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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.

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