from Rense Website
These moves represent an historical watershed as Germany becomes the first major economic power to roll back the tide of financial globalization, under which crackdowns on hedge funds, derivatives, and the world gambling casino were branded as taboo for national governments.
German Finance Minister Wolfgang Schäuble has announced that the Merkel government is sending a draft bill to the German parliament (the Bundestag) targeting "turbulence" and "volatility" through further regulation of "certain transactions [which] amplify the crisis."
The bill reaffirms the most fundamental German measure enacted so far, the May 18 blanket ban on all naked credit default swaps issued against the treasury bonds of the Eurozone nations.
This ban represents the most aggressive move
the OECD against these most toxic
derivatives, which have
figured prominently in the AIG bankruptcy and the recent Goldman Sachs
Abacus scandal. They are also the derivatives being widely used by hedge
fund hyenas and zombie banks to attack such nations as Greece, Spain, and
the rest of the Southern tier of the Euro.
To that would now be
added a ban on the naked shorting of those Euro zone government bonds
themselves. This means that a speculator wishing to sell a Euro zone
government bond short must own that bond in advance. This makes speculation
more complex and expensive, and is all to the good.
The obvious next step is to ban naked shorting of stocks altogether. From now on, speculators who wish to short German stocks must own those stocks before they sell, making it more difficult and costly for said speculators to operate. The new draft bill would also outlaw the naked shorting of the Euro itself in the foreign exchange markets.
The Bundestag needs to approve this bill on the
fast track, and then do more.
There was no doubt that the overriding
purpose of Geithner's mission was to sabotage the German moves against
derivatives in particular and speculation in general.
The band was "one-sided," he added, making clear that Geithner & Co. did not expect the German ban to be adopted on a large scale. Geithner was evidently deeply concerned that the German ban might be imitated by some of Germany's closest economic partners, including the Netherlands, Belgium, and Sweden, as well as by other nations much farther afield.
Who was the anonymous
official? It might have been Tiny Tim himself, or it might have been
Patterson of Goldman Sachs, Geithner's chief of staff and chief lobbyist for
carbon offset boondoggles.
The explanation is obviously that the Socialist
International as a whole (with figures like Papandreou of Greece and
Socrates of Portugal, as well as Zapatero) is acting as an abject
This meant that the hedge funds had succeeded in spreading the Greek contagion, thus raising questions about the short-term survivability of such overextended speculative operations as Banco Santander and Banco de Bilbao. The Spanish parliament approved a draconian austerity program by a single vote, offering the lunatic spectacle of a country already mired deeply in economic depression, with an official unemployment rate of 20%, embracing its own self-cannibalization with a deflationary austerity program in the vain effort to regain the confidence of international financial markets and investors.
Spain needs to understand that there are no "markets" today, but
only oligopolies and cartels. They need to understand that they are dealing
with ruthless speculators, and not with investors. They might as well try to
regain the confidence of Bonnie and Clyde, Dillinger, and Ma Barker.
The financiers Franco DeBenedetti and Paolo Savona, camouflaged amidst a group of free-market quackademics, are desperately campaigning to convince Prime Minister Berlusconi to maintain the sanctity of hedge funds and derivatives. My answer to these market fetishists appears below.
Berlusconi is moving in the wrong direction on draconian austerity with the € 30 billion package of cuts which he has presented to the parliament. If this is all Berlusconi has to offer, the Italian economy is in danger of entering a death spiral in which tax increases and cuts to spending and public services inevitably cause rising unemployment, falling real production, and constantly lower government revenue receipts.
Berlusconi should concentrate on suppressing speculation
and on launching a recovery program, not on austerity.
The Greeks, we are told, are "profligate."
This legend of the profligate Greeks conveniently ignores the fact that Greece is the second poorest nation of pre-1990 Europe only Portugal is poorer. The Greeks have 18% official unemployment, with 20% of the population living below the official poverty line. The average Greek office worker earns about $1500 per month, or barely 40% of the wage level of their German counterparts. And the average pension for Greek government worker is about $750 per month. This is hardly a king's ransom.
Greece is also an example of one of the peripheral countries where the
depression first began to hit. Greece is heavily dependent on tourist
revenue, which began to decline sharply in 2007 and 2008 as the world
derivatives panic began to lash Germany and northern Europe, spelling fewer
foreign visitors on the Acropolis and on Mykonos and the Dodecanese .
For many of these countries, it is already obvious that their current debts cannot be repaid in the physical universe as presently constituted. For them, default is simply an inevitable necessity, not a choice. Their only choice is now when they will default, and with what strategy. In this regard, their choices are essentially two.
On the one hand, they can destroy their national economies, dilapidate their capital stock, and destroy the living standard of productive working families through criminally stupid austerity programs and budget cuts of the vandalistic type dictated by the monetarist crackpots at the International Monetary Fund, European Commission, World Bank, Bank for International Settlements, and similar institutions.
At the end of all this unspeakable torture of austerity, they will find,
At the end of all this, they will default anyway, and drift like derelict wrecks on the world ocean.
Many of them will fall under dictatorships, or even fascist
This freeze on all payments of interest and principal on international financial debt must be conducted in an orderly, legal fashion, fully explained to the population and presented as an integral part of a strategy for national economic recovery.
Plans should be made in advance for
suppressing financial speculation, while mobilizing domestic economic
resources for the most ambitious projects of national public infrastructure
as a means to radically reduce unemployment and poverty. Raw materials must
be secured in advance through barter deals and other ad hoc arrangements
with the relevant countries, and these transactions must necessarily occur
outside of the straitjacket of IMF and World Trade Organization rules.
The goal is to produce something which the world will find simply indispensable, independent of whatever protectionist measures may or may not be enacted elsewhere.
This effort can be used as a
science driver along with other science drivers to restart scientific
discovery and technological research and development throughout the entire
national economy. This is the kind of strategy which the leaders of the
southern tier nations of the Euro should currently be elaborating.