FacebookTwitterGoogle+RedditEmail

Just Another Goldman Sachs Take Over

by PAUL CRAIG ROBERTS

On November 25, two days after a failed German government bond auction in which Germany was unable to sell 35 per cent of its offerings of 10-year bonds, the German finance minister, Wolfgang Schaeuble said that Germany might retreat from its demands that the private banks that hold the troubled sovereign debt from Greece, Italy, and Spain must accept part of the cost of their bailout by writing off some of the debt. The private banks want to avoid any losses, either by forcing the Greek, Italian, and Spanish governments to make good on the bonds by imposing extreme austerity on their citizens, or by having the European Central Bank print euros with which to buy the sovereign debt from the private banks. Printing money to make good on debt is contrary to the ECB’s charter and especially frightens Germans, because of the Weimar experience with hyperinflation.

Obviously, the German government got the message from the orchestrated failed bond auction. As I wrote at the time, there is no reason for Germany, with its relatively low debt to GDP ratio compared to the troubled countries, not to be able to sell its bonds.  If Germany’s creditworthiness is in doubt, how can Germany be expected to bail out other countries?  Evidence that Germany’s failed bond auction was orchestrated is provided by troubled Italy’s successful bond auction two days later.

Strange, isn’t it. Italy, the largest EU country that requires a bailout of its debt, can still sell its bonds, but Germany, which requires no bailout and which is expected to bear a disproportionate cost of Italy’s, Greece’s and Spain’s bailout, could not sell its bonds.

In my opinion, the failed German bond auction was orchestrated by the US Treasury, by the European Central Bank and EU authorities, and by the private banks that own the troubled sovereign debt.

My opinion is based on the following facts. Goldman Sachs and US banks have guaranteed perhaps one trillion dollars or more of European sovereign debt by selling swaps or insurance against which they have not reserved. The fees the US banks received for guaranteeing the values of European sovereign debt instruments simply went into profits and executive bonuses. This, of course, is what ruined the American insurance giant, AIG, leading to the TARP bailout at US taxpayers’ expense and Goldman Sachs’ enormous profits.

If any of the European sovereign debt fails, US financial institutions that issued swaps or unfunded guarantees against the debt are on the hook for large sums that they do not have. The reputation of the US financial system probably could not survive its default on the swaps it has issued. Therefore, the failure of European sovereign debt would renew the financial crisis in the US, requiring a new round of bailouts and/or a new round of Federal Reserve “quantitative easing,” that is, the printing of money in order to make good on irresponsible financial instruments, the issue of which enriched a tiny number of executives.

Certainly, President Obama does not want to go into an election year facing this prospect of high profile US financial failure.  So, without any doubt, the US Treasury wants Germany out of the way of a European bailout.

The private French, German, and Dutch banks, which appear to hold most of the troubled sovereign debt, don’t want any losses. Either their balance sheets, already ruined by Wall Street’s fraudulent derivatives, cannot stand further losses or they fear the drop in their share prices from lowered earnings due to write-downs of bad sovereign debts.  In other words, for these banks big money is involved, which provides an enormous incentive to get the German government out of the way of their profit statements.

The European Central Bank does not like being a lesser entity than the US Federal Reserve and the UK’s Bank of England. The ECB wants the power to be able to undertake “quantitative easing” on its own. The ECB is frustrated by the restrictions put on its powers by the conditions that Germany required in order to give up its own currency and the German central bank’s control over the country’s money supply. The EU authorities want more “unity,” by which is meant less sovereignty of the member countries of the EU. Germany, being the most powerful member of the EU, is in the way of the power that the EU authorities desire to wield.

Thus, the Germans bond auction failure, an orchestrated event to punish Germany and to warn the German government not to obstruct “unity” or loss of individual country sovereignty.

Germany, which has been browbeat since its defeat in World War II, has been made constitutionally incapable of strong leadership. Any sign of German leadership is quickly quelled by dredging up remembrances of the Third Reich. As a consequence, Germany has been pushed into an European Union that intends to destroy the political sovereignty of the member governments, just as Abe Lincoln destroyed the sovereignty of the American states.

Who will rule the New Europe?  Obviously, the private European banks and Goldman Sachs.

The new president of the European Central Bank is Mario Draghi. This person was Vice Chairman and Managing Director of Goldman Sachs International and a member of Goldman Sachs’ Management Committee. Draghi was also Italian Executive Director of the World Bank, Governor of the Bank of Italy, a member of the governing council of the European Central Bank, a member of the board of directors of the Bank for International Settlements, and a member of the boards of governors of the International Bank for Reconstruction and Development and the Asian Development Bank, and Chairman of the Financial Stability Board.

Obviously, Draghi is going to protect the power of bankers.

Italy’s new prime minister, who was appointed not elected, was a member of Goldman Sachs Board of International Advisers. Mario Monti was appointed to the European Commission, one of the governing organizations of the EU. Monti is European Chairman of the Trilateral Commission, a US organization that advances American hegemony over the world. Monti is a member of the Bilderberg group and a founding member of the Spinelli group, an organization created in September 2010 to facilitate integration within the EU.

Just as an unelected banker was installed as prime minister of Italy, an unelected banker was installed as prime minister of Greece. Obviously, they are intended to produce the bankers’ solution to the sovereign debt crisis.

Greece’s new appointed prime minister, Lucas Papademos, was Governor of the Bank of Greece. From 2002-2010. He was Vice President of the European Central Bank. He, also, is a member of America’s Trilateral Commission.

Jacques Delors, a founder of the European Union, promised the British Trade Union Congress in 1988 that the European Commission would require governments to introduce pro-labor legislation. Instead, we find the banker-controlled European Commission demanding that European labor bail out the private banks by accepting lower pay, fewer social services, and a later retirement.

The European Union, just like everything else, is merely another scheme to concentrate wealth in a few hands at the expense of European citizens, who are destined, like Americans, to be the serfs of the 21st century.

Paul Craig Roberts was an editor of the Wall Street Journal and an Assistant Secretary of the U.S. Treasury.  His latest book, HOW THE ECONOMY WAS LOST, has just been published by CounterPunch/AK Press. He can be reached at: PaulCraigRoberts@yahoo.com 

Paul Craig Roberts is a former Assistant Secretary of the US Treasury and Associate Editor of the Wall Street Journal. Roberts’ How the Economy Was Lost is now available from CounterPunch in electronic format. His latest book is The Neoconservative Threat to World Order.

More articles by:

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

Weekend Edition
April 28, 2017
Friday - Sunday
Paul Street
Slandering Populism: a Chilling Media Habit
Andrew Levine
Why I Fear and Loathe Trump Even More Now Than On Election Day
Jeffrey St. Clair
Mountain of Tears: the Vanishing Glaciers of the Pacific Northwest
Philippe Marlière
The Neoliberal or the Fascist? What Should French Progressives Do?
Conn Hallinan
America’s New Nuclear Missile Endangers the World
Peter Linebaugh
Omnia Sunt Communia: May Day 2017
Vijay Prashad
Reckless in the White House
Brian Cloughley
Who Benefits From Prolonged Warfare?
Kathy Kelly
The Shame of Killing Innocent People
Ron Jacobs
Hate Speech as Free Speech: How Does That Work, Exactly?
Andre Vltchek
Middle Eastern Surgeon Speaks About “Ecology of War”
Matt Rubenstein
Which Witch Hunt? Liberal Disanalogies
Sami Awad - Yoav Litvin - Rabbi Lynn Gottlieb
Never Give Up: Nonviolent Civilian Resistance, Healing and Active Hope in the Holyland
Pete Dolack
Tribunal Finds Monsanto an Abuser of Human Rights and Environment
Christopher Ketcham
The Coyote Hunt
Mike Whitney
Putin’s New World Order
Ramzy Baroud
Palestinian, Jewish Voices Must Jointly Challenge Israel’s Past
Ralph Nader
Trump’s 100 Days of Rage and Rapacity
Harvey Wasserman
Marine Le Pen Is a Fascist—Not a ‘Right-Wing Populist,’ Which Is a Contradiction in Terms
William Hawes
World War Whatever
John Stanton
War With North Korea: No Joke
Jim Goodman
NAFTA Needs to be Replaced, Not Renegotiated
Murray Dobbin
What is the Antidote to Trumpism?
Louis Proyect
Left Power in an Age of Capitalist Decay
Medea Benjamin
Women Beware: Saudi Arabia Charged with Shaping Global Standards for Women’s Equality
Rev. William Alberts
Selling Spiritual Care
Peter Lee
Invasion of the Pretty People, Kamala Harris Edition
Cal Winslow
A Special Obscenity: “Guernica” Today
Binoy Kampmark
Turkey’s Kurdish Agenda
Guillermo R. Gil
The Senator Visits Río Piedras
Jeff Mackler
Mumia Abu-Jamal Fights for a New Trial and Freedom 
Cesar Chelala
The Responsibility of Rich Countries in Yemen’s Crisis
Leslie Watson Malachi
Women’s Health is on the Chopping Block, Again
Basav Sen
The Coal Industry is a Job Killer
Judith Bello
Rojava, a Popular Imperial Project
Robert Koehler
A Public Plan for Peace
Sam Pizzigati
The Insider Who Blew the Whistle on Corporate Greed
Nyla Ali Khan
There Has to be a Way Out of the Labyrinth
Michael J. Sainato
Trump Scales Back Antiquities Act, Which Helped to Create National Parks
Stu Harrison
Under Duterte, Filipino Youth Struggle for Real Change
Martin Billheimer
Balm for Goat’s Milk
Stephen Martin
Spooky Cookies and Algorithmic Steps Dystopian
Michael Doliner
Thank You Note
Charles R. Larson
Review: Gregor Hens’ “Nicotine”
David Yearsley
Handel’s Executioner
FacebookTwitterGoogle+RedditEmail