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This article appears in the April 13, 2012 issue of Executive Intelligence Review.

Glass-Steagall Takes to the Streets

by Andrew Spannaus

[PDF version of this article]

April 9—The campaign for a Glass-Steagall-style reform of the banking system is taking off at the popular level in Italy. Two months after the introduction into the Senate of a Glass-Steagall bill by Sen. Oskar Peterlini, the Lega Nord (Northern League), the largest opposition party, has announced a mobilization to collect signatures for the presentation of a bill into the Italian Chamber of Deputies using the "popular initiative" system, which obligates the Parliament to consider proposals that have been signed by at least 50,000 citizens.

The campaign by the Lega comes in anticipation of a bill that is expected to be introduced into the Chamber following normal procedures shortly. EIR has learned that the initiative will involve leading figures from other political parties, and will be based in part on the Peterlini bill before the Senate, which was prepared in collaboration with Movisol, the LaRouche movement in Italy. Over the past three years, Movisol has succeeded in mobilizing various individual political figures around the Glass-Steagall proposal, as well as numerous local organizations and associations, but this is the first time that a political party has taken up the cause as part of its program.

The introduction to the popular initiative (see Documentation) states that "it is time to set a limit to the excessive power of finance.... This means that it is only the state that issues money in the name of the people. It means that credit is for development and not for speculation. It means separating the wheat from the chaff, what is productive from what is speculative, as happened for centuries." Finance is identified as an "infection" that is out of control, and must be placed into an orderly reorganization procedure, to allow for "large-scale public investment for the industrial economy and manufacturing, and for infrastructure."

Insisting that taxpayers should not bail out speculators, the text states,

"A gambler cannot simply leave the table and have someone else take his place to pay for his losses. The one who loses a bet must be forced to pay!"

As most observers in Italy would recognize, the language of the introduction is that of Giulio Tremonti, the former Economics Minister, who has been very vocal in supporting a Glass-Steagall reform in Italy since the beginning of this year. In fact, the introduction to the popular initiative consists of portions from Tremonti's recent book Uscita di Sicurezza (Emergency Exit).[1] Since the outbreak of the acute phase of the global financial crisis in 2007-08, Tremonti has repeatedly called for reorganizing the international financial system in order to save the real economy, as opposed to the parasites; despite an increase in his popularity in Italy (or because of it), he was rewarded with a scandal campaign aimed at pushing him out of office, which ultimately succeeded, only when the elected government of Silvio Berlusconi—himself increasingly under the influence of Tremonti's enemies—was replaced by technocrats and bankers led by market darling, now Prime Minister, Mario Monti.

The broadening of the push for Glass-Steagall to multiple political parties represents an important marker in this period of crisis, where far too many in the population and institutions have to date been cowed into accepting policies dictated by the international financial establishment. Despite their different political ideologies, various sectors of the population are beginning to coalesce around the proposal, which can represent an essential first step towards the abandonment of the suicidal free-market policies in place at the international level.

Judicial Attack

On April 1, Lega Nord leader Umberto Bossi announced the Glass-Steagall campaign during a public event by saying: "We need to split up the banks; those that speculate from those that give money to enterprises." The plan is to have literature tables to collect signatures around Northern Italy, with petitions that include the proposed articles of law.

Right on cue, the Financial Police showed up at the Lega's headquarters in Milan two days later, on April 3, announcing an investigation of three party officials accused of fraud and embezzlement of public funds provided as reimbursement for election campaigns. Details were then released that involved misuse of funds for the personal expenses of Bossi's family. Bossi and the Lega deny knowledge of any wrongdoing, but their political image is taking a huge hit, since the party was built on an anti-corruption message, charging that the hard-working North shouldn't be paying for inefficient and corrupt public and private structures in the South.

(This has at times expressed an undercurrent of racism in some sections of the party, along with threats to split Italy as a nation between North and South, although in recent times the Lega has essentially dropped these points, and become a magnet for opposition to globalization and free-market policies. Indeed, for over a year, the party's radio station Radio Padania has regularly interviewed the leaders of Movisol, to promote the campaigns of the LaRouche movement.)

As a result of the judicial attack, Bossi resigned as secretary of the Lega on April 5.

While the operation against the party obviously predates the campaign for Glass-Steagall, as it involved investigations that took place over a significant period of time, it is clear that the Lega has become a target due to its role as the only major party that has opposed the harsh austerity measures being imposed on Italy by the European Central Bank and its cohorts, through the Monti government. In fact, the other major political parties, including those who claim that they are against free-market liberalism, have been fully supporting the technocrats, either explicitly or de facto. Thus, undercutting the Lega's credibility is certainly seen as essential to avoiding another major increase in its vote totals in the upcoming municipal elections, which could spell trouble for the hegemony of the technocrats.

At the same time, the attack on the Lega must be seen in the broader context of a series of anti-corruption operations involving other political parties in Italy. Even minor offenses, or those that do not implicate party leaders, have become the subject of widespread media attention, engendering a general environment conducive to undermining trust in the political class as a whole. The beneficiaries of this are those who aim to push through a wave of so-called structural reforms, meaning cuts in social services, liberalization/deregulation measures, and privatization of whatever is left of state-sector industries to be gobbled up by financial markets desperate for new sectors of the economy to pillage. The parties don't dare stand up to Monti, and thus the destruction goes on (see Movisol statement, below).

Among the citizens, however, the opposition is growing, and promises to increase significantly when the additional tax increases hit people's bank accounts this Summer and Fall (massive property tax hikes, and a two-point increase in Value Added Tax, similar to a national sales tax that is levied on every category of goods and services). At this point, the smartest thing that the Lega, or any party, could do, would be to go full-steam ahead with Glass-Steagall, to create the basis for the early ouster of the compradors running the government, and provide an example internationally for those who wish to change the dynamic of the global financial crisis.

[1] Andrew Spannaus, "Tremonti Returns, Launches Glass-Steagall Offensive in Italy," EIR, Feb. 10, 2010.

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