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11 11 11 Banker's Choice

11 11 11 Banker's Choice

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Published by William J Greenberg
Imagine letting Goldman Sachs and Bank of America select our president—that's just what's happened in Italy and Greece.
So Greece has a new prime minister – Lucas Papademos – and Italy looks about to have a new one, too – Mario Monti. To which not just you and I but damn near every Italian and Greek responds, “Who?”
Imagine letting Goldman Sachs and Bank of America select our president—that's just what's happened in Italy and Greece.
So Greece has a new prime minister – Lucas Papademos – and Italy looks about to have a new one, too – Mario Monti. To which not just you and I but damn near every Italian and Greek responds, “Who?”

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Published by: William J Greenberg on Nov 14, 2011
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NOVEMBER 11, 2011Imagine letting Goldman Sachs and Bank of America select our president—that's just what's happened in Italy and Greece.So Greece has a new prime minister – Lucas Papademos – and Italy looksabout to have a new one, too – Mario Monti. To which not just you and I butdamn near every Italian and Greek responds, “Who?”Neither Papademos nor Monti has ever held elective office, or even run forone. Neither has been a minister, sub-minister or even civil servant in one of their nation’s ministries. Neither has developed, or sought to develop, apublic following from their careers as economic technicians, chiefly on theEuropean supra-national level. Yet each is about to lead a major nation.Papademos and Monti are something new under the sun: national leaderselected by the markets. Imposed, not as pro-consels by foreign occupiers,but by the European banking community, by the finance ministers of theEurozone powers – chiefly, Germany and France. Each has an impressiveresume and a good reputation with the centrist political and economic elitesof his own nation, but there’s no reason why the person on the street of Rome or Athens should know who the hell they are.But imagine if the U.S. couldn’t sell its Treasury notes (which has never beena problem, let’s be clear), and the IMF and Germany and China got togetherand said that Barack Obama, Joe Biden, the Cabinet and the Congress had togo. Imagine that they then designated as Obama’s successor, say, the guywho followed Tim Geithner as head of the New York Fed (I don’t even knowwho that is), or Robert Zoellick, the American who heads the World Bank. That’s essentially what just happened to Italy and Greece.And the way this fits into democratic theory is – well, it doesn’t fit intodemocratic theory. It’s closer to a coup without tanks. To be sure, these aretemporary coups until each nation holds new elections, but Papademos andMonti are not supposed to be mere caretakers until the real leaders arrive. To the contrary, they’re assuming power under instruction from the markets– the markets that have seen Italy’s financing costs rise and the value of stocks everywhere topple – to make sweeping cuts in services andsubstantial hikes in taxes, cuts so sweeping and hikes so substantial that no
elected leader would dare make them. They’ve been instructed by themarkets, in essence, to lower the living standards of their peoples.Both Monti and Papademos look to be corporate liberal internationalists of the kind that in the U.S. end up in the Treasury Department. Papademoswent to college and grad school at MIT and taught economics at Columbiafrom the mid-70s to the mid-80s. He even served as senior economist for theFederal Reserve Bank of Boston in 1980. Returning to Greece in 1985 towork as chief economist of the Bank of Greece, he rose to the post of thebank’s Governor; then served as Jean-Claude Trichet’s chief deputy at theEuropean Central Bank from 2002 to 2010, returning again to Greece in 2010to become an economic adviser to Prime Minister George Papandreou.Monti went to college in Italy, but completed his graduate studies ineconomics at Yale, where he studied under James Tobin (which I supposeincreases the chances that he supports a financial transaction tax). He wasan economics professor and university administrator in Italy from 1970through 1994, then was appointed to the European Commission, where hewas handed various economic portfolios, including those on financial servicesand competition, in which capacity he initiated anti-monopoly proceedingsagainst Microsoft and led the investigation that culminated in blocking themerger of General Electric and Honeywell. With Jacques Delors and DanielCohn-Bendit, he has supported an initiative to deepen the European Union,and he was the first chairman of Breugel, a Brussels-based EU-oriented thinktank. His bio on the European Commission’s website listed him as an adviserto Goldman Sachs, and it’s downhill from there: A conspiracy theorist’sdream-come-true, Monti, according to Wikipedia, is also the Europeanchairman of the Trilateral Commission and a member of the BilderbergGroup.But there’s nothing conspiratorial about what is happening in plain view inItaly and Greece: Two economists have been imposed from on high to makechanges to the Italian and Greek economies – really, to fundamentallifestyles of Italians and Greeks – that neither nation would be likely to makethrough the normal democratic processes. Some of the changes we’re likelyabout to see would probably come in any case, but surely not all:Democracies tend not vote themselves into austerity-driven penury. But Italyand Greece (the latter, need I note, the cradle of democracy) aren’t reallylooking like democracies just now, or even sovereign states.
So what do we call this? A coup? An occupation? The latest version of the18th Brumaire? (That one’s for the Marxists.) If nothing else, it’s certainly atriumph of capitalism over democracy.As much as I believe in Keynesian stimulus I also believe that there has to bea reckoning day for debt when borrowing gets out of control and there are no"adults" to come up with a rational path forward. There are worse things thatcould happen then having rational economists (I'll have to assume that'swhat these guys are) take the reins for a short term (especially when thealternative is a buffoon like Berlusconi). This whole situation is more a testament to the dysfunctional politicalsituation in so many parts of the world than the power of bankers orcapitalists to seize control in a bloodless coup. And dysfunctional politicspoints straight back to we the electorate. Too much willful ignorance andbelief in fantasy politics and not enough simple common sense and gumptionto elect politicians who will really represent the interests of the majority of the citizens and work together to solve problems is where the troubleoriginates.Perhaps a bit of Italian history will make President Napolitano's choice of Monti as a technocratic custodian of the nation more explicable. As Haroldpoints out, the President was a leader of the old Communist Party, one of itsmost prestigious and he was also in effect an Italian Social Democrat whenthe party of that name was mired in the corruption that destroyed the largerSocialist Party (all in Cold War and immediate post Cold War days.) TheCommunist Party shared rule with the Christian Democrats and others,although an American veto never allowed it into national government. Themurder of Christian Democratic leader Aldo Moro was connected to hisefforts to bring the Communists de jure as well as de facto into government.In any event, Monti is a long term friend of the President, who like manyCommunists was and is a firm supporter of an idea of a united Europe. Montiis also typical of the technocrats who themselves travelled freely back andforth across the Atlantic and across the Alps, but who always thought andsometimes said that nothing good would come of the exclusion of theCommunists from government, since the party represented very positivecultural and social forces indispensable to the health of the nation and itsdemocracy. The very sad and frequently disgusting spectacle presented byBerlusconi et al in the recent past suggests how right they were.

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