Just Another Goldman Sachs Take Over
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 
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