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Paulson Drops the Ball Again

Calls for a new U.S. Federal "economic stimulus" of $400 billion-plus are multiplying on a far larger scale than before the British government's steering of "a consensus for internationally coordinated fiscal stimulus" at the G-20 summit. This is also a much larger "stimulus package" than the $150 billion which Congressional Democrats talked about before the November 4 election, and then dropped. Although the Mis-Leadership around Speaker Nancy Pelosi is not yet talking about $400 billion, it appears that think-tanks like the Economic Policy Institute, Center for American Progress, and Peterson Institute for International Economics have been asked to point "the British way" until the 111th Congress can meet.

Today a circular letter was released signed by 400 economists, headed by Joseph Stiglitz, demanding a $350-400 billion stimulus annually for several years. Its purpose was stated by Dr. Laurie Appelbaum of Rutgers University to be, "filling the huge hole in economic demand" left by a collapse in consumption. Purely Keynes--the John Maynard Keynes who from 1932-36 looked to Nazi Germany as the model for his monetary theories. This morning Dr. Simon Johnson of the Peterson Institute was in front of the Senate Budget Committee calling for the same policy. This was ironic, since Johnson's boss Peter Peterson is spearheading the propaganda campaign for long-term drastic cuts in U.S. fiscal budgets, including particularly in Social Security and Medicare entitlements!

EIR representatives asked the four economists presenting the letter, including Stiglitz, why they hadn't emphasized that the cause of the economic collapse sweeping the globe was the breakdown of the financial and banking system--or discussed the need to reorganize the financial system in bankruptcy. All four answered in turn, that the measures of Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke had stabilized the financial crisis (!) and taken it off the table--exactly what Paulson and Bernanke had been claiming the previous day to a House Committee. "I think we stopped the financial collapse," said Dean Baker of Economic Policy Research Center, speaking for all of them and putting the "big stimulus" network firmly in Paulson's and Bernanke's camp.

Famous last words.

After G-20: The Beginning of the End of the Old Order

Mario Draghi is described as the mastermind of the G-20 plan, which boosts the Financial Stability Forum (FSF) as the world bankers' government. Draghi and IMF head Strauss-Kahn catapulting to action as early as November 13, sending a letter to the G-20 leaders, with the guidelines of the plan which envisions the FSF and the IMF as the two pillars of the world government.

At the November 14 working dinner at the White House, Draghi gave the main address. On November 17, the daily Il Giornale commented, "Only one central banker appears in the family photo of the 25 participants at the G-20 financial-economic summit--a clear privilege of Mario Draghi, present at the Washington summit as chairman of the FSF."

The FSF was founded in 1999 on British initiative, when Gordon Brown was Chancellor of the Exchequer. It is based in Basel at the Bank for International Settlements, and includes major central bankers and financial "regulators." The plan is to enlarge it to include China and Russia. To achieve its goals, the FSF "needs the support of the new U.S. administration. And one of the candidates for a top position at the U.S. Treasury is N.Y. Federal Reserve chairman Tim Geithner, who in recent months has closely collaborated with Draghi," Il Giornale writes.

Mario Draghi became famous as "Mr. Britannia" in January 1993, when EIR exposed his participation as a government official in the June 2, 1992 meeting on the British royal yacht Britannia, off Italy's territorial waters. At that meeting, bankers from the City of London and Italian businessmen discussed future privatizations.

At that point, Draghi was director general of the Treasury Ministry. Under the Ciampi government, he was then appointed head of the Privatizations Committees, and oversaw all privatizations. He also authored a reform of the 1936 banking law that eliminated all firewalls between commercial banking, insurance, and investment activities, and a liberalization of the stock market that allowed hostile takeovers. Eventually, he left the Treasury in 2002 and became European Director for Goldman Sachs. He was then appointed Governor of the Bank of Italy in December 2005, in the aftermath of a scandal that caused the resignation of Antonio Fazio, the central banker who tried to oppose a foreign takeover of a regional bank in Northern Italy by ABN-Amro.

Draghi is so afraid to be called "Mr. Britannia", that last year he filed a libel suit against a right-wing newspaper in Rome. Strangely enough, he did not file a suit against the Italian Movisol website, which had been the source for the article.