by Dr. Paul Craig Roberts
November 26, 2011
Dr. Paul Craig Roberts is the
father of Reaganomics and the former head of policy at the
Department of Treasury.
He is a columnist and was previously an
editor for the Wall Street Journal. His latest book, “How the
Economy Was Lost: The War of the Worlds,” details why America is
Goldman Sachs Tower
On November 25, two days after a failed German government bond auction in
which Germany was unable to sell 35% of its offerings of 10-year bonds, the
German finance minister, Wolfgang Schaeuble said that Germany might
retreat from its demands that the private banks that hold the troubled
sovereign debt from,
...must accept part of the cost of
their bailout by writing off some of the debt.
The private banks want to avoid any losses either by forcing the Greek,
Italian, and Spanish governments to make good on the bonds,
Printing money to make good on debt is contrary
to the ECB’s charter and especially frightens Germans, because of
experience with hyperinflation.
Obviously, the German government got the message from the orchestrated
failed bond auction. As I wrote at the time, there is no reason for Germany,
with its relatively low debt to GDP ratio compared to the troubled
countries, not to be able to sell its bonds.
If Germany’s creditworthiness is in doubt, how can Germany be expected to
bail out other countries? Evidence that Germany’s failed bond auction was
orchestrated is provided by troubled Italy’s successful bond auction two
Strange, isn’t it. Italy, the largest EU country that requires a bailout of
its debt, can still sell its bonds, but Germany, which requires no bailout
and which is expected to bear a disproportionate cost of Italy’s, Greece’s
and Spain’s bailout, could not sell its bonds.
In my opinion, the failed German bond auction was orchestrated by,
My opinion is based on the following facts.
Goldman Sachs and US banks have
guaranteed perhaps one trillion dollars or more of European sovereign debt
by selling swaps or insurance against which they have not reserved
the US banks received for guaranteeing the values of European sovereign debt
instruments simply went into profits and executive bonuses
This, of course, is what ruined the American
insurance giant, AIG, leading to the TARP bailout at US taxpayer expense and
Goldman Sachs’ enormous profits
If any of the European sovereign debt fails, US financial institutions that
issued swaps or unfunded guarantees against the debt are on the hook for
large sums that they do not have
The reputation of the US financial system
probably could not survive its default on the swaps it has issued
Therefore, the failure of European sovereign
debt would renew the financial crisis in the US, requiring a new round of
bailouts and/or a new round of Federal Reserve “quantitative easing,” that
is, the printing of money in order to make good on irresponsible financial
instruments, the issue of which enriched a tiny number of executives.
Obama does not want to go into an election year facing
this prospect of high profile US financial failure. So, without any doubt,
the US Treasury wants Germany out of the way of a European bailout.
The private French, German, and Dutch banks, which appear to hold most of
the troubled sovereign debt, don’t want any losses.
Either their balance sheets, already ruined by
Wall Street’s fraudulent derivatives, cannot stand further losses or they
fear the drop in their share prices from lowered earnings due to write-downs
of bad sovereign debts. In other words, for these banks big money is
involved, which provides an enormous incentive to get the German government
out of the way of their profit statements.
The European Central Bank does not like being a lesser entity than
Federal Reserve and
the UK’s Bank of England.
The ECB wants the power to be able to undertake
“quantitative easing” on its own. The ECB is frustrated by the restrictions
put on its powers by the conditions that Germany required in order to give
up its own currency and the German central bank’s control over the country’s
The EU authorities want more “unity,” by which
is meant less sovereignty of the member countries of the EU. Germany, being
the most powerful member of the EU, is in the way of the power that the EU
authorities desire to wield.
Thus, the Germans bond auction failure, an orchestrated event to punish
Germany and to warn the German government not to obstruct “unity” or loss of
individual country sovereignty.
Germany, which has been browbeat since its defeat in World War II, has been
made constitutionally incapable of strong leadership. Any sign of German
leadership is quickly quelled by dredging up remembrances of the Third
Reich. As a consequence, Germany has been pushed into an European Union that
intends to destroy the political sovereignty of the member governments, just
as Abe Lincoln destroyed the sovereignty of the American states.
Who will rule the New Europe? Obviously, the private European banks and
The new president of the European Central Bank is Mario Draghi.
This person was,
Vice Chairman and Managing Director of
Goldman Sachs International
member of Goldman Sachs’ Management
Italian Executive Director of the World
Governor of the Bank of Italy
member of the governing council of the
European Central Bank
member of the board of directors of the
Bank for International Settlements
member of the boards of governors of the
International Bank for Reconstruction and Development and the Asian
Chairman of the Financial Stability
Obviously, Draghi is going to protect the power
Italy’s new prime minister, who was appointed not elected, was a member of
Goldman Sachs Board of International Advisers. Mario Monti was
appointed to the European Commission, one of the governing organizations of
European Chairman of the Trilateral
Commission, a US organization that advances American hegemony over
member of the Bilderberg group
founding member of the Spinelli group,
an organization created in September 2010 to facilitate integration
within the EU
Just as an unelected banker was installed as
prime minister of Italy, an unelected banker was installed as prime minister
Obviously, they are intended to produce the
bankers’ solution to the sovereign debt crisis.
Greece’s new appointed prime minister, Lucas Papademos,
of the Bank of Greece from 2002-2010
was Vice President of the European
is a member of America’s
Jacques Delors, a founder of the European Union, promised the British Trade
Union Congress in 1988 that the European Commission would require
governments to introduce pro-labor legislation.
Instead, we find the
banker-controlled European Commission demanding that European labor bail out
the private banks by accepting,
fewer social services
a later retirement
The European Union, just like everything else, is merely another scheme to
concentrate wealth in a few hands at the expense of European citizens, who
are destined, like Americans, to be the serfs of the 21st