It has proved impossible to hold the line on Greece, which under the latest EU proposals is effectively going to default on its debt by asking creditors to take a "voluntary" haircut of 50 per cent on its bonds, but the current consensus in the eurozone is that the creditors of bigger nations like Italy and Spain must be paid in full. These creditors, of course, are the continent's big banks, and it is their health that is the primary concern of policymakers. The combination of austerity measures imposed by the new technocratic governments in Athens and Rome and the leaders of other eurozone countries, such as Ireland, and rescue funds from the IMF and the largely German-backed European Financial Stability Facility, can all be traced to this consensus.This is in line with Jamie Galbraith's description, "The eurozone crisis is a bank crisis posing as a series of national debt crises." (The crisis in the eurozone Salon 11/10/2011)
"My former colleagues at the IMF are running around trying to justify bailouts of €1.5trn-€4trn, but what does that mean?" says [economist] Simon Johnson. "It means bailing out the creditors 100 per cent. It is another bank bailout, like in 2008: The mechanism is different, in that this is happening at the sovereign level not the bank level, but the rationale is the same."
Foley also writes:
The ascension of Mario Monti to the Italian prime ministership is remarkable for more reasons than it is possible to count. By replacing the scandal-surfing Silvio Berlusconi, Italy has dislodged the undislodgeable. By imposing rule by unelected technocrats, it has suspended the normal rules of democracy, and maybe democracy itself. And by putting a senior adviser at Goldman Sachs in charge of a Western nation, it has taken to new heights the political power of an investment bank that you might have thought was prohibitively politically toxic. [my emphasis]This Spanish-language video from TV Publica Argentina, Visión Siete Internacional 11/18/2011, also calls the installation of the supposedly technocratic, debt-collector governments in Italy and Greece "una especie del golpe [contra] la democracia" ("a type of coup against democracy"), though the reporters do point out that both new governments were approved through the technical forms of parliamentary legality, Ocupar Wall Street: una canción para Obama:
The Argentine report also discusses the past business connections of both Monti and the new Greek Prime Minister Lucas Papademos with Goldman Sachs.
The focus of Foley's article is the particular influence of Goldman Sachs. and it's an important topic. The company is functioning from a long-term plan which Foley calls the Goldman Sachs Project whose goal he describes as follows:
Put simply, it is to hug governments close. Every business wants to advance its interests with the regulators that can stymie them and the politicians who can give them a tax break, but this is no mere lobbying effort. Goldman is there to provide advice for governments and to provide financing, to send its people into public service and to dangle lucrative jobs in front of people coming out of government. The Project is to create such a deep exchange of people and ideas and money that it is impossible to tell the difference between the public interest and the Goldman Sachs interest.Such outsize influence for a particular business concern is nothing new in history. In the pre-First World World age of the "trusts" (monopolies), the House of Morgan, the Rockefellers, and the Andrew Carnegie interests all wielded powerful and prominent influence in the US economy and politics.
And, in itself, there's nothing wrong with that by the current rules of the game, both formal laws and regulations and informal practices and assumptions. According to the Roberts Supreme Court, corporations are people, too, and they have the right to spend unlimited funds to influence the outcome of elections. However much of it is legal, it's still a form of major corruption incompatible with democracy.
Tags: italy, goldman sachs, greece