It may seem like all the bankers and politicians have a very short memory as they are trying to continuously profit without changing their modus operandi. One of the methods used is to offer politicians cushy positions for their cooperation with financial circles. This setup benefits both sides and confirms that the government is not what decides about the future of a country.
Barroso’s new employer? You guessed it, Goldman Sachs
Autumn 2014. After a decade of presiding the European Commission, Jose Manuel Barroso finished his tenure. He waited for 18 months (legally required cooling-off period) and proceeded to accept a job offer from Goldman. If Barroso cared at least a bit about the future of Europe and Europeans he would not have accepted a position at the bank which helped Greeks hide their debt level before they entered the Eurozone. But let us be honest, it is hard to ask someone to care about average Mr. Smith when he started his political career in communist parties.
Chris Hohn the founder and manager of TCI Fund Management was the star speaker at this year's London Value Investor Conference, which took place on May 19th. The investor has earned himself a reputation for being one of the world's most successful hedge fund managers over the past few decades. TCI, which stands for The Read More
We saw criticism of Barroso move coming from several EU officers. The question has been raised pointing fingers at the revolving door between Brussels political sphere and the financial sector. There are voices in Brussels that the ethics code itself is not adequate if situations like this can happen. Applying critical analysis to this matter we see that among those who protest against these practices are politicians who are going to accept a position at Goldman Sachs (or any other big institution) without hesitation. Since the very beginning, the history of the European Union is full of those instances.
Goldman Sachs owns political faces you know
Barroso is far from being a snowflake. Many known names from the world of big politics are easy to connect with the banking industry. I have to give Goldman honorary mention here because they are unparalleled in terms of using renowned faces. The bank successfully applies pressure to secure governmental positions for their officials and after their term ends, they return to Goldman. Sometimes the order is reversed. Do you know Mario Draghi? The former Director General of Italian Treasury proceeded to be employed by Goldman and ended up being the head of the ECB.
There are more people connected with Goldman Sachs. Before Mario Monti became the head of Italian government (replacing democratically elected Silvio Berlusconi) he worked at Goldman.
When Greece misinformed about their level of indebtedness before entering the Eurozone, the head of National Bank of Greece was Petros Christodoulou – who started his career at Goldman.
Until 2015 Peter Sutherland was chairman of Goldman Sachs (GS). In the ‘80s he was the Attorney General of Ireland, later became the European Commissioner for Competition and was the key Irish official during negotiations about bank nationalisation and bailout conditions for this country.
Otmar Issing is another advisor from GS. Issing is deemed to be the architect of the Euro, chairman of Deutsche Bundesbank transformed later into the European Central Bank.
Political puppets controlled by banks return favors to their masters. The story of Robert Rubin stands out. A man who strongly influenced banks’ position they enjoy today. He worked 26 years for GS (co-chairman) and since 1995 to 1999 he was Secretary of the US Treasury. During his tenure, Rubin made sure that the Glass-Steagall Act was revoked by Bill Clinton.
This Act was introduced in the US in 1933. Regulation separated commercial banking from investment banking. The act lasted for 60 years. At the end of the ‘90s Clinton administration defused Glass-Steagall Act and as a result banks blended into huge financial establishments – later called “too big to fail”. During 2008 meltdown Lehman Brothers collapsed but other banks were saved. When the dust settled banks came out stronger than ever before. Once the Glass-Steagall was removed deposits were threatened. In the past, a deposit was just the opposite side of a credit but deposits today are used to leverage bank’s risky operations.
There are many claiming that saving banks and introduction of stimulus packages put us into recession but prevented catastrophic depression. The problem is that the way this situation is handled lays in hands of a very small group of people simultaneously increasing their influence and capital. These resources are used to buy politicians and media creating an atmosphere that millions of people are grateful for salvaging the economy. You may wonder why voters are surprised that rich are getting richer and poor are getting poorer.
A crisis is a natural situation. It is a cleansing mechanism both in the economic and political way. Unfortunately, the system we have now unleashes only negative consequences of the turmoil. Any recession/depression is used to intrude upon citizens’ lives and further consolidate corporations which are already “too big to fail”. This way Goldman Sachs and other big banks were working hard these past years. Employment of Barroso is just a confirmation that bankers are continuing with their tactics.