Skip to main content

How eurozone became a financial dictatorship

It all started with the silent coup against Ireland


In 2010, Ireland experienced Frankfurt's political blackmail. On the 18th of November, where there was a governing council of the ECB in Frankfurt. The governor of the Irish central bank who sat on the governing council, called "Morning Ireland" which is the most important radio program in Ireland, to say that Ireland will need what he called a loan. He didn't warn the government about it and this created a massive panic.

Then, the next day, there was a letter written from the then president of ECB, Jean-Claude Trichet, to Brian Lenihan, the minister of finance at the time, saying that 'if you don't apply the so-called bailout program, by this opening of the markets the following Monday, we're going to cut off access to Emergency Liquidity Assistance (ELA)', which obviously would have collapsed the Irish banking system.

The ECB used the liquidity weapon in order to impose its terms on the Irish government: austerity, privatizations, labor market deregulation. The ECB enforces fiscal policy, which is not what a central bank should do. And it does this by denying ELA, or, by providing liquidity, or not providing liquidity. The ECB had basically taken over the government. In Ireland, they forced the government to bailout the banks at huge cost to the Irish population. They blackmailed the country with shutting its banks.

At the beginning of the crisis in Europe, which came as a shock wave from the United States, the ECB tested its strength and power on Ireland through this silent coup.

A year later, it was the turn of Italy to find out what the eurozone dictatorship means. Yet, this time it would not be that easy. Even Angela Merkel and Nicolas Sarkozy had to be involved in order to effectively overthrow Silvio Berlusconi who (for his own ambition and popularity of course) didn't want to implement the iron austerity model. The power of markets was involved in that coup too. Romano Prodi knew very well the dirty game played in secret: he told Mario Monti that "When Italian spreads reach 300 units, you will be asked to govern."



But it was sloppy and dangerous. Imagine what would have happened if the Italian people would somehow learn the direct involvement of the leaders of other countries and the involvement of the Italian economic elite. A more elegant, sophisticated, permanent and widely accepted method had to be established under the disguise of some kind of 'stability mechanism' for the safety of eurozone. A mechanism that would appear as purely technocratic, equally implemented to all members, in order to hide the huge political interference and blackmail.

And Mario Draghi found it. A year later, in 2012, he made a move that would officially turn eurozone into a financial dictatorship with the ECB as its basic tool. The ECB announced unlimited buying of distressed government bonds. As the Guardian reported back then:

           Draghi also set strict terms for triggering the bond-buying programme, putting pressure on the eurozone's political leaders to request help, enter austerity programmes, and agree on direct bailouts for struggling governments before the ECB will act. [...] The new bond-buying scheme, to be known as outright monetary transactions or OMTs, means that the ECB will intervene in the secondary markets to buy up the debt of governments whose bond yields are too high and are therefore jeopardising the uniform conduct of monetary policy across the eurozone, Draghi said. [...] It is understood that the ECB believes IMF involvement in the new policy and future bailouts is essential. Initial reaction from the Fund's Washington headquarters was extremely positive. [...] Spanish and Italian 10-year borrowing costs fell to three- and five-month lows following Draghi's announcements. [...] While Germany's central banker, Jens Weidmann, has been a vocal monetarist hawk in the contentious debate leading to Thursday's move, the other German in the ECB governing council, Jörg Asmussen, played a key role in drafting the new policy. The government in Berlin has mounted minimal resistance to the new ECB policy.

In this blog, we immediately pointed out Draghi's sinister plan. As we wrote back then, the ECB becomes a corresponding Fed in the European area, “serving” the problematic economies that are excluded from the bond markets, through the print of new money. Therefore, the problematic economies will be loaded with more and more debt which the ECB, i.e. the largest private European banks will hold. Someone could argue that is not something new, since nations were facing huge debts in previous years, because they were indebted to banks through the excessive borrowing from the markets. But in this case, there is an important difference that makes things much worse: it is the cruel conditions imposed by the ECB to states that need to buy money. States that are excluded from markets, are now trapped within the neoliberal economic empire of the eurozone and will be forced to follow new austerity measures every time they need ECB to buy their bonds.

With a completely corrupted old political class in most of the eurozone, which had been fully taken over by the lobbyists and the neoliberal doctrine, the ECB had now absolute control over the eurozone members and no one would dare to challenge its authoritarian nature.

It seemed to be perfect. A silent and peculiar dictatorship, implemented under the nose of the Europeans, based on ECB's liquidity firepower. Most eurozone governments would be forced to implement permanent austerity and cruel neoliberalism under the threat of the exclusion from the markets. And if someone would dare to take a different path, the rating agencies would attack in full force, spreads would skyrocket making impossible for the country to borrow in a reasonable interest rate, leaving the country with the only option: the ECB trap. Only this time ECB's money would come under even heavier conditions. That is, more austerity, more privatizations, more fiscal discipline. In other words: more cruel neoliberalism.

As expected, all the bank-occupied mainstream media and the corrupted political class praised Draghi, as being a kind of heroic figure that would save eurozone from further trouble.

Yet, the Greek political storm came in 2015 to destroy the disguise of the financial dictatorship and spoil the dreams of the financial elites who believed that their covert dictatorship could last forever with no problems. The Greek political establishment collapsed with the rise of SYRIZA in power, and the ECB was forced to proceed in an open financial coup against Greece when the current PM, Alexis Tsipras, decided to conduct a referendum on the catastrophic measures imposed by the ECB, IMF and the European Commission, through which the Greek people clearly rejected these measures, despite the propaganda of terror inside and outside Greece. Due to the direct threat from Mario Draghi and the ECB, who actually threatened to cut liquidity sinking Greece into a financial chaos, Tsipras finally forced to retreat, signing another catastrophic memorandum.

This was the last thing eurocrats wanted, simply because the authoritarian nature of their financial union has now been fully exposed. After Greece, nothing would be the same. Their hopes that they would impose cruel neoliberalism throughout Europe without any reaction from the people has permanently gone. So, now, Italy came back, and their panic started to rise again.

What we see now in Italy is a similar story with Greece, only in larger scale. The old political class, unquestionably faithful to the European institutions, has been nearly vanished from the political landscape. In their panic, the eurocrats stupidly insist on the same tactics, openly blackmailing and insulting an entire nation, telling people who to vote for. And that stupid tactic only fuels further rage against the authoritarian union.

Well, you know what they say and what actually history teach us: ruthless empires usually fall due to the enormous arrogance and corruption of their rulers.

Comments

Popular posts from this blog

How neoliberalism manufactured consent to secure its unlimited power

From David Harvey's A Brief History of Neoliberalism
Part 3 - The corporate-backed institutions behind the rapid and artificial ideological transformation of the American society in favor of neoliberalism
In the US case I begin with a confidential memo sent by Lewis Powell to the US Chamber of Commerce in August 1971. Powell, about to be elevated to the Supreme Court by Richard Nixon, argued that criticism of and opposition to the US free enterprise system had gone too far and that ‘the time had come –– indeed it is long overdue –– for the wisdom, ingenuity and resources of American business to be marshalled against those who would destroy it’. Powell argued that individual action was insufficient. ‘Strength’, he wrote, ‘lies in organization, in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and n…

Mystery solved: here's why the Western mainstream media suddenly 'discovered' the war in Yemen

globinfo freexchange
Why it took so long for the Western mainstream media to 'discover' the war in Yemen and the war crimes committed by the Saudi coalition in full co-operation with the US?
One might think that the humanitarian disaster there - caused also by the blockade of goods for the relief of the civilians - has become so obvious, condemned multiple times by the UN, that the media finally forced to speak about it.
In previous article we attempted to explain the 'unexplained phenomenon' and the fact that CNN surprisingly returned to the issue to openly condemn the US support to the Saudi coalition atrocities against civilians in Yemen.
Yet, despite that the Saudi regimes have been, traditionally, the best allies of the Western neocolonialists, this time, the US had serious reasons to overthrow the Saudi crown prince Mohammed bin Salman (MBS). And, surprisingly enough, at the center of this underground conflict lies an attempt by the US to privatize Aramco, Saudi Arab…

CIA had an agent at a newspaper in every world capital at least since 1977

Joel Whitney is a co-founder of the magazine Guernica, a magazine of global arts and politics, and has written for many publications, including the New York Times and Wall Street Journal. His book Finks: How the C.I.A. Tricked the World's Best Writers describes how the CIA contributed funds to numerous respected magazines during the Cold War, including the Paris Review, to subtly promote anti-communist views. In their conversation, Whitney tells Robert Scheer about the ties the CIA’s Congress for Cultural Freedom had with literary magazines. He talks about the CIA's attempt during the Cold War to have at least one agent in every major news organization in order to get stories killed if they were too critical or get them to run if they were favorable to the agency. And they discuss the overstatement of the immediate risks and dangers of communist regimes during the Cold War, which, initially, led many people to support the Vietnam War.
globinfo freexchange
James Jesus Angleton wa…

Trump proves he is completely clueless on what's the real reason behind the mass layoffs epidemic in big businesses and how to deal with it

globinfo freexchange
Donald Trump's response to recent General Motors' decision to close plants and slash jobs, proves that he is completely clueless on what's the real reason behind the mass layoffs epidemic in US big businesses and how to deal with it.
The media circulated what Trump thinks to do about it, including threats against GM to impose auto tariffs, or, his most beloved action: penalties on foreign cars.
Yet, perhaps the most hilarious part in the whole story, is that one of the key frontline tools of the global neoliberal capital immediately published an 'in your face' article to make Trump realize that he is completely powerless too, against the forces of the markets. Here are some interesting parts:
... market forces are tough to beat, even if you’re president. Trump captured the White House thanks in large part to the story he told -- that he could reverse America’s industrial decline. He promised to bring back manufacturing and fossil-fuel j…

In 1961, US experts knew that the Soviets had only four ICBMs

globinfo freexchange
In a discussion with Paul Jay of the Real News, Daniel Ellsberg revealed that the US discovered - through a top-secret operation -that the USSR had only four(!) ICBMs back in 1961. This meant that the Soviets were very far from becoming a serious threat for the West. However, the false picture of the 'Soviet threat' remained powerful in order to permit the US to justify its frenzy nuclear armament race.
Ellsberg explains:
The estimate of 40 to 60 [Soviet intercontinental ballistic missiles] - which was pretty much in 1962 at the time of the missile crisis based on a lot of satellite photography - was much lower than was estimated earlier, from ‘58, ‘59, ‘60.
The Air Force had a higher estimate. Even the CIA official estimate in 1961 was well over 100. The State Department estimated like 160. The Air Force was much higher than that. And in August of 1961, the then commander of Strategic Air Command, Thomas Power, believed that there were then 1000 Soviet ICBMs…

Another US slow motion coup in Latin America: astonishing details on how the neoliberal-fascist complex destroyed Leftist leaders in Brazil and brought Jair Bolsonaro to power

globinfo freexchange
Greg Wilpert of the RealNews, spoke with Brian Mier, editor for the website Brasil Wire, about the recent developments after right-wing extremist Jair Bolsonaro won the presidential election in Brazil.
Mier revealed astonishing details on how the neoliberal-fascist complex in Brazil (fully backed by the US), undermined and destroyed the most popular leaders of the Workers' Party (PT), Lula da Silva, Dilma Rousseff and even Fernando Haddad, in order to bring Jair Bolsonaro to power.
The purpose of this slow motion coup was what has been always for the US empire, especially in Latin America: to secure and broaden the absolute domination of the US and the Western corporate monopolies and destroy any Leftist resistance against the neoliberal status quo.
As Mier explained:
On the eve of the Supreme Court decision - which ruled on whether Lula should be imprisoned or not, exceptionally, in a moment when his appeals were still going on, contrary to hundreds of other poli…

How neoliberalism manufactured consent to secure its unlimited power

From David Harvey's A Brief History of Neoliberalism
Part 4 - Neoliberalism's second big experiment after Chile: the financial coup by the banking mafia to take over New York
One line of response to the double crisis of capital accumulation and class power arose in the trenches of the urban struggles of the 1970s. The New York City fiscal crisis was an iconic case. Capitalist restructuring and deindustrialization had for several years been eroding the economic base of the city, and rapid suburbanization had left much of the central city impoverished. The result was explosive social unrest on the part of marginalized populations during the 1960s, defining what came to be known as ‘the urban crisis’ (similar problems emerged in many US cities).
The expansion of public employment and public provision –– facilitated in part by generous federal funding –– was seen as the solution. But, faced with fiscal difficulties, President Nixon simply declared the urban crisis over in the early 1…

How the corporate elite started to eliminate the Left and the power of the US working class right after the end of WWII

globinfo freexchange
Richard Wolff brilliantly explains the economics behind the great US anti-leftist purge (McCarthyism) after 1945:
At the end of WWII - late 1940s into the 50s - something remarkable happened politically in the United States. And it was in many ways surprising. Suddenly, a group of people in the United States who had been celebrated as heroes, became instead - almost overnight – demons. From being leaders they became traitors.
Communists - members of the American Communist Party, Socialists - members of the two socialist parties at that time, and active leaders of the labor movement - the big organizing drives of the CIO in the 1930s and 40s, had brought millions of Americans who had never been in unions before, into the unions. They joined the unions because they thought it would be a safe way to make it through the Great Depression of the 1930s. At least safer than not being in a union.
And together, the Communists, the Socialists and the Unionists, really struggled …

Exploiting Khashoggi's assassination: the neoliberal predators hang over Saudi Arabia

globinfo freexchange
A month ago we gathered some information to explain the sudden 180 degrees hostile turn by the Western neoliberal status quo against the current Saudi regime.
We discovered that the US corporate dictatorship and the Wall Street mafia heavily invested on the rapid neoliberalization of the Saudi Arabian economy, with the privatization of the state-owned oil company Aramco at the heart of this plan. Suddenly, Mohammed bin Salman decided to step back from the deal.
It would be worth to note that Aramco was standing at the top of the global list of the largest oil and gas companies for 2017 with a revenue of 465.49 billion US dollars.
It seems that the neoliberal regime didn't abort its plans concerning Saudi Arabia and silently seeks to "replace" bin Salman with a more faithful puppet, exploiting, of course, the assassination of Jamal Khashoggi.
Digging a little bit more, we found plenty of evidence in the Western mainstream media, in recent years, showing …

Trump is running scared of Socialism

Donald Trump’s economic advisers released a bizarre report attacking socialism yesterday. Socialists can only take one lesson from it: we’re winning.
by Miles Kampf-Lassin
Part 5 - A Flawed Critique
Accidental arguments for single-payer aside, the entire premise of the CEA critique of socialism misses the mark. After pointing to the failures of farming and food production under Stalin and Mao — models which, as far as I’m aware, no socialist politicians or Democratic Socialists of America organizers are advocating for — the authors claim that “the lessons from socialized agriculture carry over to government takeovers of oil, health insurance, and other modern industries: They produce less rather than more.
The implication is that socialist policies would result in scarcity — bread lines, famine, and rationed care. For socialists, however, the goal is not to eliminate production, but to shift it from boosting corporate profits to serving human needs. As Meagan Day explains, “Our goal is …