Global banking interests continue to dominate government posts in Europe and the United States, with the needs of ordinary citizens coming second to those of the financial services industry - claims Occupy London campaign group
The disclosure that Jim O'Neill of Goldman Sachs is a candidate to be the next governor of the Bank of England is a cause for grave concern. Over recent years - global banking interests and Goldman Sachs, in particular, have dominated government posts in the United States and Europe. The harshest critics would say they have presided over one catastrophe after another. In the 1990s, former chief executive officer of Goldman Sachs Robert Rubin became Bill Clinton's Treasury secretary and presided over the disastrous de-regulation of banking and derivatives trading. The collapse of the hedge fund Long Term Capital Management, in 1998, was caused by huge derivative securities trades going wrong. The massive bank bail-outs in the wake of the sub-prime crisis were needed because Rubin organised the repeal of the Glass-Steagal Act, therefore removing the separation of retail and investment banking.
Hank Paulson, another former CEO of Goldman Sachs, was Bush Junior's Treasury secretary - who in 2008 frightened the US Congress into bailing out the banks with the $800bn Troubled Assets Relief Program – known as TARP - of which Goldman Sachs received $10bn. Coincidentally, they paid themselves $10bn in bonuses in the same year. Paulson, together with Lloyd Blankfein - Goldman's current CEO - organised the $128bn bail-out of American International Group of which Goldman Sachs received $13bn in respect of credit default swaps underwritten by AIG. In 2003, Goldman Sachs arranged a secret debt swap for the Greek government to enable Greece to meet the criteria to qualify for membership of the euro. Lucas Papedemos, the current unelected prime minister, was running the Central Bank of Greece at the time. And the current head of the Greek debt office started his career at Goldman.
The blending of banking and politics is perfectly embodied by arch-technocrat Mario Monti, the unelected Prime Minister of Italy. Monti is an adviser for Goldman Sachs International, and the European chairman of the Trilateral Commission - the executive chairman being David Rockefeller. He is also on the steering committee of the Bilderberg Group – again, the executive chairman being David Rockefeller - alongside Peter Sutherland, the chairman of Goldman Sachs International. Monti's glittering curriculum vitae also includes membership of the research advisory council of the Goldman Sachs Global Market Institute.
The European Central Bank also has a Goldman tentacle around its neck. Mario Draghi was appointed president of the ECB in November, last year. Draghi was a member of the World Bank and managing director of the Italian Treasury before spending three years as managing director of Goldman Sachs International, between 2002 and 2005 – only to return to government as president of the Italian central bank. Draghi has been dogged by controversy over the accounting tricks conducted by Italy and other nations on the eurozone periphery as they tried to squeeze into the single currency a decade ago. See What price the new democracy? Goldman Sachs
by Stephen Foley, for a detailed map of the network of power in the single currency area.
Central banks are dominated by banking interests and they have served their sponsors well. Even the US government appointee Ben Bernanke, chairman of the privately controlled Federal Reserve Board, allegedly dances to the bankers' tune. A recent US Congressional audit of the Fed revealed that $16 trillion dollars was secretly created and given to domestic and international banks between 2007 and 2010. This is in addition to successive tranches of quantitative easing, which have driven up asset prices with little effect on the real economy. As the CEO of Goldman's asset management business, O'Neill has been a direct beneficiary of this largesse.
It gets muddier. The current president of the New York Federal Reserve William Dudley worked at Goldman for 21 years, including 10 as their chief economist. The CEO of the New York Stock Exchange Duncan Niederauer chalked up 22 years at Goldman. Meanwhile, the current head of the World Bank Robert Zoellick is a former managing director of – you guessed it - Goldman Sachs. Closer to home, the Bank of England's Mervyn King has been no less generous to banking interests: £325bn of quantitative easing in the United Kingdom has similarly driven up asset prices with little benefit to the majority of British people. We are fortunate in that the Bank of England was nationalised in 1946, but unless we populate the court - the governing body of the Bank of England - with truly independent thinkers, banking interests will continue to benefit at our expense. And if we hand the reins to yet another Goldman Sachs man, we can expect more problems.Clive Menzies is a member of the Occupy London campaign organisation's economics working group
The extent to which the Goldman alumni have infiltrated politics, and vica versa, goes far beyond a network. It would be interesting to understand whether the intermingling is motivated by simple greed and self-interest, which is easy to accept and communicate - or whether it is motivated by a genuine acceptance of a coherent, though profoundly mistaken, belief in the neo-liberal projerct; even though it is so damaging to the 99 per cent.
If it were the former it would seem apt to deal with it by punishing greed, if this could be done. But if it were the latter, the job might be more challenging: the replacement of the theoretical foundations which support the neo-liberal view. Perhaps the attack should proceed on both fronts simultaneously.
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