Posted 10 months ago on July 1, 2012, 3:44 p.m. EST by LeoYo
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Government by the Banks, for the Banks: The ESM Coup D’Etat in Europe
Sunday, 01 July 2012 14:01 By Ellen Brown, Truthout | News Analysis
On Friday, June 29th, German Chancellor Angela Merkel capitulated to changes to a permanent Eurozone bailout fund—"before the ink was dry," as critics complained. Besides easing the conditions under which bailouts would be given, the concessions included an agreement that funds intended for indebted governments could be funneled directly to stressed banks.
According to Gavin Hewitt, Europe editor for BBC News, the concessions mean that:
[T]he eurozone's bailout fund (backed by taxpayers' money) will be taking a stake in failed banks.
Risk has been increased. German taxpayers have increased their liabilities. In future a bank crash will no longer fall on the shoulders of national treasuries but on the European Stability Mechanism (ESM), a fund to which Germany contributes the most.
In the short term, these measures will ease pressure in the markets. However there is currently only 500bn euros assigned to the ESM. That may get swallowed up quickly and the markets may demand more. It is still unclear just how deep the holes in the eurozone's banks are.
The ESM is now a permanent bailout fund for private banks, a sort of permanent "welfare for the rich." There is no ceiling set on the obligations to be underwritten by the taxpayers, no room to negotiate, and no recourse in court. Its daunting provisions were summarized in a December 2011 youtube video originally posted in German, titled "The shocking truth of the pending EU collapse!":
The treaty establishes a new intergovernmental organization to which we are required to transfer unlimited assets within seven days if it so requests, an organization that can sue us but is immune from all forms of prosecution and whose managers enjoy the same immunity. There are no independent reviewers and no existing laws apply. Governments cannot take action against it. Europe's national budgets [are] in the hands of one single unelected intergovernmental organization.
Here are some of the ESM's key provisions:
[Article 8] "The authorised capital stock shall be EUR 700 000 [700 billion Euros]."
And that was before Merkel's recent concessions, which allow this open-ended indebtedness to be funneled directly to the banks.
Why Did Merkel Cave?
"Reactions back home were devastating," reported der Spiegel. "[T]he impression was that [Merkel] had been out-maneuvered by Italian Prime Minister Mario Monti and Spanish Prime Minster Mariano Rajoy."
As of June 21, 13 of 17 countries still had not ratified the ESM; and the most important ratification needed was Germany's, the largest economy in the Eurozone. Earlier, Angela Merkel had opposed using the bailout fund to pump money directly into struggling European banks. But at the EU summit that began on Thursday and dragged on well into the night, she finally relented. Late Friday evening, German lawmakers voted 493-106 in favor of the €700 billion ($890 billion) permanent bailout fund.
What caused Merkel to back down? According to an article in The Economist, the late night was "filled with bluff and bluster," in which Mariano Rajoy, the Spanish prime minister . . . , along with Italy's Mario Monti, had threatened to block any agreement at the summit unless their demands were met. Mr Rajoy obtained satisfaction, but the same is not quite true of Mr Monti, who had been the most adamant of the two.
Mr Monti declared himself satisfied, but caused considerable irritation to partners. Among the deals he had blocked was the "growth pact", a mixture of stimulus measures. What Monti achieved by this maneuver was not clear:
"Who needs the growth pact? Not Germany," said one bemused participant. The euro zone's fiscal hawks say the bond-buying mechanism will be little different from the existing system. "Mario Monti raised a gun to his head and threatened to shoot himself. In the end he wounded himself in the shoulder," said one scornful diplomat.
Maybe. Or maybe the bond-buying mechanism was not what he was really after.
The Italian Coup D'Etat
"Super Mario" Monti is a controversial figure. He rose to power in Italy last November in what critics called a "'coup d'etat' engineered by bankers and the European Union." He was not elected but stepped in after Prime Minister Silvio Berlusconi resigned under duress.
Monti is not only an "international advisor" to Goldman Sachs, one of the most powerful financial firms in the world, but a leader in the Bilderberg Group and the Trilateral Commission. In an article in The New American, Alex Newman calls these clandestine groups "two of the most influential cabals in existence today." Monti is listed as a member of the steering committee on the official Bilderberg website and as the European Group chairman on the Trilateral Commission website.
The Trilateral Commission was co-founded in 1973 by David Rockefeller and Zbigniew Brzezinski, also Bilderberger attendees. The Trilateral Commission grew from the thesis in Brzezinski's 1970 piece Between Two Ages: America's Role in the Technetronic Era that a coordinated policy among developed nations was necessary in order to counter global instability erupting from increasing economic inequality. He wrote in his 1997 book The Grand Chessboard that it would be difficult to get a consensus on these issues "except in the circumstance of a truly massive and widely perceived direct external threat."
Naomi Klein calls it "the shock doctrine"—an induced disaster forcing austerity measures on sovereign nations. In desperation, they would come to heel, relinquishing the sovereign right of governments to an unelected body of technocrats. And that is what the ESM seems to achieve.
Rockefeller notoriously wrote in his 2002 autobiography, "Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as 'internationalists' and of conspiring with others around the world to build a more integrated global political and economic structure—one world, if you will. If that's the charge, I stand guilty, and I am proud of it."