Italy is the latest nation to join the global voter revolt against the City of London and Wall Street banking interests. On 4 December an emphatic 60 per cent of Italians voted to reject constitutional changes that would have concentrated power in the prime minister and elevated EU law to the same level as Italian constitutional law. The changes, intended to give Prime Minister Matteo Renzi the power to enforce EU plans to prop up Europe’s Too-Big-To-Fail (TBTF) banks, were explicitly fascist—in 2013 TBTF megabank JPMorgan had complained that the anti-fascist measures in Italy’s post-war constitution were the obstacle to centralised EU control of Europe’s financial system. The “no” vote is therefore a smashing defeat of this EU fascism, which has forced Renzi to resign and leaves the TBTF banks facing oblivion.
The vote is especially a defeat for the British Crown and City of London, the original masterminds of the EU. In 1992 Queen Elizabeth and Prince Philip set Italy’s present crisis in train when they hosted top figures from the Italian government and elite financiers from the City of London at an exclusive function on their Royal Yacht Britannia off Italy’s west coast. This event finalised plans to mass-privatise Italy’s state-owned industries, and enforce the new Maastricht Treaty’s rules for adoption of the euro single currency. Italy was the world’s sixth-largest industrial economy, and a premier producer of machine tools. The radical privatisation of the Italian economy in the decade following that function on the Britannia resulted in the greatest destruction of real wealth in the country’s history.
Like Brexit and the blue collar vote for Trump, it was the victims of Italy’s deindustrialisation who turned out in droves to vote down the EU-banker agenda. The highest percentage of “no” votes came from the southern regions with the highest unemployment and poverty levels, and the northern regions that have lost the most industries.
The deindustrialisation is also the root cause of the crisis in Italy’s banks, which hold more than €360 billion in non-performing loans—more than their combined capital. With a market value of just 20 per cent of their face value, if these loans were “marked to market”, all Italian banks would collapse overnight. To prop up some of the banks, last December the Italian government complied with EU rules and “bailed in” their bondholders, converting their bonds into worthless shares. Most Italian bank bonds are held by ordinary pensioners—the rage that this bail-in provoked in the population fuelled the voter revolt.
The referendum result leaves the next Italian government at an impasse. To comply with the EU’s bail-in rules would be political suicide; however, it must address the banking crisis, which threatens financial contagion across the world (especially through Deutsche Bank, which is heavily exposed to Italy’s banks and is a derivatives counterparty to all other TBTF banks worldwide).
The only solution for Italy lies outside of the EU and its euro straitjacket. It begins with a Glass-Steagall separation of commercial banking from investment banking and all forms of financial speculation. This separation will be a firewall to protect the banks that serve the real economy from the inevitable meltdown of unpayable debts and bad derivatives bets. It must coincide with massive public investment in infrastructure, both in domestic projects and in cooperation with the One Belt, One Road vision China has initiated to connect Asia with Europe.
This is a national solution, but the Italian crisis, which threatens the entire world, puts a fine point on the need for all nations to agree to implement Glass-Steagall. The last such international agreement, reached at the 1944 Bretton Woods conference, established the regulated system of fixed exchange rates and capital controls that underpinned the post-WWII era of unprecedented economic growth and prosperity. Bretton Woods defined the alternative to the fascism then being fought in the war; Glass-Steagall is the alternative to financial fascism today.
Click here to sign the petition: Break up the big banks now—pass Glass-Steagall!
http://cecaust.com.au/glass-steagall/
Toms Blog on Life and Livingness