by Joseph P. Farrell, Giza Death Star:
While we’re talking about Germany and the European Union, Mr. H.B. also spotted this story and passed it along, and it’s worth passing along to you. Remember all the hoopla a few years ago between Germany and Greece, and how Goldman Sachs was being accused as the real architect of the austerity policies that were wrecking the Greek economy? It was a case then that the runaway socialist policies of southern Europe were having the bill footed by Germany and the stronger northern European economies. The result was actual seizure of assets, in some cases. It is as if we were watching a process where the Parthenon had become private property, and the Greeks, rightly, were not too happy about it, but (not rightly) were not prepared to examine how their own domestic policies had led to the situation.
That, of course, is a dramatic over-simplification, but now there’s a new internal struggle shaping up.
The catalsysts? The recent Italian elections, and the appointment of a Goldman Sachs man to be Germany’s deputy finance minister, and this appointment has potentially huge significance:
Having populated most central banks with its alumni, Goldman is now aiming even higher: right at sovereign governments, and on Monday morning, a spokesman for Germany’s finance ministry said that the co-head of Goldman Sachs in Germany, Joerg Kukies, will become deputy finance minister in the new German government.
According to Reuters, Kukies will be responsible for financial market policy and Europe in his new role, the spokesman said. In other words, with Mario Draghi – another Goldman alum – potentially resigning from the ECB, Goldman is loathe to give up its control on key European policy developments and has made its move.
Kukies served as the Managing Director of Goldman Sachs and served as its Co-Head of Germany since October 2014. Kukies oversaw the equities and fixed income division in Germany and Austria for Goldman.
What does this signify? My high octane speculation here has two components. Firstly, it symbolizes yet another retreat from reality, and a clear signal of “more of the same” as far as the European Union goes and the policy of austerity that Merkel’s previous government pursued vis-a-vis Greece, and it’s a symbol that there is a showdown coming between the EU, Germany, and Italy. Why is it a retreat from reality? Because recall that Frau Merkel’s previous finance minister, Wolfgang Schauble, in the midst of the growing EU crisis, stated to a meeting of the top economic powers of the world in China, that the “debt growth model” was over: finance capitalism and paper profits had run their course, and that there was “no way forward that is not a reform.”
Notably, Schauble is gone, and Goldman Sachs has a heavy presence in Merkel’s new “coalition,” and that means there will be “more of the same”. And that in turn will serve to weaken her government even more, as it will eventually fuel commentary and criticism that her government is nothing but a branch office of the firm itself. It’s an echo of the previous Greek crisis, but this time on a much larger stage with much larger players, which brings us to point number two: