by F. William Engdahl, … with New Eastern Outlook, Moscow
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[ Editor’s note: Brother Engdahl recounts this historical replay of our Western vulture banksters, who use the age old scam of “load them up with debt they can’t pay, and then loot them in default to take possession of their long term wealth.”
There is nothing wrong about this from a purely foreclosure on a bad loan scenario, as such things have commonly been done on a micro scale. During the big US economic crash with the auto bailouts, the bondholders took a big haircut, while GE pensions and to-die-for medical insurance were not touched, which the bondholders screamed about to no avail.
In this current Greek debt fight, the banksters have so far protected their loan portfolios at 100%. And those who had nothing to do with the loan negotiations are taking the hit. Another story never touched on is where did all this borrowed money go? As Gordon Duff so often pointed out, Greece remained almost totally undeveloped.
But all is not perfectly rigged in Camelot. The IMF has openly stated that it is not onboard the current bailout without some debt adjustments that would make a turn-around of Greece’s economy assured.
The state assets being put into the pooled security fund can also be viewed as protecting them from being sold off to non-loan holding parties at fire sale prices, and where the appropriate bribe paid to the right Greek officials would buy their tickets to relocating from their sinking ship.
How much more can the Greek people be squeezed?One of the things the new Greek government tried to fight for was that these pledged security assets would not be liquidated at the current depressed prices to cover any defaults, but held in reserve for when their value recovered… an iffy proposition to the banksters who prefer the depressed price liquidation.
China, for example, even bought a Greek port to give them a Mediterranean shipping anchor. Russia might also be looking at similar assistance deal opportunities. So the West has locked them out of picking the bones of Greece, which seemed to be reserved for fellow NATO countries only.
Lost in all this is the investment bank scandal, where they cooked the Greek books by hiding a lot of Greek debt through derivatives juggling to get the country into the EU. I have only seen one story about a possible $50 billion lawsuit in that regard, and this is something for which we don’t need a trial to establish that it was a conspiracy.
The banking elite may accept some of their wayward members getting clipped for Libor rate rigging and other hands-caught-in-the-cookie-jar jams, but they prefer that no mega conspiracy cases get started, as basically the international banking system is nothing but a conspiracy against the public.
The stolen and non-tax paid funds that they sit on to use in their market manipulations are big enough to pay down a chunk of state debts and recharge the world economy. But any good deeds along those lines would require a lot of bankers and politicians hanging from light poles across Europe and Manhattan. This seems to be a solution that they have been averse to participate in, so far… Jim W. Dean ]
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First published … July 31, 2015
By now it is clear that far from a sensible resolution of the relatively solvable Greek crisis, the agreement pushed on Greece above all by the Merkel coalition in Berlin, with the willing complicity of Greek Prime Minister Tsipras, is preprogrammed to not merely fail but also to detonate a tsunami of consequences which likely will begin the chaotic breakup of the European Monetary System and its Euro.
What’s also becoming clear is the clash of geopolitical interests between Washington, France and the IMF on the one side and Germany, with support from tiny Finland on the other side. For those conscious of the barest facts of history, the cruel irony is that Germany is imposing on “defeated” Greece conditions more severe than the post World War I Versailles Reparations conditions under the so-called Dawes Plan in 1924.
The terms of the deal amount to a brazen theft of the most prized Greek state assets by a German state bank, the Kreditanstalt für Wiederaufbau (KfW).
According to a report in the German Süddeutsche Zeitung, the Greek government has agreed to a German demand to place ownership with the KfW of some € 50 billion of Greek state assets such as ports, airports, highways and other national property, including no doubt the state offshore oil and gas rights that are believed to hold hundreds of billions of Euros worth of hydrocarbons.
Those assets will then be privatized by an entity owned in effect by the German state KfW bank. The proceeds will go to repay the EU creditors’ lending to Greece that went largely to bail out French and German banks.
The fund, modelled on the disastrous East German Treuhand Fund that asset-stripped former Communist German Democratic Republic after its union with West Germany in November 1989, will be based in Athens, but its Greek employees will be supervised by relevant EU agencies, and controlled at the top apparently by the Frankfurt Kreditanstalt für Wiederaufbau.
It was Wolfgang Schäuble, then German Interior Minister, who negotiated the terms of unification of East Germany into West Germany. The East German Treuhand was set up as part of that, to hold all Communist GDR state assets to prepare them for privatization.
Following the assassinations of Deutsche Bank chairman Alfred Herrhausen—a key adviser to Chancellor Helmut Kohl who advocated massive debt forgiveness for former communist countries such as Poland and construction of a high-speed rail linking Berlin to Moscow—the first head of Treuhand, Detlev Rohwedder, was also assassinated by professional terrorists who were curiously never apprehended.
Rohwedder’s replacement at Treuhand, Birgit Breuel, daughter of a prominent German private banker, was a regular guest at the Bilderberg think-tank meetings. She managed to turn industrial East Germany into a wasteland of deindustrialization and tourism.
Here an historical note is in also order about the integrity of having the KfW as “guardian” of Greek state assets. It was the KfW, via its then-daughter bank, IKB in Düsseldorf, which first triggered the global panic that was named the USA sub-prime real estate crisis in July of 2007. IKB had bought billions worth of US dodgy real estate bonds marketed to them by Goldman Sachs, Deutsche Bank and other Wall Street firms.
The KfW, as the largest shareholder of IKB took responsibility and the chairman of KfW was forced to leave amid heavy criticism for failed understanding of bank risk. Today the chairman of Kreditanstalt für Wiederaufbau is Finance Minister Wolfgang Schäuble.
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A Greek Dawes Plan
While the comparison to the Treuhand of Germany in the 1990’s is apt, there is a more poignant and more precise model that applies, that of the US-instigated Dawes Plan of 1924.
The Versailles Treaty imposed on a defeated Germany in 1919 contained an infamous Article 231, the War Guilt Clause.
It made Germany and her allies the sole guilty ones for World War I and all its damages. German Weimar hyperinflation in 1922-1923, ignited by the French military occupation of the Ruhr industrial heart of Germany, was resolved in April 1924 when the Bank of England’s Montagu Norman and New York J.P. Morgan Bank got German banker Hjalmar Schacht to be head of the German Reichsbank under suspicious circumstances.
With their man Schacht in control of the German national bank, J.P. Morgan stepped in with a new scheme to collect German war reparations. The French attempt to collect at gunpoint had utterly failed.
The reparations technically would be paid to allied victors Britain and France. Britain and France in turn would turn those reparation payments over to the US Government. J.P. Morgan & Co. had been the main creditor illegally financing munitions purchases in the USA in the period before 1917, when the United States was officially neutral. The new debt collection plan was drafted by an American banker close to the Morgan group, General Charles G. Dawes, who sat on the Allied Reparations Committee.
Under the Dawes Plan, French troops would immediately evacuate the Ruhr. Germany would pay a sum of one billion Reichsmarks the first year rising to 2.5 billion annually. The German Reichsbank, then a public state bank, was forced to become a private independent central bank in effect controlled by The House of Morgan. In return for a loan of $100 million from a consortium of Wall Street banks led by J.P. Morgan, Germany would place its tax receipts under the direct control of an American debt collector agent in Berlin.
At Versailles in 1919, the Allied victors had systematically stripped Germany of her most vital economic resources. All her valuable colonies, especially Tanganyika and South West Africa, were taken by Britain. The growing economic markets of the Ottoman Empire, opened through the expansion of the Baghdad Railway, along with the Deutsche Bank oil rights of the Turkish Petroleum Company were gone.
Germany herself had lost her most valuable source of iron ore for her steel industry: Alsace-Lorraine and the east, including Silesia, with its rich mineral and agricultural resources. Germany had lost 75 per cent of her iron ore, 68 per cent of her zinc ore and 26 per cent of her coal as a consequence of Versailles.
Alsatian textile industries and potash mines were gone. Her entire merchant fleet, a fifth of her river transport fleet, a quarter of her fishing fleet, 5,000 locomotives, 150,000 railroad cars and 5,000 motor trucks were taken by the Allied powers after Versailles.
All was justified as part of an as yet undefined German war ‘reparations’ levy. In 1921 the Allied reparations Committee, under what was termed the London Ultimatum, fixed the total owed by Germany to the Allies at the unpayable sum of 132 billion gold marks.
Washington and Wall Street, through the House of Morgan, then organized the Dawes Plan to take the German tax revenues in order to further extract their pound of flesh for Germany’s “sole war guilt.”
Under the Dawes Plan, Germany paid reparations for five years, until 1929. At the end of 1929, she owed more than at the beginning. It was a scheme of organized looting and debt vassalage by the international banking community dominated by J.P. Morgan in New York. Guarantees were made for reparations payments from special funds in Germany. An Agent-General for Reparations, S. Parker Gilbert, a J.P. Morgan bank partner, was installed in Berlin to collect the repayments for the American banks.
With their risk thus all but nil, New York banks began a vastly profitable lending to Germany, money which was recycled back to the banks of New York in the form of reparations, with commission and interest. It was a vast international credit pyramid at the top of which sat, ultimately, the New York banks.
Between 1924 and 1931, Germany paid 10.5 billion marks in reparations, but borrowed 18.6 billion marks from abroad. German recovery after 1923, under the guiding hand of Montagu Norman and his Reichsbank colleague, Hjalmar Schacht, was all controlled by the borrowings from the House of Morgan and Wall Street. It was similar to the borrowing frenzy in Greece as they were overwhelmed by “cheap” French and German bank credits to buy homes, new cars and such after joining the Eurozone. When the music of cheap foreign loans stopped, the edifice collapsed.
Forgetting the lessons of history
In the Greek case, with the clear collusion of Prime Minister Tsipras, Finance Minister Varoufakis and now Euclid Tsakalotos, the German Government, with cruel irony, is using the same model that was imposed on defeated Germany in the 1920’s.
Today Berlin is imposing impossible debt repayment terms on Greece, debts that had little to do with the Greek people or even their government, but rather with the excesses of the French and other EU and Wall Street banks during the years of easy money.
At this point, as the shock-wave dynamic is working through the Eurozone, Berlin has set off a chain-reaction. In many ways it is similar to that by the revenge-obsessed French government in May, 1931, when they deliberately brought down the Vienna, Austria Creditanstalt bank to punish Germany for creating a trade alliance with Austria.
That French act set off a chain reaction that brought the inter-linked German banking system into collapse and triggered an economic depression which paved the way for the German NSDAP candidate, Adolf Hitler, with support of the German ultra-conservative Catholic Center Party, under Chancellor Franz von Papen, to become German Chancellor in 1933.
The Tar Baby
Forcing a country and a people to swallow guilt at all, let alone sole guilt for the Greek debt crisis, is a pre-programmed plan to political and economic suicide. It could be that the German government has just set into motion the suicide of the European Monetary Union with its insistence on its rigid demands on Greece for repayment of unpayable debts. Be sure that some in Washington and Wall Street are smiling at all this.
The Euro threat to displace the dollar as world reserve currency, the main pillar of America’s hegemony position that allows it to finance its wars and Color Revolutions with unwilling money from others, looks much less as the Eurozone sinks into a “Tar Baby” quagmire of mutual recrimination and growing EU economic misery.
Joel Chandler Harris, author of the original Tar Baby story in his Tales of Uncle Remus, today would recognize immediately that B’rer Fox—Christine Lagarde and the US Treasury behind her—has lured B’rer Rabbit in Berlin to start punching her Tar Baby, Greece, for not “respecting” her sufficiently. Now B’rer Rabbit is stuck in the tar. Lagarde’s IMF, conveniently, has leaked a confidential IMF report dated July 14 (French Bastille Day) after the much-touted Berlin deal with Greece was forced on the Greek Parliament.
The IMF document states that “Greece’s debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far.”
The IMF, one of three Troika members along with the European Central Bank and the EU Commission, may be the first one to “exit,” that is to walk away from Greece and from the Troika. Germany’s Finance Minister Wolfgang Schäuble has made IMF participation in the Greek deal mandatory to any deal. Now, under its own rules, the IMF is not allowed to participate in a bailout if a country’s debt is deemed unsustainable and there is no prospect of it returning to private bond markets for financing.
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F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine “New Eastern Outlook”.
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Jim W. Dean was an active editor on VT from 2010-2022. He was involved in operations, development, and writing, plus an active schedule of TV and radio interviews.
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