Draghi also happens to have been the person who was running the show in Europe (while Henry Paulson was running the whole Goldman shooting match in New York) for none other than Goldman-Sachs when that firm developed and managed many of the ethically-challenged, European government-related derivatives deals which a German foreign affairs spokesman referred to, on Sunday (specifically focusing upon the Goldman-Greece transactions), in the following manner: "Goldman Sachs broke the spirit of the Maastricht Treaty, though it is not certain it broke the law."
Fallout From Goldman-Greece Affair Widens: Impact On The European Central Bank
By Simon Johnson
February 15, 2010
As controller of the euro, the European Central Bank (ECB) wields great power in Europe and has a wide global reach. The race to become the ECB's next president - with a term that starts next year - has been intense and hard fought. The final selection is down to two men: the ultra hawkish Axel Weber, head of the Bundesbank, who sees inflation dangers at every turn; and the relatively more moderate Mario Draghi, head of the Bank of Italy, chair of the Financial Stability Board, and experienced international economic diplomat.
Unfortunately for those hoping that Draghi could still prevail, he is also formerly senior management at Goldman Sachs and serious questions are emerging regarding what he knew and did during Goldman's alleged "let's help Greece circumvent EU budget rules" phase in the early 2000s.
Now, to understand the political climate in Germany--which really is the economic powerhouse with the most amount of leverage in the European Union today--one need look no further than today's (Tueday's) New York Times: "Opposition Grows In Germany to Bailout for Greece," where we learn that 53% of the German public wants to tell Greece to go suck an olive as far as any European Union bailout of that country is concerned.
So, as Johnson reminds us this evening, the German authorities have their own horse in the race to run Europe's central bank and, politically, they're "...upset at the prospect of bailing out Greece."
You can pretty much count Mr. Draghi out of the running for the ECB job, and it would not be a surprise if he soon steps down from chairing the Financial Stability Board.
Being associated with Goldman Sachs is now beyond awkward. For someone aiming high in the public sphere, work experience at the top levels of Goldman is fast becoming a toxic asset.
A not-so-funny thing though...and it certainly serves as a stark contrast between how Goldman is being treated in the press in Europe versus how they're being handled with kid gloves in the MSM here in the U.S., even today.
What I'm referencing is another piece on the op-ed pages of today's NY Times, where none other than Bush Treasury Secretary Henry Paulson takes it upon himself to impart his brilliance (the guy running the whole shebang in the lead-up to our country's Great Recession) in: "How to Watch The Banks.'
Oh, the irony of it all!
So, let's just forget about how then-Treasury Secretary Paulson watched (because that's about the only thing he did until September 2008) the banks in 2006 and 2007, as our country virtually collapsed in the greatest economic upheaval since the Great Depression.
Speaking of which--and perhaps even tying-in all the disparate information I'm covering herein together--Calculated Risk has a very interesting piece running over on their blog tonight which is now telling us that, in our "new normal" (which Simon Johnson referred to last Summer as our "Two-Track Economy"), well over a third of our population is, still, in nothing less than a full-blown depression right now; and, this will continue to be the case, perhaps for decades! (In no small part thanks to how Treasury Secretary Paulson "watched the banks" in 2006, 2007 and 2008, too.) See: "Labor Underutilization Rate by Household Income."
Labor Underutilization Rate by Household Income
by CalculatedRisk on 2/15/2010 01:52:00 PM
The following chart is based on data from a research paper by Andrew Sum and Ishwar Khatiwada at the Center for Labor Market Studies, Northeastern University (ht Ann): "Labor Underutilization Problems of U.S. Workers Across Household Income Groups at the End of the Great Recession: A Truly Great Depression Among the Nation's Low Income Workers Amidst Full Employment Among the Most Affluent"
Labor Underutilization Rate by Household Income Click HERE for image in new window.
"At the end of calendar year 2009, as the national economy was recovering from the recession of 2007-2009, workers in different segments of the income distribution clearly found themselves in radically different labor market conditions. A true labor market depression faced those in the bottom two deciles of the income distribution, a deep labor market recession prevailed among those in the middle of the distribution, and close to a full employment environment prevailed at the top. There was no labor market recession for America's affluent."
Then again, I'm sure we'd all settle for just knowing what then-Goldman CEO Henry Paulson said to his employee, Mario Draghi, as Draghi managed sovereign deals with European countries on Goldman's behalf which, as of today, have all but undermined a good portion of the effort President Obama has made in the past year to rebuild relations with these very same countries--the same countries that Goldman worked with to obfuscate their finances so that they appeared compliant with European Union rules back when Hank Paulson was "watching the banks" as a part of his job description at Goldman-Sachs, too!
# # #
Here are some of the things Henry Paulson said as he "watched the banks" in 2007 and 2008...
(From Mortgage News Daily: "Timeline of Henry Paulson Quotes.")
April 20, 2007 -- "I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained."
July 26, 2007 -- "I don't think it [the subprime mess] poses any threat to the overall economy."
November 29, 2007 -- "While the difficulties in housing and credit markets and the effects of high energy prices will extract a penalty from growth, the US economy has many strengths, and I expect the expansion to continue,"
December 7, 2007 - "The US banking system is well-capitalized and `we have a strong deposit insurance system that provides good coverage for the savings of hard-working Americans.'"
March 16, 2008 -- "I have great, great confidence in our capital markets and in our financial institutions. Our financial institutions, banks and investment banks, are strong. Our capital markets are resilient. They're efficient. They're flexible."
May 16, 2008 -- "Looking forward, I expect that financial markets will be driven less by the recent turmoil and more by broader economic conditions and, specifically, by the recovery of the housing sector."
July 20, 2008 -- "It's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation."
September 19, 2008 -- "I am convinced that this bold approach will cost American families far less than the alternative -- a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion..."
November 12, 2008 -- "This market has for all practical purposes ground to a halt. Today, the illiquidity in this sector is raising the cost and reducing the availability of car loans, student loans and credit cards. This is creating a heavy burden on the American people and reducing the number of jobs in our economy."
November 12, 2008 -- "I will never apologize for changing a strategy or an approach if the facts change..."
November 14, 2008 -- "We have in many ways humiliated ourselves as a nation with some of the problems that have taken place here..."
November 14, 2008 -- "I'm not saying we're going to need more," he said. "Let's get this program done. Let's get the $250 billion out the door, let's see how it's working ... and it's highly likely the right thing to do will be at some time in the not too distant future to have another capital program..."