The
Eurozone is close to collapse -- and the sooner the better. The
following article from the current EIR looks at the disaster in Italy,
while explaining the murderous policies of the EU which are driving its
own demise. Mike Billington
------------------------------------------------------------------------
European Populations Hope for U.S. Help
to End Euro Tyranny
by Claudio Celani
Jan. 29--As Italian Member of the European
Parliament, Marco Zanni, told {EIR} in an
exclusive interview, the populations of Europe
are looking with hope to the new U.S.
Administration, as a potential ally in their
fight for freedom from the tyrannical Euro
system.
Parliament, Marco Zanni, told {EIR} in an
exclusive interview, the populations of Europe
are looking with hope to the new U.S.
Administration, as a potential ally in their
fight for freedom from the tyrannical Euro
system.
As Mr. Zanni explains, the Euro is going
to be finished, at the latest, after this
year's round of general elections in key
European countries--such as France, Germany,
and possibly Italy--which might bring an
anti-Euro majority to the European Council.
However, the Euro might implode even before
that--for instance, if the European Central
Bank (ECB) is forced to suspend its
Quantitative Easing (QE) policy, or the
so-called ``Italian banking crisis'' gets out
of control, or a major zombie bank goes
bust--or a combination of all three.
to be finished, at the latest, after this
year's round of general elections in key
European countries--such as France, Germany,
and possibly Italy--which might bring an
anti-Euro majority to the European Council.
However, the Euro might implode even before
that--for instance, if the European Central
Bank (ECB) is forced to suspend its
Quantitative Easing (QE) policy, or the
so-called ``Italian banking crisis'' gets out
of control, or a major zombie bank goes
bust--or a combination of all three.
Although the ECB confirmed its monetary
expansion policy at its last board meeting in
January, growing inflation figures might make
it impossible for ECB chairman Mario Draghi to
continue keeping zombie banks afloat, and might
force him to ``taper'' away from zero interest
rates and ``Quantitative Easing'' (QE) asset
purchases on the open market. Pressure is
increasing from Germany for the ECB to stop its
QE program if inflation rises close to the 2%
``target.''
expansion policy at its last board meeting in
January, growing inflation figures might make
it impossible for ECB chairman Mario Draghi to
continue keeping zombie banks afloat, and might
force him to ``taper'' away from zero interest
rates and ``Quantitative Easing'' (QE) asset
purchases on the open market. Pressure is
increasing from Germany for the ECB to stop its
QE program if inflation rises close to the 2%
``target.''
Not only has Draghi's zero interest-rate
policy almost destroyed traditional banking in
Germany--forcing depositors to choose between
losing money or investing in high-risk
assets--but half of the one trillion euro of
the ECB Assets Purchase Program (APP) has gone
to support the City of London, as Draghi
himself revealed in his letter to Zanni and
Vanni.
policy almost destroyed traditional banking in
Germany--forcing depositors to choose between
losing money or investing in high-risk
assets--but half of the one trillion euro of
the ECB Assets Purchase Program (APP) has gone
to support the City of London, as Draghi
himself revealed in his letter to Zanni and
Vanni.
The APP works in such a way that the ECB
purchases a quota of sovereign, corporate, and
asset-backed securities from banks, in order to
provide those banks with liquidity. The ECB
does not purchase the bonds directly, but does
it through respective national central banks
(``The Eurosystem''). Banks are immediately
provided with liquidity by the ECB, and
balances among national central banks (NCBs)
are settled through the so-called ``TARGET2''
clearing system.
purchases a quota of sovereign, corporate, and
asset-backed securities from banks, in order to
provide those banks with liquidity. The ECB
does not purchase the bonds directly, but does
it through respective national central banks
(``The Eurosystem''). Banks are immediately
provided with liquidity by the ECB, and
balances among national central banks (NCBs)
are settled through the so-called ``TARGET2''
clearing system.
Draghi reported that ``almost 80% of [the]
bonds [were] purchased by national central
banks, and roughly half of the purchases were
from counterparties located outside the euro
area, most of which mainly access the TARGET2
payments system via the Deutsche Bundesbank.''
For further explanation, Draghi refers in
his letter to a March 2016 ECB monthly report,
which says: ``Credit institutions domiciled
outside the euro area participate in TARGET2
via a Eurosystem NCB (national central bank),
not least in the case of major international
banks operating in the City of London.''
bonds [were] purchased by national central
banks, and roughly half of the purchases were
from counterparties located outside the euro
area, most of which mainly access the TARGET2
payments system via the Deutsche Bundesbank.''
For further explanation, Draghi refers in
his letter to a March 2016 ECB monthly report,
which says: ``Credit institutions domiciled
outside the euro area participate in TARGET2
via a Eurosystem NCB (national central bank),
not least in the case of major international
banks operating in the City of London.''
So far, the ECB has provided European
banks with 1.4 trillion euro of liquidity
through the APP. The program will continue at
least throughout 2017, so that at the end of
the year the banks will have received almost 2
trillion euro, which means that the City of
London has received almost 1 trillion from the
ECB!
banks with 1.4 trillion euro of liquidity
through the APP. The program will continue at
least throughout 2017, so that at the end of
the year the banks will have received almost 2
trillion euro, which means that the City of
London has received almost 1 trillion from the
ECB!
At the same time, the ECB, the EU
Commission and the German government have
entered into a confrontation with Italy on the
issue of the Italian banking crisis and on
austerity. The Italian government is refusing
to apply EU rules to ``bail in'' (confiscate)
depositors and bondholders, and has demanded
more budget flexibility in order to face two
emergencies: refugees, and earthquake aid and
reconstruction.
Commission and the German government have
entered into a confrontation with Italy on the
issue of the Italian banking crisis and on
austerity. The Italian government is refusing
to apply EU rules to ``bail in'' (confiscate)
depositors and bondholders, and has demanded
more budget flexibility in order to face two
emergencies: refugees, and earthquake aid and
reconstruction.
The ECB, the EU Commission, and the German
government insist on implementing EU bail-in
and budget rules. This became grotesque when,
in the middle of earlier earthquake and bad
weather damage in central Italy in mid-
January, the EU Commission rejected the Italian
budget plan and demanded a ``correction'' of
3.4 billion euro.
government insist on implementing EU bail-in
and budget rules. This became grotesque when,
in the middle of earlier earthquake and bad
weather damage in central Italy in mid-
January, the EU Commission rejected the Italian
budget plan and demanded a ``correction'' of
3.4 billion euro.
It has become more than evident that a
continued membership in the Euro system is an
obstacle to the life of the Italian population
and to Italy's survival as a functioning
nation.
continued membership in the Euro system is an
obstacle to the life of the Italian population
and to Italy's survival as a functioning
nation.
- Italian Catastrophe -
A poll published by Eurispes Jan. 27, says
that the incomes of 43% of Italians don't last
to the end of the month. EU-imposed austerity
has forced Italian families to reduce
consumption, which the report highlights as
follows: 38% have reduced their medical
expenses; 70.9% meals at restaurants; 68.6%
travel and holidays; and 62% hairdresser. One
of every ten young persons or couples cannot
afford to rent housing, and go back to live
with their parents or their in-laws.
that the incomes of 43% of Italians don't last
to the end of the month. EU-imposed austerity
has forced Italian families to reduce
consumption, which the report highlights as
follows: 38% have reduced their medical
expenses; 70.9% meals at restaurants; 68.6%
travel and holidays; and 62% hairdresser. One
of every ten young persons or couples cannot
afford to rent housing, and go back to live
with their parents or their in-laws.
Italy's budget constraints under EU law
make it impossible to reverse an economic
stagnation that became a depression after 2011,
and is now making it impossible even to deal
with the earthquake emergency.
make it impossible to reverse an economic
stagnation that became a depression after 2011,
and is now making it impossible even to deal
with the earthquake emergency.
Since August 2016, the earthquakes never
stopped in central Italy. The last shocks
occurred Jan. 18--four shocks of over 5.0
within two hours. This latest quake occurred in
the midst of a snowstorm which had hit central
and southern Italy, creating serious problems
both for the quake-affected population and for
the nation in general. One of the shocks
unleashed a major avalanche which struck a
hotel under Mount Gran Sasso (2,914 m), killing
twenty-nine.
stopped in central Italy. The last shocks
occurred Jan. 18--four shocks of over 5.0
within two hours. This latest quake occurred in
the midst of a snowstorm which had hit central
and southern Italy, creating serious problems
both for the quake-affected population and for
the nation in general. One of the shocks
unleashed a major avalanche which struck a
hotel under Mount Gran Sasso (2,914 m), killing
twenty-nine.
The the snowstorm collapsed electrical
lines in the Abruzzo region, initially leaving
300,000 persons without power. Electricity has
since been slowly restored, but not to all
villages. The snowstorm has isolated many
villages in the Apennines, and is especially
endangering cattle herds in the earthquake
areas, threatened both by the cold and the lack
of water.
lines in the Abruzzo region, initially leaving
300,000 persons without power. Electricity has
since been slowly restored, but not to all
villages. The snowstorm has isolated many
villages in the Apennines, and is especially
endangering cattle herds in the earthquake
areas, threatened both by the cold and the lack
of water.
In this situation, the EU insistance that
Italy cut its budget further--when it should
instead increase it in order to face the new
emergencies--has been extremely provocative,
and is feeding the already-overwhelming anti-EU
sentiment. Exemplary was the Jan. 18 op-ed by
Antonio Cangini, editor of {La Nazione} and {Il
Resto del Carlino}, a national daily read
especially in central Italy. Cangini wrote that
the post-Glass-Steagall era is over, but the EU
has failed to recognize it--and should be
buried.
Italy cut its budget further--when it should
instead increase it in order to face the new
emergencies--has been extremely provocative,
and is feeding the already-overwhelming anti-EU
sentiment. Exemplary was the Jan. 18 op-ed by
Antonio Cangini, editor of {La Nazione} and {Il
Resto del Carlino}, a national daily read
especially in central Italy. Cangini wrote that
the post-Glass-Steagall era is over, but the EU
has failed to recognize it--and should be
buried.
With Brexit and the election of Donald
Trump in the U.S.A., ``a global historic phase
is being closed,'' Cangini continued:
Trump in the U.S.A., ``a global historic phase
is being closed,'' Cangini continued:
"A chaotic as well as dramatic phase,
which has brought us two poisoned fruits: the
economic crisis and the European crisis. For
the former, we must thank the United States. In
order to avoid a repetition of the 1929 crisis,
President Roosevelt had the sacred
Glass-Steagall Act enacted in 1933, separating
investment banks from commercial banks. Bill
Clinton repealed it in 1999, opening the way to
globalization, and, less than a decade later,
to the implosion of the U.S. financial system,
full of toxic and non-performing assets....
which has brought us two poisoned fruits: the
economic crisis and the European crisis. For
the former, we must thank the United States. In
order to avoid a repetition of the 1929 crisis,
President Roosevelt had the sacred
Glass-Steagall Act enacted in 1933, separating
investment banks from commercial banks. Bill
Clinton repealed it in 1999, opening the way to
globalization, and, less than a decade later,
to the implosion of the U.S. financial system,
full of toxic and non-performing assets....
"To save the banks, attention was shifted
to the sovereign debt of states, beginning the
suffering of southern and Catholic European
countries. No systemic correction has been
implemented since, just palliative measures
such as the Dodd-Frank bill in 2010. Whatever
judgment one may have on Trump's victory, it
represents a shift, a radical correction of
route. Instead, no shift is on the horizon in
old Europe, where the route is still the
same."
to the sovereign debt of states, beginning the
suffering of southern and Catholic European
countries. No systemic correction has been
implemented since, just palliative measures
such as the Dodd-Frank bill in 2010. Whatever
judgment one may have on Trump's victory, it
represents a shift, a radical correction of
route. Instead, no shift is on the horizon in
old Europe, where the route is still the
same."
The EU is dead and its ``corpse is
beginning to stink--and holding its funeral
might be the only way to start life again. The
only problem: there is no gravedigger around to
do it,'' Cangini wrote.
beginning to stink--and holding its funeral
might be the only way to start life again. The
only problem: there is no gravedigger around to
do it,'' Cangini wrote.
Cangini correctly focusses on the repeal
of Glass-Steagall in the U.S.A., but he forgets
that the repeal of similar banking separation
systems in Italy, and in all European
countries, was imposed by EU Treaties.
of Glass-Steagall in the U.S.A., but he forgets
that the repeal of similar banking separation
systems in Italy, and in all European
countries, was imposed by EU Treaties.
A Bank of Italy official did recall this,
however, in a hearing before the joint Finance
Committee of the Italian Chamber and the
Senate, on Jan. 17. Answering a question from
Deputy Alessio Villarosa (M5S), on whether the
old bank-separation system would have prevented
the current Italian banking crisis, the Bank of
Italy's head of supervision, Carmelo
Barbagallo, answered that the old system of
bank separation was ended by EU guidelines--but
he let it be understood that he favors the old
system. ``What Deputy Villarosa said on the
1936 Banking Act is very interesting,''
Barbagallo said. The old system ``was changed
in order to implement a European guideline.
Separation between banks and industries, long-
and short-term [credit], and banks of public
interest are not European concepts. Already in
the mid-'80s they were not European concepts.
If Italy is a member of the EU... one can have
a different personal view, but this is a
fact.''
however, in a hearing before the joint Finance
Committee of the Italian Chamber and the
Senate, on Jan. 17. Answering a question from
Deputy Alessio Villarosa (M5S), on whether the
old bank-separation system would have prevented
the current Italian banking crisis, the Bank of
Italy's head of supervision, Carmelo
Barbagallo, answered that the old system of
bank separation was ended by EU guidelines--but
he let it be understood that he favors the old
system. ``What Deputy Villarosa said on the
1936 Banking Act is very interesting,''
Barbagallo said. The old system ``was changed
in order to implement a European guideline.
Separation between banks and industries, long-
and short-term [credit], and banks of public
interest are not European concepts. Already in
the mid-'80s they were not European concepts.
If Italy is a member of the EU... one can have
a different personal view, but this is a
fact.''
So re-introducing a Glass-Steagall-like
system separating commercial banks from
speculative banks, is incompatible with
membership in the Euro. Even defensive measures
such as the Italian government decision to
protect bondholders in the bail-out of Monte
dei Paschi di Siena bank, which goes against EU
rules, and to allocate a 20 billion fund to
prevent insolvency, won't work.
system separating commercial banks from
speculative banks, is incompatible with
membership in the Euro. Even defensive measures
such as the Italian government decision to
protect bondholders in the bail-out of Monte
dei Paschi di Siena bank, which goes against EU
rules, and to allocate a 20 billion fund to
prevent insolvency, won't work.
Worse, they are seen by the population as
a favor to bankers. The most widespread slogan
at a demonstration of earthquake victims Jan.
25, in front of the national Parliament, was:
``The government finds 20 billions for the
banks, but not for us!.'' Indeed, not only is
emergency housing not going up on schedule, but
very little has been done to protect the cattle
which are now dying in the cold wave.
a favor to bankers. The most widespread slogan
at a demonstration of earthquake victims Jan.
25, in front of the national Parliament, was:
``The government finds 20 billions for the
banks, but not for us!.'' Indeed, not only is
emergency housing not going up on schedule, but
very little has been done to protect the cattle
which are now dying in the cold wave.
Many in Italy compare the current failures
with the approach adopted after the L'Aquila
earthquake of 2009, when 5,600 quake-proof
apartments were built in 100 days, and families
were able to move in before winter struck. This
was done through a military-style mobilization
under a centralized Civil Protection Department
(CDD) with emergency powers.
with the approach adopted after the L'Aquila
earthquake of 2009, when 5,600 quake-proof
apartments were built in 100 days, and families
were able to move in before winter struck. This
was done through a military-style mobilization
under a centralized Civil Protection Department
(CDD) with emergency powers.
The difference between then and now is
called former Prime Minister Mario Monti.
Monti, the EU butcher, cut the budget of the
CDD and deprived it of powers in 2011-12. Now,
the CDD head no longer has sufficient emergency
powers to bypass bureaucracy and get done
what's necessary in a short time.
called former Prime Minister Mario Monti.
Monti, the EU butcher, cut the budget of the
CDD and deprived it of powers in 2011-12. Now,
the CDD head no longer has sufficient emergency
powers to bypass bureaucracy and get done
what's necessary in a short time.
The social and political climate is
explosive and will become more so as long as
Italy stays in the Euro, a climate ready to
fill the sails of the anti-Euro parties in the
next general elections, which might come as
early as next summer.
explosive and will become more so as long as
Italy stays in the Euro, a climate ready to
fill the sails of the anti-Euro parties in the
next general elections, which might come as
early as next summer.
