Draghi’s Super-Secret Secret Squirrel show


SECRET SQUIRREL COLOR 3

Mariano Rajoy (L) and Mario Draghi (R) in fancy dress at the Transparency International Winter Gala

 

The European Central Bank’s Darth Draghi descended upon Madrid on Tuesday for a pep talk, saying that Spain had successfully stabilised its banking system and that borrowers with top-notch credit ratings should be seeing an easing of the credit drought by the end of the year. He saluted new laws making it easier to fire workers and did his best Bill Clinton impression, feeling the pain of the almost 60% unemployed youth.

After a closed hearing before a select group of MPs in the Chamber of Deputies, he told reporters that “Spain is on the right track,” while darkly warning that all EU countries still had far to go and called on PM Rajoy to put together a “credible, detailed plan” on further spending cuts.

Nothing really new here. Typical ‘Good work, now cut more’ generalities.

So why was the meeting held as a closed session?

It was reported ahead of the meeting by El Pais that according to parliamentary sources, the central bank had requested the secrecy as Draghi had wanted a similarly restricted format to that which he used when he spoke to Germany’s Bundestag.

The decision to keep the meeting closed to the public, with proceedings to be issued in none of the normal formats, provoked an angry response from left-wing deputies, who announced that they would just “retransmit” Draghi’s comments by Twitter.

All opposition parties, including the Socialists, denounced the move (although one has to ask if PSOE would really have done any different). The Socialists’ spokesman, Valeriano Gómez filed a formal protest, while the Plural Left (United Left and Greens) described the efforts at a closed session as a “failure of democracy”.

Shockingly, in response, the Speaker of the House installed mobile-phone jammers to prevent deputies from live-tweeting. So left-wing deputies Alberto Garzón and Joan Coscubiela just sneakily filmed the session on their iPhones and later uploaded the videos to YouTube.

The kerfuffle prompted Draghi to subsequently deny that he had ever wanted a closed session and that he would have been perfectly happy for it to happen in the open, adding that no harm had been done by it being posted on YouTube. See, look, I’ll even post my speech up on the ECB website.

On the one hand, the Sith Lord’s speech was so full of austerian banalities that it makes you wonder why whoever it was requested the meeting be held in secret in the first place.

On the other hand, if Draghi’s comments really were going to be incendiary and have such import for the Spanish political economy, then such words – if Spain is still a sovereign democracy – need to be said publicly.

Particularly as the ECB has such form since the crisis with secret letters to governments ordering them to liberalise their economies or commanding them to take a bail-out, or quiet phone calls to domestic banking bosses directing them to turn off the taps, citizens have every reason to be frightened of Frankfurt’s preference for the shadows.

In 2011, when former Eurogroup chief Jean-Claude Juncker was at a small Brussels think-tank function, forgetting that reporters were present, he for once spoke quite frankly about the need for secrecy, saying: “I’m ready to be insulted as being insufficiently democratic, but I want to be serious.”

Economic policy discussions were simply too sensitive, he said, potentially putting “millions of people at risk”, to have them in public. “I am for secret, dark debates,” he joked at the time, adding that despite his Catholic upbringing, he had often “had to lie.”

In the end, Draghi’s comments appear to have been largely banal. But this is the point. European leaders have become accustomed to operating beyond the glare of parliaments and the public, both for discussions of great import and for the prosaic.

The demand for state secrecy in economic matters is expanding – a sharp turn away from principles of open government, which require that citizens have a right to access documents and proceedings of government to assure democratic, public oversight.

It should be obvious that limitations on state secrecy, a core principle of democrats since the Enlightenment, is also required to prevent corruption.

At a time when great swathes of the current Spanish and Greek political classes stand accused of protecting themselves and those close to them from the taxes that mere mortals are subject to – and Draghi himself is caught up in a similar scandal of his own, we must be especially vigilant and on guard against what increasingly appears to be unblushing criminality amongst our leaders.

Enough clumsy cloak and dagger, Draghi. At least talk pretty to our face before you screw us.

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For more details on Draghi’s Super-Secret Secret Squirrel meeting, just check the #openDraghi hashtag.

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  1. #1 by FinancialGuy on February 21, 2013 - 3:21 pm

    Nice post. For me, this is the unspoken narrative of the eurozone crisis – the gradual transfer of powers away from national capitals and parliaments and into the centre in Brussels and institutions. It is happening in plain sight which makes it all the more surprising that people are not complaining. Perhaps it is simply because the topics of central banking are too complex for most people and the media, or perhaps people only care about their taxes and services. Either way, in a few years time the EU will be very different to the current version if this path is continued on.

  2. #2 by John on February 24, 2013 - 12:39 pm

    Ecuador’s President Rafael Correa has the special ability to drive our most elite media nuts.

    http://neweconomicperspectives.org/2013/02/correas-and-ecuadors-success-drive-the-economist-nuts.html#comment-124801

    Ha-Joon Chang is a South Korean economist currently teaching at Cambridge University, as well as a follower and friend of Nobel laureate Joseph Stiglitz, whose main areas of interest are development economics and international trade. His books have had considerable impact in the developing world: Rafael Correa, the current Ecuadorian president, cited Dr Chang’s book Bad Samaritans: “The Myth of Free Trade and the Secret History of Capitalism” as his main influence for economic policy.

    Chang reinvented economics of Silvio Gesell and Gottfried Feder. Prosperity instead austerity.

    As reminder. Gottfried Feder was kicked off from German governemnent by Hjalmar Schacht- central banker- by Long Knifes Night which changed German path from national socialism to fascism. Feder was lucky he was not murdered that night as other founders of DAP were.

    In jun 1927 Hjalmar Schacht met at Long Island heads of FED, Bank of England and central bank of France where they made agreements. 2 years later Wall Street crashed and The Great Depresion started.