that the way in which our society is constructed, the institutions and ideologies, the policies, programs, priorities and effects of the way in which our world is ordered and altered, is inherently counter to ‘human nature’? In other words: is human nature inherently self-destructive; or, is our constructed human ‘society’ (our global social, political and economic order) inherently destructive to human nature? Does human nature pervert the effects we have upon the world, or do the structures of world order – and power – pervert human nature?
It is this vast disconnect between our personal values and the form they take at the global – collective – level of the species, which is ultimately so dehumanizing. Because power is centralized at the top, and for such a tiny fraction of the species – so much so that there has never been a more unequal and vast ‘Empire of Poverty’ in all of human history, the ‘great inequality’ is not of wealth, but of power.
Wealth is an illusion: a manufactured means to power, a collective delusion. Power is central to human nature. Every person needs power: they need autonomy over their own lives, thoughts, feelings, and decisions. It is central to maturity, it is central to leaving adolescence and becoming an adult, and it is central to finding a sense of self-worth. Understanding oneself is to empower oneself. Power is about possibility, personal fulfillment, passion and purpose. It has individual and social representations. It can be seen – or not – in your own life, but also in the world around us.
A pre-requisite for power is freedom. The process of achieving freedom is, itself, empowering. Once (and if) achieved, it is of immense responsibility to use your new power of freedom wisely, for the effects that it may have upon others and the rest of the world are endless. Power is freedom, quite simply, because slavery is the opposite of both freedom and power: it is the most un-free and the most disempowering personal position to be in.
Freedom is power; power is freedom. If we were actually free, we would have significantly more power. But we don’t. We barely have any control over our own individual lives, let alone the world around us. We leave all that to the others, to those with the proper degrees, the ‘expertise,’ the politicians, the pundits, the ‘right’ people… because they’ve obviously done such a great job of it so far. We remain – as a species, and very often as individuals – neutered from the necessities of individual empowerment, subjected instead to the very-often-arbitrary abuses of power over others.
So if we are not free, what are we? Certainly, we are not slaves, for we have no shackles, bear the brunt of no whips, serve no visible masters. We are, perhaps, slaves of another kind. We are financially, reflexively, intellectually, emotionally and hopelessly and very often spiritually enslaved to the system, as it exists. We are slaves to money. We serve the masters of money, with our time, with our labour and efforts, with our interactions, exchanges, interests, intelligence and aspirations. We are slaves to money.
Our society is built and sustained upon it; and our species is being driven to extinction because of it. The cause and effect of money – or more aptly, debt – slavery, is the distribution of power among the species: too few have too much, and too many have too little. This imbalance of power within the species is leading to our self-destruction, our inevitable extinction if we continue along this path.
Money is both the means and very often – the reason – for continuing down this path, for maintaining this imbalance. While very few have all the money, everyone – and everywhere else – has all the debt. This is not the wondrous ‘free market’ capitalist utopia which is incessantly babbled about, but the very real global feudal dystopia, both cause and effect of the power imbalance and money-system. In feudalism, there is no freedom, only serfdom.
Welcome to our global economic order, serf!
Welcome to the Empire of Poverty.
But it’s not hopeless. The truth is both painful, but also full of possibilities. The truth is that we do have the ability to understand the world we live in, to comprehend our global economic order. We don’t need a degree; we just need honesty.
The illusion that is our economic system is built not upon technical knowledge, but rather, technical language, a highly political language, “designed to make lies sound truthful, murder respectable, and to give a feeling of solidity to pure wind,” as George Orwell defined the term. Our inability to communicate honesty, and thus effectively, about our economic – and indeed, political and social – system is an essential mechanism in maintaining that system.
To speak and ‘understand’ this language, at least at a superficial level, usually does require some ‘education’: economists must be trained, so too must political and other social scientists. The artificial separations in their knowledge – (as in, the notion that the economic world exists separate from the political and social world, and thus, must be studied separately) ensures that none who receive a ‘proper education’ achieve a profound understanding of the world. Some may, but they are few and far between, and usually weeded out or co-opted.
Such a ‘proper education’ will allow one to gain enough basic knowledge related to the sector of society in which they aim to explore and advance, and they are given just enough knowledge to do so, but not enough to honestly look at – let alone have the capacity to communicate – the reality of how our global political, social and economic order functions and evolves. They may see problems, make recommendations, propose policies, and they may even do some good, but ultimately – as we still remain on the path toward extinction – they have not, and cannot – do enough.
Few possibilities – few ‘solutions’ – or opportunities, are communicated to the populations that are effected under and by these societies, and by the decisions the few at the top make. People are generally given a small set of options from which to choose, like guessing what’s behind door number one or two, when both are ultimately terrible, and ineffectual (in a positive sense). We put ‘faith’ – however empty – into the hands of politicians, we consume the crap spewed in the media, or we lose ourselves in the vast vacancy that is the ‘substance’ of our culture; a culture of mythology, lies, fantasy, persuasion, punishment, entertainment and manipulation.
Our hope is first in honesty. We can – and must – look honestly at the world for what it is, not what we want or imagine it to be, but what it is. Then, we can – and must – communicate this message, and to do so honestly and directly. This is a human reality, and it must become a part of a collective human knowledge, a shift in understanding, and thus, a change in direction; away from the current-inevitably of extinction, and toward survival. What comes after is for future generations to determine. For now, we must aim to simply survive.
Our goal must first be to begin charting a new path toward survival; this must be the duty of our present living and younger generations, as challenging, demanding and terrifying a responsibility that may be, it is either that, or extinction. And this is not a matter of hundreds or thousands of years away; it could be as soon as decades. If you – like me – are between 18 and 45 – the coming few decades of the world in which you currently live and hope to survive will become increasingly dreadful, destructive, oppressive, and disempowering. We cannot afford to continue kicking the can down the road, delaying – and exacerbating – the inevitable.
There is always hope, not in myths and fantasy, but hidden in reality. In our actions, ideas, in us – as individuals – connecting, interacting, sharing, working and creating together, as collectives, as part of a larger human organism; beginning to act as if we don’t want to self-destruct as a species, creating a new society – a new order – to make the current one obsolete. This is our great challenge. How do we navigate through living within the present existing order, while simultaneously seeking to create a new and alternative order? Moreover, how do we achieve this if it takes nearly all our effort, time and energy to simply survive the present order? To put it as crudely (and honestly) as possible: how the fuck are we supposed to change the world?!
I don’t know the answers. But I think that the best way to get them is to ask honest questions, seek an honest understanding, and to communicate honestly – about ourselves and the world – personally, and globally. This book is my attempt to understand and speak honestly about the world, not to speak in a language that only economists and political scientists or other so-called ‘experts’ can understand, but to speak plainly and directly. This will require me to dedicate some focus in attempting to translate political language into English. I don’t have a degree, and you won’t need one to read this, or to understand it.
The hope, then, that I hold for this book – and the wider book project of which it is apart – is that it presents an accessible and usable collection of knowledge. It is not the book that asks every question, or has ever answer (no books do!), but it is an attempt at taking a different approach to asking and seeking answers to some rather important questions about our world: what is the true nature of our society? How did we get here? Where are we going? Why? And, what can we do to change it?
This is but an introduction to our world, by no means comprehensive or conclusive, simply accessible, honest, and (hopefully) useful.
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 the World of Resistance (WoR) Report, and hosts a weekly podcast show with BoilingFrogsPost.
 Mike Davis, Planet of Slums (Verso: London, 2007), pages 151-173.
 Thomas Pogge, “Keynote Address: Poverty, Climate Change, and Overpopulation,” Georgia Journal of International and Comparative Law (Vol. 38, 2010), pages 526-534.
 Dan Vergano, “Billionaires back ambitious space projects,” USA Today, 13 May 2012:
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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US President Barack Obama is hosting China’s President Hu Jintao to discuss their economic co-dependence, currency and trade. Does this mean the US is losing ground to China’s new found success?
From Global Depression to Global Governance
The role of the corporate elites’ secretive global think tanks
Global Research, October 19, 2010
The following is the text of Andrew Gavin Marshall’s presentation at the book launch of The Global Economic Crisis: The Great Depression of the XXI Century”, Michel Chossudovsky and Andrew Gavin Marshall (Editors). September 29, 2010, Montreal, Canada.
We now stand at the edge of the global financial abyss of a ‘Great Global Debt Depression,’ where nations, mired in extreme debt, are beginning to implement ‘fiscal austerity’ measures to reduce their deficits, which will ultimately result in systematic global social genocide, as the middle classes vanish and the social foundations upon which our nations rest are swept away. How did we get here? Who brought us here? Where is this road leading? These are questions I will briefly attempt to answer.
At the heart of the global political economy is the central banking system. Central banks are responsible for printing a nation’s currency and setting interest rates, thus determining the value of the currency. This should no doubt be the prerogative of a national government, however, central banks are of a particularly deceptive nature, in which while being imbued with governmental authority, they are in fact privately owned by the world’s major global banks, and are thus profit-seeking institutions. How do central banks make a profit? The answer is simple: how do all banks make a profit? Interest on debt. Loans are made, interest rates are set, and profits are made. It is a system of debt, imperial economics at its finest.
In the United States, President Woodrow Wilson signed the Federal Reserve Act in 1913, creating the Federal Reserve System, with the Board located in Washington, appointed by the President, but where true power rested in the 12 regional banks, most notably among them, the Federal Reserve Bank of New York. The regional Fed banks were private banks, owned in shares by the major banks in each region, which elected the board members to represent them, and who would then share power with the Federal Reserve Board in Washington.
In the early 1920s, the Council on Foreign Relations was formed in the United States as the premier foreign policy think tank, dominated by powerful banking interests. In 1930, the Bank for International Settlements (BIS) was created to manage German reparations payments, but it also had another role, which was much less known, but much more significant. It was to act as a “coordinator of the operations of central banks around the world.” Essentially, it is the central bank for the world’s central banks, whose operations are kept ‘strictly confidential.’ As historian Carroll Quigley wrote:
In 1954, the Bilderberg Group was formed as a secretive global think tank, comprising intellectual, financial, corporate, political, military and media elites from Western Europe and North America, with prominent bankers such as David Rockefeller, as well as European royalty, such as the Dutch royal family, who are the largest shareholders in Royal Dutch Shell, whose CEO attends every meeting. This group of roughly 130 elites meets every year in secret to discuss and debate global affairs, and to set general goals and undertake broad agendas at various meetings. The group was initially formed to promote European integration. The 1956 meeting discussed European integration and a common currency. In fact, the current Chairman of the Bilderberg Group told European media last year that the euro was debated at the Bilderberg Group.
In 1973, David Rockefeller, Chairman and CEO of Chase Manhattan Bank, Chairman of the Council on Foreign Relations and a member of the Steering Committee of the Blderberg Group, formed the Trilateral Commission with CFR academic Zbigniew Brzezinski. That same year, the oil price shocks created a wealth of oil money, which was discussed at that years Bilderberg meeting 5 months prior to the oil shocks, and the money was funneled through western banks, which loaned it to ‘third world’ nations desperately in need of loans to finance industrialization.
When Jimmy Carter became President in 1977, he appointed over two dozen members of the Trilateral Commission into his cabinet, including himself, and of course, Zbigniew Brzezinski, who was his National Security Adviser. In 1979, Carter appointed David Rockefeller’s former aide and friend, Paul Volcker, who had held various positions at the Federal Reserve Bank of New York and the U.S. Treasury Department, and who also happened to be a member of the Trilateral Commission, as Chairman of the Federal Reserve. When another oil shock took place in 1979, Volcker decided to raise interest rates from 2% in the late 70s, to 18% in the early 80s. The effect this had was that the countries of the developing world suddenly had to pay enormous interest on their loans, and in 1982, Mexico announced it could no longer afford to pay its interest, and it defaulted on its debt, which set off the 1980s debt crisis – collapsing nations in debt across Latin America, Africa and parts of Asia.
It was the IMF and the World Bank came to the ‘assistance’ of the Third World with their ‘structural adjustment programs’, which forced countries seeking assistance to privatize all state owned industries and resources, devalue their currencies, liberalize their economies, dismantle health, education and social services; ultimately resulting in the re-colonization of the ‘Third World’ as Western corporations and banks bought all their assets and resources, and ultimately created the conditions of social genocide, with the spread of mass poverty, and the emergence of corrupt national elites who were subservient to the interests of Western elites. The people in these nations would protest, riot and rebel, and the states would clamp down with the police and military.
In the West, corporations and banks saw rapid, record-breaking profits. This was the era in which the term ‘globalization’ emerged. While profits soared, wages for people in the West did not. Thus, to consume in an economy in which prices were rising, people had to go into debt. This is why this era marked the rise of credit cards fueling consumption, and the middle class became a class based entirely on debt.
In the 1990s, the ‘new world order’ was born, with America ruling the global economy, free trade agreements began integrating regional and global markets for the benefit of global banks and corporations, and speculation dominated the economy.
The global economic crisis arose as a result of decades of global imperialism – known recently as ‘globalization’ – and the reckless growth of– speculation, derivatives and an explosion of debt. As the economic crisis spread, nations of the world, particularly the United States, bailed out the major banks (which should have been made to fail and crumble under their own corruption and greed), and now the West has essentially privatized profits for the banks, and socialized the risk. In other words, the nations bought the debt from the banks, and now the people have to pay for it. The people, however, are immersed in their own personal debt to such degrees that today, the average Canadian is $39,000 in debt, and students are graduating into a jobless market with tens to hundreds of thousands of dollars of student debt that they will never repay. Hence, we are now faced with a global debt crisis.
To manage the economic crisis, the G20 was established as the major international forum for cooperation among the 20 major economies of the world, including the major developing – or emerging – economies, such as India, Brazil, South Africa and China. At the onset of the financial crisis, China and Russia’s central banks began calling for the establishment of a global currency to replace the U.S. dollar as the world reserve currency. This proposal was backed by the UN and the IMF. It should be noted, however, that the Chinese and Russian central banks cooperate with the Western central banks through the Bank for International Settlements – which the President of the European Central Bank, Jean-Claude Trichet, recently said was the principle forum for “governance of central bank cooperation” and that the G20 is “the prime group for global economic governance.” In 2009, the IMF stated that the BIS “is the central and the oldest focal point for coordination of global governance arrangements.” The President of the European Union, appointed to the position after attending a Bilderberg meeting, declared 2009 as the “first year of global governance.” The 2009 Bilderberg meeting reported on the desire to create a global treasury, or global central bank, to manage the world economy. In 2009, prior to the Bilderberg meeting in fact, the G20 set in motion plans to make the IMF a global central bank of sorts, issuing and even printing its own currency – called Special Drawing Rights (SDRs) – which is valued against a basket of currencies. In May of 2010, the IMF Managing Director stated that “crisis is an opportunity,” and while Special Drawing Rights are a step in the right direction, ultimately what is needed is “a new global currency issued by a global central bank, with robust governance and institutional features.” Thus, we see the emergence of a process towards the formation of a global central bank and a global currency, totally unaccountable to any nation or people, and totally controlled by global banking interests.
In 2010, Greece was plunged into a debt crisis, a crisis which is now spreading across Europe, to the U.K. and eventually to Japan and the United States. If we look at Greece, we see the nature of the global debt crisis. The debt is owed to major European and American banks. To pay the interest on the debt, Greece had to get a loan from the European Central Bank and the IMF, which forced the country to impose ‘fiscal austerity’ measures as a condition for the loans, pressuring Greece to commit social genocide. Meanwhile, the major banks of America and Europe speculate against the Greek debt, further plunging the country into economic and social crisis. The loan is granted, to pay the interest, yet simply has the effect of adding to the overall debt, as a new loan is new debt. Thus, Greece is caught in the same debt trap that re-colonized the Third World.
At the recent G20 meeting in Toronto, the major nations of the world agreed to impose fiscal austerity – or in other words, commit social genocide – within their nations, in a veritable global structural adjustment program. So now we will see the beginnings of the Great Global Debt Depression, in which major western and global nations cut social spending, create mass unemployment by dismantling health, education, and social services. Further, state infrastructure – such as roads, bridges, airports, ports, railways, prisons, hospitals, electric transmission lines and water – will be privatized, so that global corporations and banks will own the entirely of national assets. Simultaneously, of course, taxes will be raised dramatically to levels never before seen. The BIS said that interest rates should rise at the same time, meaning that interest payments on debt will dramatically increase at both the national and individual level, forcing governments to turn to the IMF for loans – likely in the form of its new global reserve currency – to simply pay the interest, and will thus be absorbing more debt. Simultaneously, of course, the middle class will in effect have its debts called in, and since the middle class exists only as an illusion, the illusion will vanish.
Already, towns, cities, and states across America are resorting to drastic actions to reduce their debts, such as closing fire stations, scaling back trash collection, turning off street lights, ending bus services and public transportation, cutting back on library hours or closing them altogether, school districts cutting down the school day, week or year. Simultaneously, this is occurring with a dramatic increase in the rate of privatizations or “public-private partnerships” in which even libraries are being privatized.
No wonder then, that this month, the Managing Director of the IMF warned that America and Europe, in the midst of the worst jobs crisis since the Great Depression, face an “explosion of social unrest.” Just yesterday, Europe experienced a wave of mass protests and social unrest in opposition to ‘austerity measures’, with a general strike in Spain involving millions of people, and a march on the EU headquarters in Brussels of nearly 100,000 people. As social unrest spreads, governments will likely react – as we saw in the case of the G20 in Toronto – with oppressive police state measures. Here, we see the true relevance of the emergence of ‘Homeland Security States’, designed not to protect people from terrorists, but to protect the powerful from the people.
So while things have never seemed quite so bleak, there is a dim and growing beacon of hope, in what Zbigniew Brzezinski has termed as the greatest threat to elite interests everywhere – the ‘global political awakening’. The global political awakening is representative of the fact that for the first time in all of human history, mankind is politically awakened and stirring, activated and aware, and that generally – as Zbigniew Brzezinski explains – generally is aware of global inequalities, exploitation, and disrespect. This awakening is largely the result of the information revolution – thus revealing the contradictory nature of the globalization project – as while it globalizes power and oppression, so too does it globalize awareness and opposition. This awakening is the greatest threat to entrenched elite interests everywhere. The awakening, while having taken root in the global south – already long subjected to exploitation and devastation – is now stirring in the west, and will grow as the economy crumbles. As the middle classes realize their consumption was an illusion of wealth, they will seek answers and demand true change, not the Wall Street packaged ‘brand-name’ change of Obama Inc., but true, inspired, and empowering change.
In 1967, Martin Luther King delivered a speech in which he spoke out against the Vietnam War and the American empire, and he stated that, “It seems as if we are on the wrong side of a world revolution.” So now it seems to me that the time has come for that to change.