“Financial Circles” or Predators Decided Mattarella’s Decision For Him in Italy
May 27 (EIRNS)—Trampling on democracy and probably on the Italian Constitution, the European Central Bank and London-centered “financial circles” have used Italy’s state President as their puppet in blocking a clear majority government. The open reason: It might violate the crippling rules of the euro in pursuing real economic growth, or even decide leave the Eurozone.
In refusing the coalition government of the Lega party and the Five Star Movement party, which was qualified by a majority of voters in March 4 elections and a majority of parliamentary seats, State President Sergio Mattarella openly admitted who was directing his hand. He said financial circles and foreign investors in Italy’s state bonds intensely disliked the government’s nominated finance minister and his potential break with the Eurozone. Italy’s state bonds are mostly bought by big London and European banks and sold for liquidity to the European Central Bank, which holds them now.
The “financial circles’ ” votes were the only ones that counted, this time.
But what is happening in these “financial circles”? They are choking in highly speculative corporate “junk debt,” and derivative contracts on that debt; now the rise in dollar interest rates is driving them toward mass defaults and the collapse of banks.
Look at Deutsche Bank, the biggest bank in Germany, actually controlled from its London investment bank divisions. Two months ago the European Central Bank (ECB) ordered Deutsche Bank to make an “emergency scenario” for having to wind up its investment bank; the ECB clearly knew something serious was wrong at the bank with the world’s biggest derivatives exposure. Now, Deutsche Bank is firing employees en masse at its investment bank, the division which has been driving the whole bank for 15 years (lately, into big losses). Two analysts concurred for CNBC that the bank’s stock and capital, recently fallen from 26 billion to 21 billion euros, could soon go to zero “with very bad consequences for international markets in the near term.”
Actions by Germany for Deutsche Bank’s reorganization, proposed in 2016 in EIR by Helga Zepp-LaRouche, president of the Schiller Institute, are becoming the only way to stop the collapse of the bank and its ramifications into the London/Wall Street trans-Atlantic banking system.
And those actions—including Glass-Steagall separation of the investment divisions to protect the industrial/commercial lending bank—would be prohibited under the Eurozone’s regulations and bank resolution rules, including new ones it’s adopting now!
It’s the same with banks throughout the financial system, exposed to the huge “everything bubble” of speculative debt which is now getting toxic.
What the denied Italian government was “threatening” to do in opposing these regulations and even leaving the Eurozone if necessary, is a step into the only solution to preventing another crash worse than 2008.
That solution is presented in Lyndon LaRouche’s “Four Laws” to restore productivity growth and scientific/technological breakthroughs, published in 2014 with emphasis on the United States economy, whose financial system is in the same perilous condition. President Trump called for one of those steps, restoring the Glass-Steagall Act, back in 2016; and talked about another, building a new economic infrastructure for America. But action has not been forthcoming, as British intelligence has triggered all-out attacks on his presidency and tried the kind of coup, which they just saw succeed against Italy.
The voters of both nations now face elections in which they have to force through those actions LaRouche proposed, and not allow anything to deter them.