From Volume 38, Issue 6 of EIR Online, Published Feb. 11, 2011

Global Economic News

At Davos, Bankers Dream of Dictatorship

Jan. 30 (EIRNS)—The bankers at this year's Davos, Switzerland World Economic Forum (Jan. 26-29) were back to dreaming of running their world dictatorship, according to Liam Halligan in the Jan. 29 London Daily Telegraph. As the summit closed, Halligan reported, executives from JP Morgan, Barclays, and Crédit Suisse, among others, summoned a meeting of Western finance ministers and other officials, to tell them to "lay off" the bankers. Their best pupil was, not surprisingly, U.K. Chancellor of the Exchequer George Osborne.

Halligan reports that the bankers were busy at Davos, getting rid of every threat for more regulation. The new Basel rules for higher capital requirements have been totally diluted. And U.S. regulators have dropped new accounting rules that would have required marking their asset "to market," thereby restoring "their official licence to cook their books."

Meanwhile, Halligan reports, the banks continue to expand, with the top 10 U.K. banks' balance sheets totalling 460% of national income and the entire sector accounting for five times GDP. This dwarfs U.S. banking indebtedness, which is only 100% GDP. Halligan is actually in favor of a Glass-Steagall-style reform in light of this situation, separating investment and commercial banking. But he doesn't expect it to come any time soon.

Goldman Sachs Tells Germans To Pay for Bailouts

Feb. 4 (EIRNS)—The German taxpayer will have to bleed, Alexander Dibelius, CEO of Goldman Sachs in Germany, stated bluntly in an interview today with Bild Zeitung, Germany's leading mass-circulation daily. "We must not forget that Germany has so far profited much more from the euro than the debt crisis has cost it. The benefits are so enormous, Germany is so strong today, that it could almost theoretically afford a restructuring of Greece on its own."

And the bailout of Greece is crucial, Dibelius explained, because "even though Greece generated just 2% of Europe's total economic output, it has become a symbol for the euro-debt crisis and therefore could not be allowed to fail.... It must not get to a situation in which a great currency system fails." And the euro must not fail, he added, because Germany needs it to compete with the "new rising powers," China, India, and Brazil.

Apart from outing himself as a propagandist for the BRIC (the Brazil, Russia, India, China combination being promoted by the Rothschilds' Inter-Alpha Group of banks), Dibelius's taking to the press on the issue a few hours before a European Union summit in Brussels, is of special relevance, because he is generally attributed with the role of a crucial door-opener in 2005, when German industry was still skeptical about Angela Merkel's capabilities as future Chancellor. Dibelius convinced the skeptics that Merkel was the best choice to replace Gerhard Schröder, later in 2005. Dibelius has special political leverage on Merkel, therefore.

If Europe Accepts Brutal Austerity, Germany Will Provide Bailouts

Feb. 4 (EIRNS)—The first reports from the European Union summit in Brussels today, spoke of the Franco-German position prevailing there, implying that the two countries and a couple of others in Europe that still have an AAA credit rating, will step in for the more troubled countries and increase their own guarantees for the Eurozone banking rescue fund EFSF. That may imply a doubling (!) of guarantees that Germany alone would supply, from the present volume of EU123 billion euros.

The price that the troubled countries that need a bailout would pay, is a whole set of new and more brutal austerity measures: limits on debt levels written into national laws, a higher retirement age, the abolition of indexing of wages to inflation, and a minimum corporate tax rate. Details will have to be worked out for the March 25 EU summit.

Initially, the smaller countries of the EU revolted against the whole idea, but they were apparently blackmailed into accepting it. The main blackmail, however, is the one that drove Germany into making this idiotic and suicidal proposal in the first place.

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