The term “rigged game” should have been word of the year in 2016. Both the US and the EU have been exposed as never before in this modern era. The “defeat” of Bernie Sanders and Wikileaks revelations in the US; the destruction of Greece, and election after election show general hostility to EU policies and austerity. And on both sides of the Atlantic the policy of refugee importation ought to be enough for the masses to understand that first world ruling classes are bent on destroying the modern middling class and the so-called welfare state, yet the middling classes persist in their — perhaps unwitting — cooperation with the system. The historical importance of these times cannot be understated, and yet never has a population been so unprepared and unaware of its own precarious future.
Against this backdrop, crisis has supposedly been averted. Italian president Mattarella approved the new government of Italy’s anti-EU’s parties, after voicing his displeasure on behalf of investors.
The New York Times Jason Horowitz reports,
On Thursday, the populists reshuffled, keeping the same prime minister, Giuseppe Conte, and other top players, but moving the objectionable finance minister to a less critical post.”
That was apparently enough to satisfy the president, who preferred an elected government to a caretaker alternative he had in reserve.
The cosmetics of democracy hide the inevitable ugliness of ruling class agendas. The EU is headed for the rocks and not by accident, but by heading directly for them. Silvia Ardagna, of the criminal banking syndicate Goldman Sachs, who helped a corrupt Greek government fake its way into the EU with full knowledge of the EU, confirms what informed individuals know:
“based on recent polling, new elections could result in an even stronger victory for the populist parties, which we expect would raise investor concerns that a more aggressive populist agenda as embodied in the coalition agreement — possibly including risks to Italy’s continued participation in the Euro area — could be in prospect.”
Rather than giving the populist parties, especially Lega, an opportunity to reaffirm their popularity over the EU, investors have settled for the “elected” coalition government sans the anti-EU finance minister. 5 Star and Lega returned the favor scrapping their finance nominee for a more acceptable one, and disavowed Italeaving.
Why, then, the dim prognosis? Why the assurance that the populist parties will only gain in polls? Because the agenda only includes austerity and refugee imporation. A combination sure to stir up more hostility to Brussels. “First,” on the EU’s agenda says Ardagna is “to avoid an automatic increase in VAT (which existing legislation demands), the government needs to implement fiscal tightening measures worth EUR12bn in 2019 and around EUR19bn in 2020 and 2021.” Italy already carries a massive debt load.
And for confirmation of this depressing situation, let us recall how we got here. The president of Italy, Sergio Mattarella opposed prospective finance minister Paolo Savona on the basis of his euro-skepticism. “The uncertainty over our position within the euro has alarmed Italian and foreign investors who have invested in securities and companies,” he said. The electorate ought to have been a little more considerate.
Among the those investors you will find members of the Preservation Society. On that count, We do indeed breathe a sigh of relief at democracy thwarted. It is true that Mattarella had the constitutional right to use the veto but that does not make it very democratic. This is not a surprise since ruling classes create governments.
The US has its own stop-gap measures to prevent excessive democracy. Among other machinations, superdelegates help ensure the “proper” outcome of democracy [State delegates are supposed to vote the way their populations do]. Well over a year before election night, Hillary Clinton had already amassed over 500 hundred. This article points out
‘Having superdelegates would ensure that members of the Democratic Party had some weight in case the Democratic voters picked a dud, as they did in 1972 when anti-Vietnam War liberal Sen. George McGovern won the nomination and not much else,’ according to U.S. News & World Report.”
Who knew there was a difference between the Democratic Party and Democratic voters? Certainly not the rank and file Liberals that support them. But in Italy, it seems, the Established order is eroding faster than elsewhere, and pundits wonder how long naughty Anti-EUism will last.
“When will European voters come to their senses?” We recently heard a France 24 pundit exclaim in defending the EU without addressing its policies.
Italy should be doing well. Unlike Britain, it exports considerably more to the rest of the world than it imports, while its government spends less (excluding interest payments) than the taxes it receives. And yet Italy is stagnating, its population in a state of revolt following two lost decades.
There are “no thinking economists anywhere in the world” who don’t have reservations about the EU. The man Mattarella blocked from becoming finance minister
had in the past expressed doubts about the eurozone’s architecture and has favoured a plan of EU exit just in case it was needed. It was as if Mattarella declared that reasonableness from a prospective finance minister constitutes grounds for his or her exclusion from the post.
All this may be true, EU apologists tell us, but the fact is a anti-EU finance minister of the fourth largest economy in Europe “would have risked the confidence of foreign investors and destabilising the country“. Cold comfort to those devastated by EU austerity, and who have watched wave after wave of First World-made refugees washing up on their shores. It is like saying “breaking your agreement with the mafia ‘will have destabilizing consequences for your family.’ ” Sure enough, the EU budget commissioner “Germany’s (Guenther) Oettinger, says that ‘the markets will teach Italians to vote for the right thing‘“.
Mattarella, as if to put an exclamation point on his veto, appointed a former apparatchik of that country-destroying institution, the IMF to form a care-taker government: one Carlo Cottarelli, nick-named “Mr. Scissors” for his penchant for budget cuts. This unelected government failed. The two naughty parties came to heel and choose a close ally of former Trumpian Prime Minister Berlusconi’s Forza Italia to be finance minister.
Expect things to fall apart.
Meanwhile, the rigged game in the US continues apace. As the New York Times admitted, the game is “Legislate. Repeal. Fail. Repeat.” Now, we are in the repeal phase of the current round of games. The Trump administration is poised to repeal the Volcker rule, which supposedly protects the economy from the predatory investment sector on the grounds that it is too complex.
Two questions immediately come to mind. Why not fully restore the partially repealed Glass-Steagall Act, the New Deal era legislation? The answer is that Glass-Steagall forbade investment banks from engaging in ordinary commercial banking altogether, while the Volcker rule tries to “regulate” their participation. The Volcker rule, says the Times “was made to let banks give customers liquidity for investment, while making it hard for the banks to game the system.” There is just too much money to be had out there.
The second question is if legislators are concerned about “complex rules impeding economic growth”, how come neither they nor the media are pushing for the repeal of the Patriot Act banking regulations which are onerous and complex? Ellen Brown reported in October of 2017:
In 2010, one small New Jersey bank pleaded guilty to conspiracy to violate the Bank Secrecy Act and was fined $5 million for failure to file suspicious-activity and cash-transaction reports. The bank was acquired a few months later by another bank. Another small New Jersey bank was ordered to shut down a large international wire transfer business because of deficiencies in monitoring for suspicious transactions. It closed its doors after it was hit with $8 million in fines over its inadequate monitoring policies.
Complying with the new rules demands a level of technical expertise not available to ordinary mortals, requiring the hiring of yet more specialized staff and buying more anti-laundering software. Small banks cannot afford the risk of massive fines or the added staff needed to avoid them, and that burden is getting worse.
Complexity as you can see is useful. It allows the ruling class to scrap rules and regulations which were deliberately made to be convoluted and confused in the first place. This gets the approval of business. At the same time, it forces often smaller, more vulnerable rivals to compete or be swallowed up by the higher orders. Remember, it is all about wealth transfer, bottom to top.
The Times lays out the proposals to weaken the Volcker rule:
A bank’s short-term trading positions are at the outset presumed to be in violation of the rule, and banks must show that the positions were held to serve customers or hedge. The new Volcker rule presumes compliance. The balance of power will tip immediately to traders from regulators.
Under the Volcker rule now, banks have to show that trading positions held for customers are in line with what those customers’ might actually demand in the near term. . . . To try and simplify this exercise, the new rule would allow banks to establish ahead of time the “risk limits,” or position sizes, they set for each trading desk. If a bank does not exceed those limits, they would be presumed to have a position that meets customer demand.
As it was written, the Volcker rule required banks to show carefully and intricately that trades classified as hedges are tied to specific positions and risks. The new rule would remove the requirement that the banks provide an analysis that shows correlation between the hedging trade and the underlying asset being hedged. Banks would also no longer have to show that a hedge “demonstrably reduces or otherwise significantly mitigates” a specific risk. This is a big concession from the regulators. The large trading losses that JPMorgan racked up during the London Whale scandal occurred in part because huge hedging trades got out of hand.
Given the blatant criminality of Wall Street in recent years (not to mention its history), these proposals amount to the ruling class’s commitment to economic failure and collapse. The Times quotes Gregg Gelzinis, of the Center for American Progress, who puts it mildly, “the proposed changes also put a lot of faith in banks’ own internal risk models and put the onus on Trump-appointed regulators to vigorously police trading activities — a task I’m not confident they are up for.”
That’s how the rigged game works.