Teutonic Tuesday: Italy, Germany, Goldman And Greece

by: Philip Davis

Not again!

In 1941 it was Hitler and Moussolini, now it's Merkel and Draghi who have run a Blitzkrieg on Greece, overwhelming Europe's poor southern state with a campaign of financial "shock and awe" that has finally subjugated the Greek people. Just like in 1941, a collaborationist Greek government was put in place to carry out the will of the Troika and once again the citizens of Greece will suffer as their nation's wealth is sucked dry to feed the EU's banking machine.

The occupation of Greece in the 1940s led to 300,000 civilians dying of starvation and, with 22% unemployment already in Greece and new austerity measures trashing the social safety net and lowering wages for those lucky enough to have jobs - it won't be very long before the next round of starvation begins to set in. The last axis occupation of Greece lasted "only" three years and left the country in ruins, leading to civil war in 1944 when the expulsion of the collaborators left a power vacuum in government. The Troika plan to occupy Greece for 18 years - what could possibly go wrong? As noted by Automatic Earth:

Mario Draghi, looks more and more like the bad guy from the B-rated horror movie series Saw with every passing day. Jigsaw was his name. Or maybe I should say "is" his name, because that series apparently never ends just like the tortured European sovereign debt and banking crises. For those unfamiliar, the premise behind the movie was that Jigsaw would create extremely uncomfortable situations for people, both psychologically and physically, and then watch how they react.

It was all originally supposed to be about an old cancer patient (Jigsaw) who teaches others about the true value of life in clever ways, but was really just about another pathetic, sadistic man who manufactures impossible situations and gets off on watching other people suffer. Sounds a lot like what's going on in Europe, huh? By now, everyone and their pet dogs are familiar with the pan-European motto - AUSTERITY OR DIE!

We cut off the limbs to save the core and throw our fellow man under the bus, because they tell us that those are our only collective choices. Mario "Jigsaw" Draghi, especially, has been cast in the role of the wise old man who serves as the "neutral" arbiter of the European Monetary Union. However, when we look beneath the surface, it is clear that he is anything but neutral, and is simply running a rigged game for the benefit of the major European banks (with the willing aid of technocratic politicians such as Lucas Papademos and Mario "Three Card" Monti).

Click to enlargeThe goal of Greek austerity is to funnel as much money as possible from Greece to the EU (clearly NOT Greece anymore) for as long as possible. Millions of people will suffer for generations in order that a few banksters will be spared the embarrassment of having to write down a bad loan. Meanwhile, these same bankers have themselves gotten TRILLIONS of euros in non-recourse bailouts themselves - enough to pull Greece out of debt five times over yet not one penny has been given to Greece without interest-bearing strings attached.

Of course, Greece is just a dress rehearsal for the financial invasion of the rest of the EU peripheral PIIGS, for every euro that is owed by Greece, 10 are owed by Portugal, Spain and Italy alone, with most of Ireland's debt being considered England's problem - and that one will be a hoot and a holler when it hits the fan (see Thursday's post for more on EU debt loads as well as our top two disaster hedges). According to the Athens News, kicking Europe's can down the road for another few months has cost the Greeks $70Bn worth of fresh debt - all part of the very generous "bailout package."

Why would Mario Draghi, an Itialian, be setting up a situation that will ultimately sell 60M Italians into the same debt slavery that he is currently forcing the rest of the PIIGS into? Perhaps that can be explained by those who knew him as the vice chairman and managing director of Goldman Sachs International from 2002-2005, after which he became the governor of the Bank of Italy (overseeing the massive build-up of Italian debt) until moving in to replace Trichet as the head of the ECB in November (see "Goldman Sachs Conquers Europe").

Click to enlarge

As noted by the Independent: "The ascension of Mario Monti to the Italian prime ministership is remarkable for more reasons than it is possible to count. By replacing the scandal-surfing Silvio Berlusconi, Italy has dislodged the undislodgeable. By imposing rule by unelected technocrats, it has suspended the normal rules of democracy, and maybe democracy itself. And by putting a senior adviser at Goldman Sachs in charge of a Western nation, it has taken to new heights the political power of an investment bank that you might have thought was prohibitively politically toxic."

The NYTimes had an excellent article this weekend titled "Is This the End of Market Democracy" in which Simon Johnson makes a point that Goldman Sachs and its pals in the financial sector have used their lobbying clout to avoid more onerous forms of regulation. Schools for the well-off are better than ever; those for everyone else continue to deteriorate. Elites in all societies use their superior access to the political system to protect their interests, absent a countervailing democratic mobilization to rectify the situation. American elites are no exception to the rule - we're just seeing it play out in Europe first.

Larry Summers wrote in the Financial Times: "The spread of stagnation and abnormal unemployment from Japan to the rest of the industrialized world does raise doubts about capitalism's efficacy as a promoter of employment and rising living standards for a broad middle class. Serious questions about the fairness of capitalism are being raised. These are driven by sharp increases in unemployment beyond the business cycle - one in six of American men between 25 and 54 is likely to be out of work even after the economy recovers - combined with dramatic rises in the share of income going to the top 1% (and even the top 0.01%) of the population and declining social mobility. The problem is real and profound and seems very unlikely to correct itself untended."

Globally we are fighting a war between the haves and the have-nots and the situation in Europe does very much remind me of the rolling Axis threat in WWII, with the American people standing by and doing nothing (because we have our own problems, right?) while the banksters roll their bond tanks over nation after nation and each time the other nations rush to appease them - hoping they will be spared. This calls to mind the famous statement made by Martin Niemoller about the inactivity of the German intellectuals during the Nazi rise to power as they purged group after group:

First they came for the communists,
and I didn't speak out because I wasn't a communist.

Then they came for the trade unionists,
and I didn't speak out because I wasn't a trade unionist.

Then they came for the Jews,
and I didn't speak out because I wasn't a Jew.

Then they came for me
and there was no one left to speak out for me.

Substitute Greeks, Portuguese and Italians for those and you've pretty much got the road map that leads to you. Not YOU, of course, I'm sure YOUR nation would never borrow more than it was comfortable paying back on your behalf and certainly Goldman Sachs couldn't possibly put one of their people into a position of power to engineer a situation that forces your government to borrow more money to bail out the banksters, who then return the favor by foreclosing on your country - no way, not us ...

Even as I write this, former Goldman Sachs trader Jim Cramer is on CNBC telling the viewers how great the Greek deal is and how we now have nothing to worry about in Europe. "Don't speak out" Cramer says, "don't be outraged" and, above all "don't be concerned." The other host seems to have the job of saying "Dow 13,000" every five minutes or so and, as we did in 2008, we are starting to see the parade of guests who tell us how great it is to have a "wall of worry" for the market to climb.

Wall of worry is another great stock market scam. Whenever you hear alliteration in a market "truism" - be very afraid. Do you buy a car when you have a wall of worry? Do you buy a home when you are worried about your job, the neighborhood, your marriage, the price of the house, the economy? According to Cramer and his pumping buddies - that's the correct time to buy. Wall of worry is nothing more than a slick sales tool to put lipstick on the pig stocks they are trying to sell high to future bag-holders.

Be very careful out there - they're coming for you.

Disclosure: I am short USO, DIA, QQQ.

Additional disclosure: Positions as indicated but subject to change.