EU now belongs to Goldman Sachs

 This is from uk.yahoo news. I always like this stuff from mainstream sources as I feel that, for doubters and waverers, it carries more weight than stuff from the more "alternative" sources.

See the original article by Ian Dunt at Yahoo! Newsblog

Italy is no longer a democracy. It is a frontier outpost in the gradual takeover of governments by the financial markets. When technocrat Mario Monti was installed and filled the government with unelected administrators, it was not just a defeat for democracy, it was a victory for the banks.

Monti is Goldman Sachs' man. He was lifted out of academia by Berlusconi in 1995 to work at the Europe Commission, first in internal markets and then on competition. The bank spotted him and made him international adviser.

Something similar happened in Ireland, where Peter Sutherland, attorney general in the 1980s and former EU competition commissioner, became non-executive chairman of Goldman Sachs International and a non-executive director of Royal Bank of Scotland, until, you know, it collapsed, and we had to share the pain — but not, it goes without saying, his salary.

Mario Draghi, who recently became president of the European Central Bank, is a former Goldman Sachs man, as is Antonio Borges, who recently stood down from the IMF for personal reasons.

The banking lobby could not win its war in Greece, where creditors — the big banks of Europe - were forced to lose 50% on bonds. This was an unprecedented defeat, although not one which will save the Greek people from brutal and self-defeating austerity for a generation.

The banks made sure they won their other battles. The big fear, that they could lose out from the situation in Spain and Italy, will not be realised. The most important aspect of Merkozy's eurozone deal this week is that it rules out creditors ever having to shoulder a portion of future bailouts in insolvent eurozone countries.

Even the use of current IMF practise - that experts should decide on a case-by-case basis whether bondholder losses are necessary - is being negotiated, with a push for it to be moved from the text of the treaty to its preamble, where it would have no legal weight.

The idea that creditors should not suffer a loss when their investment goes wrong is the reason we are inflicting unparalleled economic and social misery on Europe. The austerity measures, the rescue funds, even the European Financial Stability Facility, derive from this principle, the principle that whatever happens, we must not penalise the banks. Every national bailout is in fact a bailout of the banks. Add it to the bill.

By cementing the complete subservience of European political life to the market, the Markozy deal does an extraordinary disservice to our continent and our society. But it doesn't stop there. The deal also suggests automatic sanctions on countries that allow a budget deficit of over three per cent of GDP and inserts a rule into eurozone countries requiring a balanced budget. Unlike creditor amnesty, this is at least a commendable economic and political principle - but it directly overrides the principle of national sovereignty.

Nicolas Sarkozy has been offered joint press conferences with Angela Merkel, complete with a torrent of barely-conscionable photographs of them kissing. But these presentations are merely theatre. Everyone knows France is an afterthought. We are seeing the takeover of European national sovereignty by Germany, which will effectively wield a veto against individual states' budgets. The national angle is easy to overstate, however. Germany is merely the handmaiden of the financial markets, which got us into this place and now sit like vampires turning their own catastrophe to their advantage.

The markets reacted with sluggish enthusiasm to news of democracy's acquiesce. Spain's ten-year bonds were down 5.2% while Italy's fell to 6.3%. With commendably comic timing, however, Standards and Poor intervened to put major European economies on watch. Only the best will do for the markets, you see. They won't be pacified until they have total immunity set in stone.

It won't fix the problem in the short-term, because it will kill demand and force European economies into a death-spiral. It won't fix the problem in the long term, because fiscal fetishism, while bafflingly politically popular, does little against what is, at heart, a balance of payments crisis made particularly acute by currency union. Actually, fiscal austerity makes us particularly vulnerable to cyclical downturns.

And what has David Cameron's response been to this dramatic turn of events? He has shown even more contempt for democracy than his counterparts on the continent. The left — a political designation Cameron spoke of as if it was contemptible during last week's PMQs - wants the public to be protected from the tyranny of the markets. The right wants some recognition of national sovereignty in Europe, some guarantee that their worst dreams of an ever-expanded, monstrous technocratic super-state are not being realised.

Both left and right are correct. There is plenty of scope for cooperation in preventing this disaster from unfolding. The idea that investors should be protected from the ramifications of their gamble is not a capitalist one — quite the opposite. The idea that the public should swallow losses and be denied profits is not capitalist either. Similarly, there is nothing right-wing about believing countries are entitled to make their own laws and their own budgets, without the arrogant intervention of other, more powerful, states.

Cameron has shown himself deaf to both concerns. He has ignored eurosceptic pleas to extract Britain from the situation and his only demand in exchange is that the City of London be protected from further regulation.

Paris and Berlin's desire for a financial transaction tax is self-interested, but that does not make it wrong. It is at least one small commendable action against the tyranny of the financial markets.

Opposing it is not, as Cameron says, in the national interest. The national interest would see Britain take action against a financial sector which has ruined its economy and now demands public austerity for its own mistakes.

The modest proposals for a financial transaction tax constitute one small ray of hope in utter darkness. It is one the British prime minister is intent on defeating. Not only will he support the dismantling of European democracy, he will do so on the basis that he can promote the market's dominance even further than the puppets of Europe would tolerate.

Stuart Jane Bramhall -The Solution to the $100 Trillion Global Debt

I tip my hat to Stuart Bramhall!  I rave -on post after post about the debt crisis and the criminal banking system and here she wraps it up in one succinct post. Go to her original post and add her blog to your reading list - and don't forget to peruse her archive material too.
  
The Solution to the $100 Trillion Global Debt- by S.J.Bramhall

There seems to be broad agreement among both classical corporate economists and latter day non-corporate ones that the $100 trillion global debt is suffocating the world economy. The large amount of debt banks carry on their books severely restricts their ability to issue loans for the business creation and expansion needed to create jobs. At the same time consumers, who are losing jobs or taking wage cuts aren’t spending money. Because of massive drop in consumer demand, corporations are finding other uses for their record profits (CEO bonuses, for example), rather than reinvesting them in new factories or retail outlets.
Where the two economic schools part ways concerns the solution. Externalizing costs (getting someone else to pay for your messes) is a basic pillar of classical, corporate economics. In the case of the global economic system, the investment bankers who crashed the system through greed, fraud and speculation want the middle class, youth and the poor to pay for their recklessness. Although mainstream economists like Ben Bernanke agree that debt reduction and austerity cuts aren’t enough, they refuse to officially endorse “monetization” as part of the solution. This is why he calls it something else (QE1, QE2 and QE3 – which are short for quantitative easing) and fudges on the true amount of monetization that is occurring.
Ending Debt-Based Money, Perpetual Growth and Ecosystem Destruction
On the other side, most latter day, non-corporate economists (for example Ellen Brown, Steve Keen, Deirdre Kent, Thomas Greco, among others) call for an end to our debt-based monetary system and perpetual economic growth, along with a “downsizing” of the economies of the industrialized north in line with dwindling resources and rapid ecosystem destruction. They make a strong case that the citizens of western society are living beyond their means and must drastically reduce consumption if we are to preserve the human species. The problem is figuring out how to get there without creating an intolerable level of human suffering for disadvantaged groups who already struggle to meet basic survival needs. It’s much easier for mainstream corporate economists, who have already decided to reduce the global debt burden on the backs of the middle class and young people, dooming an entire generation to becoming a marginalized underclass. Instead of doing any belt tightening themselves, the richest 1% are using the economic crisis as an excuse to further increase their personal wealth.
Political Reform Must Accompany Economic Reform

Most latter day economists are committed to the principle that belt tightening is only tolerable if it’s shared equally. Here is where a discussion of solutions becomes really hypothetical. There is no political commitment at present for the ruling elite and special interests to share in the belt tightening. Thus true economic reform is highly unlikely so long as corporations continue to dominate and control western democracy. It’s possible that the economic and ecological crises that confront humankind can’t be fixed without dismantling capitalism itself, a view shared by many in the Occupy movement. Others believe that channels can be created (through constitutional conventions or similar national gatherings) to establish direct participatory democracy and make corporations accountable to local, state and national authorities. It’s only in this context that economic and monetary reform has any chance of being meaningful and effective.
Latter Day Economic Solutions to the Debt Crisis

Where there is political will to share the costs equally for fixing the financial crisis, there are a handful of straightforward policies which, if enacted together, could restore global economic stability within months. Monetization (the good kind, where new government money is spent directly into the economy) is a major one, but monetization alone is unlikely to be enough. As the Germans proved after World War I and the Japanese after their 1989 economic collapse, monetization on its own only makes things worse – either by creating hyperinflation or increasing debt and deflation. To work, monetization must be enacted simultaneously with other basic debt reduction measures:

1. The world’s largest economy (the US) must end their deficit spending, not via austerity cuts, which will only worsen deflation, but by ending their deficit-financed wars in the Middle East, by repealing Bush’s tax cuts on upper income earners and by ending corporate tax avoidance.
2. Western governments must require global investment banks to forgive the sovereign debt they have incurred by assuming their toxic assets (their valueless subprime mortgages). This extent of forgiveness (referred to as a “hair cut”) must depend on the amount of toxic debt these banks still carry on their books and the extent to which they have insured themselves via Credit Default Swaps. Banks that become insolvent in this process need to be nationalized, rather than bailed out, to protect depositors and pension funds with major bank shareholdings.
3. World governments must agree to end the private debt-based monetary system and replace the Federal Reserve and other central banks with national government banks charged with creating and controlling the money supply.
4. These national banks must be allowed to create and spend new money directly into the economy to create jobs and repair infrastructure, make good on depositors savings and repay unforgiven debt. To avoid incurring new debt (i.e. borrowing from future generations), it may be necessary to temporarily increase taxes (above 39% in the US) for millionaires and billionaires.