Banker's Choice

So Greece has a new prime minister – Lucas Papademos – and Italy looks about to have a new one, too – Mario Monti. To which not just you and I but damn near every Italian and Greek responds, “Who?”

Neither Papademos nor Monti has ever held elective office, or even run for one. Neither has been a minister, sub-minister or even civil servant in one of their nation’s ministries. Neither has developed, or sought to develop, a public following from their careers as economic technicians, chiefly on the European supra-national level. Yet each is about to lead a major nation.

Papademos and Monti are something new under the sun: national leaders elected by the markets. Imposed, not as pro-consels by foreign occupiers, but by the European banking community, by the finance ministers of the Eurozone powers – chiefly, Germany and France. Each has an impressive resume and a good reputation with the centrist political and economic elites of his own nation, but there’s no reason why the person on the street of Rome or Athens should know who the hell they are.

But imagine if the U.S. couldn’t sell its Treasury notes (which has never been a problem, let’s be clear), and the IMF and Germany and China got together and said that Barack Obama, Joe Biden, the Cabinet and the Congress had to go. Imagine that they then designated as Obama’s successor, say, the guy who followed Tim Geithner as head of the New York Fed (I don’t even know who that is), or Robert Zoellick, the American who heads the World Bank. That’s essentially what just happened to Italy and Greece.

And the way this fits into democratic theory is – well, it doesn’t fit into democratic theory. It’s closer to a coup without tanks. To be sure, these are temporary coups until each nation holds new elections, but Papademos and Monti are not supposed to be mere caretakers until the real leaders arrive. To the contrary, they’re assuming power under instruction from the markets – the markets that have seen Italy’s financing costs rise and the value of stocks everywhere topple – to make sweeping cuts in services and substantial hikes in taxes, cuts so sweeping and hikes so substantial that no elected leader would dare make them. They’ve been instructed by the markets, in essence, to lower the living standards of their peoples.

Both Monti and Papademos look to be corporate liberal internationalists of the kind that in the U.S. end up in the Treasury Department. Papademos went to college and grad school at MIT and taught economics at Columbia from the mid-70s to the mid-80s. He even served as senior economist for the Federal Reserve Bank of Boston in 1980. Returning to Greece in 1985 to work as chief economist of the Bank of Greece, he rose to the post of the bank’s Governor; then served as Jean-Claude Trichet’s chief deputy at the European Central Bank from 2002 to 2010, returning again to Greece in 2010 to become an economic adviser to Prime Minister George Papandreou.

Monti went to college in Italy, but completed his graduate studies in economics at Yale, where he studied under James Tobin (which I suppose increases the chances that he supports a financial transaction tax). He was an economics professor and university administrator in Italy from 1970 through 1994, then was appointed to the European Commission, where he was handed various economic portfolios, including those on financial services and competition, in which capacity he initiated anti-monopoly proceedings against Microsoft and led the investigation that culminated in blocking the merger of General Electric and Honeywell. With Jacques Delors and Daniel Cohn-Bendit, he has supported an initiative to deepen the European Union, and he was the first chairman of Breugel, a Brussels-based EU-oriented think tank. His bio on the European Commission’s website listed him as an adviser to Goldman Sachs, and it’s downhill from there: A conspiracy theorist’s dream-come-true, Monti, according to Wikipedia, is also the European chairman of the Trilateral Commission and a member of the Bilderberg Group.

But there’s nothing conspiratorial about what is happening in plain view in Italy and Greece: Two economists have been imposed from on high to make changes to the Italian and Greek economies – really, to fundamental lifestyles of Italians and Greeks – that neither nation would be likely to make through the normal democratic processes. Some of the changes we’re likely about to see would probably come in any case, but surely not all: Democracies tend not vote themselves into austerity-driven penury. But Italy and Greece (the latter, need I note, the cradle of democracy) aren’t really looking like democracies just now, or even sovereign states.

So what do we call this? A coup? An occupation? The latest version of the 18th Brumaire? (That one’s for the Marxists.) If nothing else, it’s certainly a triumph of capitalism over democracy.

You may also like