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Berlusconi and the ECB Riots

Maybe I'm wrong.

I say that a lot, but I want to start with it this time, because I'm feeling paranoid.

Something looks obvious to me, too obvious for nobody else to be saying it, but Silvio Berlusconi is not really stepping down. As soon as I heard that he was stepping down, I knew that some sort of fix had to be in, because Silvio Berlusconi can't step down without going to jail, and media tycoons don't go to jail voluntarily.

I didn't have to think about it terribly long to see one way that the fix could be in. Now, I know enough enough about cognitive biases to distrust this conclusion: it's the first thing I thought of, my brain latched onto it, and is looking for evidence to back up my initial prejudice. So I'm very probably wrong. But I remember how Silvio Berlusconi came to power in the first place. And I just finished Greg Palast's Vultures' Picnic, which more or less predicted this in chapter 12. Palast was talking about Greece, which also just underwent a suspiciously convenient, suspiciously temporary-looking, change of executive, but the situation applies even more strongly to Berlusconi because of his history. So, even though I'm probably wrong, here's what I keep thinking.

Some of you may remember what I wrote about Haiti, after the earthquake ("The Earthquake Didn't Kill Hundreds of Thousands of Haitians. We Did," 1/17/10). As part of a concerted effort to keep the world's slaves and landless peasants from seeing even one example of a successful slave revolt, it has been US policy since the Jefferson administration that Haiti must fail. Once the Haitian people saved their way out of the financial reparations for their own slave revolt that were imposed on them by the Jefferson administration, the US imposed the Duvalierists on them. The Duvalierists made sure that Haiti failed by taking out huge "development" loans, stealing that money instead of investing it, and then demanding that the Haitian taxpayers repay the loan; any time Haitian voters insist that the people who stole that money be the ones who repay it, the US Marine Corps goes in to reinstall the Duvalierists. Any more, it's not even about a 200 year old slave revolt. It's about an even more important and contemporary principle: banks must not be forced to take losses when they loan money to governments, even if they know that the money will be stolen instead of invested.

In Vultures' Picnic chapter 12, Palast lays out a cache of whistle-blower documents from inside the International Monetary Fund, documenting that the IMF has followed exactly this policy with every country in Latin America, Africa, and south Asia; he quotes a disgusted former IMF president, someone who took the job thinking that the job of the IMF was actual third-world development, as confirming the smuggled-out memos and reports. For several decades now, the IMF has known exactly what was going to happen every time Wall Street, and their counterparts in the City of London and at Deutche Bank and in Switzerland, invest in third-world government debt:

Step one: bankers pay huge bribes to government officials to make sure that it is their bank that gets to loan money to the government. Step two: the people they paid those bribes to steal at least half of the money. Step three: when it comes time to roll over those loans, there is no tax revenue to cover them, because the money was stolen and used to pay for prostitutes, drugs, casino gambling binges, private islands, rare antiques and rarer jewelry for an ever-younger series of trophy wives, and 500-foot yachts, instead of roads or ports or schools or anything else that would actually grow the economy. Step four: the IMF imposes an economic embargo on the country, that can only be lifted if the country agrees to "austerity." Austerity, in the IMF's definition, means stopping all infrastructure repair, closing almost all the schools and selling everything in them to the bankers or their hand-picked friends for pennies on the dollar of what the stuff is worth, doing the same thing to the firehouses, doing the same thing to the water treatment plants, doing the same thing to the electrical generation plants, and giving away (giving away!) the mineral rights to "foreign investment." They must also "liberalize capital flows," that is to say, eliminate any laws that are stopping the people who stole those loans from smuggling their money out of the country. Step five: voters revolt, demanding that the bankers take a haircut on the debt to the extent that it can be proven that they knew the money was being stolen. Step six: since the elections are rigged, and since the local army always takes the side of the kleptocrats, we have "the IMF riots."

Step six is in the memos, in advance, part of the plan. The IMF approved and guaranteed the initial stolen loans knowing that part of making sure that the banks got their money back would be the CIA and the US Army and the US Marine Corps taking the sides of the kleptocrats in the riots, and in many cases all-out civil wars, that followed. They make sure that the kleptocrats, and the local army and the police, know to be prepared for it, because "the IMF riots" are considered an acceptable cost of defending the sacred principles that are at stake. Which sacred principles? One: nobody in Europe or the United States must ever pay face value, fair market value, for any resource in the third world. As Annie Leonard cleverly put it in "The Story of Stuff," third world natural resources is another way of saying "our stuff, which other people somehow ended up living on top of." That's a sacred principle! And two, bankers and other investors in the United States are entitled, as a matter of sacred principle, to earn a rate of return on their investments that exceeds the rate of inflation.

Deutche Bank, and its puppet, the European Central Bank, are at step four now with Greece and Italy. The embargo is somewhat porous, because European governments are a little nervous about having an old-fashioned IMF riot within walking distance of the rest of Europe, but the embargo is being imposed. Deutche Bank and other German banks loaned huge sums of money to Greece and Italy, knowing for a fact that at least half of the loaned money was being stolen by wealthy personal friends and business partners of government officials, and not caring, because they knew that the ECB would enforce "austerity," would demand that people who didn't benefit from those loans, not the wealthy people who did, pay them back by the enforced looting of those countries of every asset. There will be riots; there may well even be civil war, but Deutche Bank will be repaid and those countries' infrastructure and archaeological treasures and other resources will end up in the hands of the banksters and their friends for pennies on the dollar, extracted at gunpoint by the Greek and Italian armies with whatever "stabilization" help they need from NATO - as a matter of sacred principle.

And Berlusconi, more than anyone, knows how to survive that; governmental collapse and the fear of anarchy, combined with ownership of the media, is how he swept himself into the position where he and his personal friends could steal half of the money Italy was borrowing in the first place. Look up the "Clean Hands" affair. When all of Italian politics was collapsing into fear of anarchy because every single politician of every political party was being convicted in a wave of bribery scandals, Berlusconi's cable TV channels portrayed him as the only man in Italy with "clean hands," the only man who could save the country from anarchy.

And here we are, with Italy teetering on the brink of anarchy. And Berlusconi, the man who cannot legally step down because he and his friends stole half of the money that Italy owes Deutche Bank (and Deutche Bank knew it at the time), the man who is only out of prison right now because of presidential immunity and because of his ability to fire prosecutors, is suddenly stepping down? And, oh, how conveniently, handing the government over to a bureaucrat, with the explicitly stated job of enforcing ECB austerity. Everybody who knows anything knows what will happen: ECB riots, maybe even a civil war. And Berlusconi still owns all the cable networks, which will, as surely as the sun shines, report: "As soon as Berlusconi, the man who saved us from anarchy after the Clean Hands scandals, stepped down, the country fell back into anarchy. Only Berlusconi can save us!"

Maybe I'm wrong. It can't be that easy. If it were, everybody would be pointing it out.



( 18 comments — Leave a comment )
Nov. 13th, 2011 10:29 pm (UTC)
More alarming is the point you failed to write about here, but surely thought of. The kleptocratic class has drained the third world dry and is drawing their sights on the west.
Nov. 13th, 2011 10:34 pm (UTC)
"In 1991, on the second anniversary of the Exxon Valdez tanker spill, I was in Paul Kompkoff’s house, watching TV. The oil was still all over his island beach, and America couldn’t care less. We were distracted: Everyone, even the patriarch, was glued to CNN. The U.S. Air Force was bombing the bejesus out of Bagdad. Uncle Paul rarely shared his thoughts, rarely speaks at all. But now, Uncle Paul, talked to the soldiers loading into Humvees in the Arabian desert, heading out toward Iraq’s oil fields, 'I guess we’re all some kind of Native now.'"

Palast, Greg (2011-11-15). Vultures' Picnic: In Pursuit of Petroleum Pigs, Power Pirates, and High-Finance Carnivores (Kindle Locations 4085-4089). Penguin Group. Kindle Edition.
Nov. 15th, 2011 02:41 am (UTC)

What do you mean "drawing?"

In the UK during the Thatcher years they would regularly asset strip utilities and companies to make a fast buck, forcing the Government to step in, replenish the slop bucket in order to ensure that public utilities were actually able to provide services to the public and that there was not massive unemployment. Then they'd do it again. All under the guise that private investment in public infrastructure is a good thing (as it doesn't use public money).

Similarly the modern trend in the US to sell lease local infrastructure to Sovereign Wealth Funds (and alienating the income from this for a lump sum now - which is often soon spent) should be extremely worrying. But, for example, the kleptocrats hold up the leasing of the Chicago parking meters for 99 yeasr as a golden method of raising revenue in troubled times. Asset stripping by stealth.

Of course, they who has the gold makes the rules.

Nov. 15th, 2011 11:01 pm (UTC)
It should be illegal to sell off public assets.
Nov. 13th, 2011 10:31 pm (UTC)
Berlusconi has already said that he has veto power over anything the president does since the majority of the current coalition works for him.

So I think it's pretty plausible, actually.
Nov. 13th, 2011 11:58 pm (UTC)
I wish it were paranoid
http://www.amazon.com/Dark-Heart-Italy-Tobias-Jones/dp/0865477248 outlines fairly well how Italian politics came to be hopelessly corrupt (Take the Byzantine, hypocrisy laden politics of the Catholic Church(and the wealth and power at stake underlying this snake pit). Add a lack of national identity. Mix in vying ruthless political predatory networks. Yield: a system where the law never is observed more than vaguely (so that these patronage networks would dominate society). Basically showing us what happens when all pretense of being a society of law fails (and the indispensability of a strong sociological narrative to inspire people to exhibit the restraint underlying a society of law).)

This book aside from making a strong argument for how Italy got to be such a hopeless mess details how Silvo got away with his first "step down, step back" scam (or it predicted it, I forget which. it did make clear the man was the dominant oligarch in the country). It also noted how he helped wage an offensive to make Italians believe "Clean Hands" was a pointless thing and that the best Italians could hope for was "He steals, but he gets things done" of their officials.

Given the mendacity of the traditional patronage groups in Italy (the books talks a lot about the one wave of bombings in the post war period and how there is strong reason to believe at least part of it was the traditional cliques doing agent provacateur stuff)...your guess could well be right.

Nov. 14th, 2011 12:01 am (UTC)
On the subject of predictions come true....
Another author who was prescient and wrote a lot about the Third World getting screwed over by America, Pat Mills of Marshal Law fame _also_ wrote "Third World War" (as in "War on the Third World") which bears strong resemblance to reality as it has unfolded :(

Alas there's no good summaries online but his predictions in it included:
One: an age of perpetual deployment of the armies of the major nations in a slowly rotating series of brushfire wars justified as being needed to stop terrorism (he didn't predict the sale of "humanitarian" military action, but he did forsee very advanced psychological operations)
Two: an age of corporate lawlessness (hello regulatory captured US government)
Three: an age of escalating pervasive health risks as corners were endlessly cut in the pursuit of maximum profit (when I read the comics, fibromyalgia which my one cousin had was "a rare disease" now it's so common I know three people who have it, only one of them in my family. As well as a host of other chronic diseases striking people by their 40's or 50's. You might notice your parents are much less healthy than your grandparents at the same age bracket despite having had adequate nutrition their whole lives)
Four: the reliable and endless attack and subversion of any government attempting to stand up for the rights of citizens against oligarchs and megacorporations.

The series Arc Words are "It's later than you think"
Nov. 14th, 2011 05:46 am (UTC)
Re: On the subject of predictions come true....
Well, that's depressing.
Nov. 14th, 2011 09:17 am (UTC)
Tell me about it
The series dates from 1989 or 1990 or something like that. Can't say we weren't warned. There was a _REASON_ I freaked out when the MAI (http://en.wikipedia.org/wiki/Multilateral_Agreement_on_Investment) was passed in the mid 90's. While it was defeated, the people behind it were all shills for the oligarchs and they just switched tactics, whereas the protestors patted themselves on the back and went home mostly :( I can only say I'm proud that my whole house, which was six other geeks of various stripes who normally you'd only find 3 in agreement on ANYTHING about ANYTHING all had our jaws drop when we read the text to that monstrosity and agreed "if this passes, our country is soooo screwed".
Nov. 14th, 2011 02:10 pm (UTC)
What do you make of Hans Rosling's claims that the world is getting better?

I can preserve your premise and his by assuming that technology is getting ahead of the looters for now.
Nov. 14th, 2011 04:12 pm (UTC)
On an individual level, any Third World country has some gadgets which would have been miraculous anywhere on the planet in 1750. Almost all countries, even Haiti, are better off on average than they were in 1750; but that's when the whole Caribbean imported labor by force because the slaves died off too quickly to reproduce.

None of this contradicts what Brad is saying; indeed, it supports it. If the looters came in, looted everything, and left no seed-corn, they wouldn't be able to do it to the same country twice - because there would be nothing to steal the second time.
Nov. 16th, 2011 12:07 am (UTC)
"Give a man a fish, feed him for a day. Take his fish away and tell him he's lucky just to be alive, and he'll figure out how to catch another one for you to take tomorrow."

And sadly, these looters are too big to be driven off by a band of samurai or gunslingers.

Edited at 2011-11-16 12:09 am (UTC)
Nov. 22nd, 2011 03:05 am (UTC)
The problem behind this is we give the "looters" respect: People tend to respect rich people beyond all reason. If we didn't respect people for being rich, it would be easier to unmask their crimes.
Nov. 14th, 2011 04:19 pm (UTC)
Berlusconi may be trying something much less melodramatic. Trying to be the Man on the White Horse is a gamble; if he loses (either because somebody else manages to become the Man or because too many of Italy's neighbors dislike the whole idea), he still goes to jail. If he goes to jail before the crisis, he may even stay there.

But if he negotiates a quiet and personal amnesty as the price for resigning, he's home free. If he has to give half the money back, he still has the other half.
Nov. 22nd, 2011 03:07 am (UTC)
Brad -- Is Vulture's Picnic worth getting?
Nov. 22nd, 2011 03:30 am (UTC)
Re: Question
Yes and no. I'll post a longer review when I've had a little longer to think about it. One line summary? Are you in the market for a supposedly-real-life version of The Girl with the Dragon Tattoo?
Nov. 24th, 2011 08:59 pm (UTC)
Berlusconi and the ECB Riots - I think he may be right
User mysanal referenced to your post from Berlusconi and the ECB Riots - I think he may be right saying: [...] Originally posted by at Berlusconi and the ECB Riots [...]
Nov. 25th, 2011 04:50 pm (UTC)
Frequency of posting is dropping - 14-25 November 02011
User silveradept referenced to your post from Frequency of posting is dropping - 14-25 November 02011 saying: [...] from power, but just setting things up so that he'll be swept back in under the threat of anarchy [...]
( 18 comments — Leave a comment )