The European Stabilization Mechanism, Or How the Goldman Vampire Squid Just Captured Europe

The Goldman Sachs coup that failed in America has nearly succeeded in Europe—a permanent, irrevocable, unchallengeable bailout for the banks underwritten by the taxpayers. 

In September 2008, Henry Paulson, former CEO of Goldman Sachs, managed to extort a $700 billion bank bailout from Congress.  But to pull it off, he had to fall on his knees and threaten the collapse of the entire global financial system and the imposition of martial law; and the bailout was a one-time affair.  Paulson’s plea for a permanent bailout fund—the Troubled Asset Relief Program or TARP—was opposed by Congress and ultimately rejected.

By December 2011, European Central Bank president Mario Draghi, former vice president of Goldman Sachs Europe, was able to approve a 500 billion Euro bailout for European banks without asking anyone’s permission.  And in January 2012, a permanent rescue funding program called the European Stability Mechanism (ESM) was passed in the dead of night with barely even a mention in the press.  The ESM imposes an open-ended debt on EU member governments, putting taxpayers  on the hook for whatever the ESM’s Eurocrat overseers demand.

The bankers’ coup has triumphed in Europe seemingly without a fight.  The ESM is cheered by Eurozone governments, their creditors, and “the market” alike, because it means investors will keep buying sovereign debt.  All is sacrificed to the demands of the creditors, because where else can the money be had to float the crippling debts of the Eurozone governments?

There is another alternative to debt slavery to the banks.  But first, a closer look at the nefarious underbelly of the ESM and Goldman’s silent takeover of the ECB . . . .

The Dark Side of the ESM

The ESM is a permanent rescue facility slated to replace the temporary European Financial Stability Facility and European Financial Stabilization Mechanism as soon as Member States representing 90% of the capital commitments have ratified it, something that is expected to happen in July 2012.  A December 2011 youtube video titled “The shocking truth of the pending EU collapse!”, originally posted in German, gives such a revealing look at the ESM that it is worth quoting here at length.  It states:

The EU is planning a new treaty called the European Stability Mechanism, or ESM:  a treaty of debt. . . . The authorized capital stock shall be 700 billion euros.  Question: why 700 billion?  [Probable answer: it simply mimicked the $700 billion the U.S. Congress bought into in 2008.] . . . .

[Article 9]: “. . . ESM Members hereby irrevocably and unconditionally undertake to pay on demand any capital call made on them . . . within seven days of receipt of such demand.”  . . . If the ESM needs money, we have seven days to pay. . . . But what does “irrevocably and unconditionally” mean?  What if we have a new parliament, one that does not want to transfer money to the ESM?  . . . .

[Article 10]: “The Board of Governors may decide to change the authorized capital and amend Article 8 . . . accordingly.”  Question:  . . . 700 billion is just the beginning?  The ESM can stock up the fund as much as it wants to, any time it wants to?  And we would then be required under Article 9 to irrevocably and unconditionally pay up?

[Article 27, lines 2-3]: “The ESM, its property, funding, and assets . . . shall enjoy immunity from every form of judicial process . . . .”  Question:  So the ESM program can sue us, but we can’t challenge it in court?

[Article 27, line 4]: “The property, funding and assets of the ESM shall . . . be immune from search, requisition, confiscation, expropriation, or any other form of seizure, taking or foreclosure by executive, judicial, administrative or legislative action.”  Question: . . . [T]his means that neither our governments, nor our legislatures, nor any of our democratic laws have any effect on the ESM organization?  That’s a pretty powerful treaty!

[Article 30]:  “Governors, alternate Governors, Directors, alternate Directors, the Managing Director and staff members shall be immune from legal process with respect to acts performed by them . . . and shall enjoy inviolability in respect of their official papers and documents.”   Question:  So anyone involved in the ESM is off the hook?  They can’t be held accountable for anything? . . . The treaty establishes a new intergovernmental organization to which we are required to transfer unlimited assets within seven days if it so requests, an organization that can sue us but is immune from all forms of prosecution and whose managers enjoy the same immunity.  There are no independent reviewers and no existing laws apply?  Governments cannot take action against it?  Europe’s national budgets in the hands of one single unelected intergovernmental organization?  Is that the future of Europe?  Is that the new EU – a Europe devoid of sovereign democracies?

The Goldman Squid Captures the ECB

Last November, without fanfare and barely noticed in the press, former Goldman exec Mario Draghi replaced Jean-Claude Trichet as head of the ECB.  Draghi wasted no time doing for the banks what the ECB has refused to do for its member governments—lavish money on them at very cheap rates.  French blogger Simon Thorpe reports:

On the 21st of December, the ECB “lent” 489 billion euros to European Banks at the extremely generous rate of just 1% over 3 years.  I say “lent”, but in reality, they just ran the printing presses. The ECB doesn’t have the money to lend. It’s Quantitative Easing again.

The money was gobbled up virtually instantaneously by a total of 523 banks. It’s complete madness. The ECB hopes that the banks will do something useful with it – like lending the money to the Greeks, who are currently paying 18% to the bond markets to get money. But there are absolutely no strings attached. If the banks decide to pay bonuses with the money, that’s fine. Or they might just shift all the money to tax havens.

At 18% interest, debt doubles in just four years.  It is this onerous interest burden, not the debt itself, that is crippling Greece and other debtor nations.  Thorpe proposes the obvious solution:

Why not lend the money to the Greek government directly? Or to the Portuguese government, currently having to borrow money at 11.9%? Or the Hungarian government, currently paying 8.53%. Or the Irish government, currently paying 8.51%? Or the Italian government, who are having to pay 7.06%?

The stock objection to that alternative is that Article 123 of the Lisbon Treaty prevents the ECB from lending to governments.  But Thorpe reasons:

My understanding is that Article 123 is there to prevent elected governments from abusing Central Banks by ordering them to print money to finance excessive spending. That, we are told, is why the ECB has to be independent from governments. OK. But what we have now is a million times worse. The ECB is now completely in the hands of the banking sector. “We want half a billion of really cheap money!!” they say.  OK, no problem. Mario is here to fix that. And no need to consult anyone. By the time the ECB makes the announcement, the money has already disappeared.

At least if the ECB was working under the supervision of elected governments, we would have some influence when we elect those governments. But the bunch that now has their grubby hands on the instruments of power are now totally out of control.

Goldman Sachs and the financial technocrats have taken over the European ship.  Democracy has gone out the window, all in the name of keeping the central bank independent from the “abuses” of government.  Yet the government is the people—or it should be.  A democratically elected government represents the people.  Europeans are being hoodwinked into relinquishing their cherished democracy to a rogue band of financial pirates, and the rest of the world is not far behind.

Rather than ratifying the draconian ESM treaty, Europeans would be better advised to reverse article 123 of the Lisbon treaty.  Then the ECB could issue credit directly to its member governments.  Alternatively, Eurozone governments could re-establish their economic sovereignty by reviving their publicly-owned central banks and using them to issue the credit of the nation for the benefit of the nation, effectively interest-free.  This is not a new idea but has been used historically to very good effect, e.g. in Australia through the Commonwealth Bank of Australia and in Canada through the Bank of Canada.

Today the issuance of money and credit has become the private right of vampire rentiers, who are using it to squeeze the lifeblood out of economies.  This right needs to be returned to sovereign governments.  Credit should be a public utility, dispensed and managed for the benefit of the people.

To add your signature to a letter to parliamentarians blocking ratification of the ESM, click here

Ellen Brown is an attorney and president of the Public Banking Institute,  In Web of Debt, her latest of eleven books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are and

34 Responses

  1. From your lips to… Makes too much sense Ellen, so my guess is that it won’t fly until things become oh, so much worse.

  2. Ellen,
    You need to send copies of your latest blog above to the
    editors of each of the major European newspapers. This needs
    to get out into public view. I originally thought the prime ministers
    should see, it, but they probably already have. If democracy is
    to survive in Europe, then the people must be brought into the
    Stan Mulaik

  3. So the question remains: How the American people enter the decision-making process? Europeans are a different breed than Americans. They solved their ethnoracial problems by creating sovereign nation-states.

    The United States need not go that far. We can create ethnoculturally-sovereign ethnoraces. Will that lead to full-blown ethnoracially sovereign nation-states in some near or distant future? I don’t know.

    Does it matter? What I do know is that the ongoing ethno-genocide of the indigenous and immigrant European Americans must permanently end.

  4. The German Constitutional Court has opposed the EFSF/ESF/ESM scum, thus Merkal is forbidden from legitimizing or financing it.
    Since the Draghi-drafted money resides in tax-havens,
    it is not likely to accelerate inflation.

  5. The international banking cartel is obviously using international treaties in precisely the same manner as their affiliate… the WTO. These treaties make their intentions transparent – to have national governments cede their sovereignty to banks and their corporate spawn. They have also made dramatic moves to gain control of the UN to be employed to similar ends.
    Our so called Democracies have become a holow sham, and the overwhelming majority of the people are completely unaware of the mechanisms that have enslaved our society. I agree we have to keep slogging forward, and keep trying to raise awareness about the public banking alternative…. good on you for your efforts, Ellen. I wish I could say I felt some small glimmer of optimism that we might succeed against such overwhelming odds.

  6. facrcheck although continues to do about 5% of its borrowing from the Bank of Canada…and hence the 60 billion dollar debt to the BoC, it , however, borrows most of its money from private sources and hence owes 0ver $500 billion to them….if one totoals in the Provincial debts, most of which is owed privately, the totla Canadian debt is about 1 trillion…..But that is not not as bad, comparatively, as the USA’s debt of 16 trillion ( if we can believe that)

  7. […] The ESM (European Stability Mechanism) Ellen Brown on ESM The European Stabilization Mechanism, Or How the Goldman Vampire Squid Just Captured Europe WEB OF D… […]

  8. […] The European Stabilization Mechanism, Or How the Goldman Vampire Squid Just Captured Europe […]

  9. Talking about raising the public awareness, I have not heard one word on how the Goldman Vampire Squid just captured Europe on the news -not even the liberal news stations. These reptiles are very stealthy.
    This article was great. Ellen has been predicting that this would happen. I’m trying to screw my head back on after reading the article and the many wonderful commentaries on this website, Truthout, and Common Dreams.

  10. […] op “Web of Debt” ook een artikel over het ESM gepubliceerd, dat ik iedereen aan kan raden: The European Stabilization Mechanism or how the Goldman-vampire-squid just captured Europe. Ook voor dit artikel geldt: als iemand voor een goede vertaling kan zorgen, dan kan die […]

  11. […] European Stabilization Mechanism, How the Goldman Vampire Squid Captured the EU The European Stabilization Mechanism, Or How the Goldman Vampire Squid Just Captured EuropePosted on April 18, 2012 by Ellen Brown The Goldman Sachs coup that failed in America has nearly […]

  12. […] 58,678 Related: The European Stabilization Mechanism, Or How the Goldman Vampire Squid Just Captured Europe […]

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  15. Goldman Sachs has taken over the European ship, and democracy has gone out the window, as Ellen says, in the name of keeping the central bank independent from the “abuses” of government.
    Yes, we’ve all seen how the bankers in this country have kept us from the abuses of government. In fact, they won’t let anyone abuse us except themselves, because they know how to do it best. I mean, after all, they’ve bought Congress., and through ALEC, they have rewritten the constitution, put in puppet dictators (Michigan), destroyed unions., created a war on the post office, are gutting the social safety nets, controlling the prices of food and gas, started a war on women, students, people of color and voters, and they are now buying up loads of prisons which they may someday intend to fill with protesters and illegals, and other non-persons. Perhaps what is beyond outrage, though, is that they control the banks and the financial system. Goldman-Sachs wants to rule not only the U.S. but the world, and make the rest of us their slaves.
    It almost seems that calling the private banks Vampire Squids is insulting to the species of Squids, which are just living their natural lives in the ocean, and doing their thing. There is nothing natural about the Goldman squids, which are vampirizing everything they can get their tentacles wrapped around, and draining the our life force. That giant sucking sound that Ross Perot used to talk about is the sound of our blood being sucked out. There is no satisfying their thirst for blood.
    It will be up to us to fight them, and it won’t be easy, with all the ammunition they have. Trying to reform the banking system will be a Herculean task, but that does not mean it can’t be done. We have awakened to what the banks have done, and how they have become such behemoths, thanks to the vigilance and brilliant writings of Ellen Brown.
    I also believe that credit should be a public utility. The banks we need to create are banks modeled after the Bank of North Dakota. People need to understand how public banks can work for them, and not immediately freak out when they hear the words public banks. We can create banks that work for the 99%, banks that will provide jobs and infrastructure and maybe even enable a single-payer health system.
    I’m sure that the private behemoths will be Goliaths for us to fight against when we try to create public banks, but that does not mean we can’t do it. We have the numbers and the minds to evolve and make the changes we need. But we need to use our collective energy and belief that we the people can do it.
    As one very wise commentator put it:
    “The real challenge is to convince people that the basis of their money is their labor and that banking should exist for the economic benefit of their exchanging it between one another.”

  16. […] The European Stabilization Mechanism, Or How the Goldman Vampire Squid Just Captured Europe By December 2011, European Central Bank president Mario Draghi, former vice president of Goldman Sachs Europe, was able to approve a 500 billion Euro bailout for European banks without asking anyone’s permission. And in January 2012, a permanent rescue funding program called the European Stability Mechanism (ESM) was passed in the dead of night with barely even a mention in the press. The ESM imposes an open-ended debt on EU member governments, putting taxpayers on the hook for whatever the ESM’s Eurocrat overseers demand. […]

  17. From my German perspective, it is remarkable that you have found the time to dig into the history and consequences of unique ‘public banking institution’, namely the ESM Bank, with the cute and thoroughly misleading name: European Stability Mechanism.
    With appropriate cynicism one can say:
    -“Yes, it deals with public banking in that the ESM, protected by the invulnerable status of legeal immunity, will have the right to draw on public funds of the eurozone countries unlimited!”
    -“Yes, it is a stability mechanism for all those generous and endangered investors and banks around the world in state loans of eurozone countries.”

    The ESM Bank, is scheduled to open its doors coming July to highly indebted (effectively bancrupt) eurozone countries, who may get the opportunity to borrow more money in exchange of relinquishing their national sovereignty and becoming a kind of EU-Protectorate.
    In a way it is a drug dealer / drug addict arrangement.

    There is a growing concern in European countries about this dangerous, undemocratic, and illegal ESM Bank.
    In Germany, at least the Free Democrats (FDP), who recently (December 2011) conducted a highly controversial poll: For versus Against the ESM among its membership, came to the conclusion that almost half (44%) of the participating members voted against the ESM.
    It my be of interest that a group of Free Democrats from Freiburg recently posted ( )
    a ‘Freiburger Call: Liberal Europe as Confederacy of Sovereign States’.
    The implicit statement of the Freiburger Call is that the current trend towards a Centralistic Europe as Federal State (“United States of Europe”) has generated major current intra-European conflicts and prompted (by a group of ignorant but self-interested politicians with well informed and self-interested bakers) such disastrous solutions like the conception of the EFSF, the Fiscal Pact and now a ESM Bank. Only a change in direction towards a Liberal Europe, which by the way will also bring Great Britain again closer to the center of the EU, provides the chance to generate a peaceful and stabile Europe.

  18. Banksters thus become the new ROYALTY.

  19. I love the cartoon you have shown with its tentacles wrapped ever so tightly around the rotunda and all the important buildings surrounding it. That picture of vampyroteuthis is worth a thousand words, and better than anything I could write. Thank you, Ellen.

  20. Eventually the parasites will kill off the host.
    The people will have nothing left to give.

  21. Here’s my problem. Public Banking would only replace private sector crooks with public sector crooks. The public bankers would STILL have the power to create money and give it to their cronies and create debt for the rest of us. The government creating money and demanding taxes to pay those promises is not much better (and may be worse) than what we have now.

    The upside of fractional reserve banking (if there is one), is that easy credit stimulates economic activity and promotes industry (small “i” industry…i.e. human productivity). The profit motive drives greater standards of living for all humanity because society has a motive to work and be productive. The downside is that corruption causes too much money creation/printin which causes inflation and distortions and even wholesale systemic failure.

    The solution is SOUND MONEY, because any fiat-money system invites easy corruption. The power to create the fiat-money is an ENORMOUS power (whether it’s public or private central banking). And to employ Lord Acton’s cliche, “Power corrupts. Absolute power corrupts absolutely” (paraphrasing).

    With sound commodity-backed money (not necessarily JUST gold), money could not be created without being backed by real value. The problem is that such a system, besides straight barter, is difficult to envision.

    But with the system we have now, profit is centered around the movement and fiat-creating of capital itself instead of the CREATION of capital through industry. Banking should NOT be an economy unto itself…at most it should be a facilitator of the real economy. But now it’s being used to STEAL and has so over-indebted the system that we now have systemic failure. We are now in a money creating death spiral. The ratio of productive transactions to money transfers is too low (creating money out of thin air and giving it to big private banks at zero interest through an EXCLUSIVE arrangement is welfare/tranfer payment of the highest order!)

    Ron Paul is right…we need to let the system crash, let the banks fail, let the rich and powerful lose their investments instead of bailing them out to keep the system in place. The economy is begging for a correction. The more we allow the banksters and government to “bail out” (i.e. grant plutocratic welfare payments), the worse the inevitable correction will be.

    The problem with such a correction is that it could cause a revolution…societal collapse…and all sorts of other really bad things. My guess is that it won’t be that bad IF the people come together and wipe all this debt off the books and start from square one again with SOUND MONEY.

    • We’re already getting robbed to the tune of many trillions by the big banks and they’ve trashed the economy to boot. It would be impossible for civil servants doing the same job to do worse. Who ya gonna trust, a patriotic civil servant banker who works for the people and gets paid a reasonable salary of some creep like Lloyd Blankfein? Look at the Bank of North Dakota: completely honest and no risky loans, no derivatives. In general foreign countries that rely on public banks – the BRIC countries, Japan, Germany, etc., have strong economies that have weathered the economic downturn much better because their public banks have a mandate to serve the public and they make counter-cyclical loans when they’re needed, whereas the private banks will only lend an umbrella on a sunny day. If it is a matter of you having a hatred of government under any circumstances, that’s awfully cynical. Good government exists. The example of BND and colonial Pennsylvania are compelling.
      The deregulated private banking sector is intrinsically criminogenic. They have a license to steal and are plenty motivated, with nothing to stop them.

      • I’m not EVER going to trust the government….ESPECIALLY with money. Fact is, governments murdered 100 million people in the 20th Century. Governments are the vehicles of all tyranny…both fascist and socialist. I don’t think it’s cynical to be complete untrusting of institutions responsible for the death and oppression of millions of people.

        So, “patriotic civil servant” is some utopian fantasy that hardly exists in the real world….Most civil servants I’ve dealt with have been rude, uncaring, and consider the citizen the enemy to be controlled and put in their place….”We’re from the government and we are here to help you”….if you believe that I have a bridge to sell you.

        I’m sorry that sounds cynical, but handing over the Federal Reserve to politicians will improve and fix NOTHING. State-owned banks may be less onerous (not federal owned…and yes, I know the Federal Reserve is not a “federal governement” institution…I’m just sayin IF the congress took it over).

        I think the best option in ALL things is decentralized power. Once power is centralized, the danger sets in. How about local municipal or local community-owned public banks? What’s wrong with that? Why do public banks have to be state-level or federal-level?

        You see, the government has mandated that only THEIR currency is legal tender….THAT is why local public banks would be illegal.

        How about currency competition? Ron Paul has suggested that and I think it’s a great idea. Let the market determine whose currency holds value….not the government.

        Government is a necessary evil…no need to give it unlimited power. Governments MUST be limited and restrained, otherwise they grow into monsters.

        • I reject this “government is a necessary evil” viewpoint. Human cooperation is not evil. One function of government is to provide reasonable laws — regulations — to protect common interests, like the environment, to protect against economic predation, fraud, etc. Cambridge professor Ha Joon Chang says in Bad Samaritans that when an area of the economy is deregulated the interests and rights that were protected by regulations give way to the power of money, of the rich. Deregulation — lack of government — is what led to the fraud-based bubble and financial crisis and is why we are in such bad economic shape today. A framework of legality is needed for free enterprise to flourish. The idea that economic anarchy works out best is false-to-fact. As James Galbraith says in The Predator State the market, left to itself, is intrinsically criminogenic. Countries (and states) that have public banking that functions for the economy rather than parasitically against it are out-competing those that don’t. Cooperation and government work.

          • Human cooperation is not evil…limited government is necessary. However, everything you said about markets applies to governments in spades. Governments, left to themselves are “criminogenic”…again, the Soviets, Chinese, and Germans murdered 100 million people in the 20th century (and the US took out several million too).

            i will never understand this Utopian sentiment on the Left about “good government” when in fact, government power is not immune from corruption, and history flies in the face of this Utopian naivete. Governments murder people….it’s an historical fact. Governments enslave people…another historical fact. Governments create monopolies (through crony/fascist laws brought about through bribery and graft).

            I really will never understand the Left’s love affair with government, except only as perhaps some vicarious form of libido dominandi…authoritarianism.

            Sound money and individual liberty and a system that maximizes the freedom, property ownership, and upward mobility of people is the best system. And history proved that limited constitutionally based LIMITED governments with free markets are the best for society.

            • Hasn’t everybody heard of the Freedom/Sovereignty/Common Law movement? Try Target date for mass arrests followed by the implementation of a new financial system is May 8, 2012 plus or minus a few days or a few weeks. The Bad Guys are fully aware of these plans but are powerless to stop their implementation. As a matter of fact the Bad Guys are terrified. A Golden Age is dawning. Freedom and Morality are the main ingredients. Debt money will be replaced by equity money. Public banking at every government level will flourish. Democracy will flourish. Freedom will flourish. The Bad Guys are going to watch the implementation of the new societal paradigm from behind bars.

  22. […] 2012 © Ellen Brown, origineel artikel HIER […]

  23. Ellen, you need a Twitter link. Besides the sign-in-&-“Post Tweets for you” WordPress one.

    Web of Debt is an absolute Must-Read stunning eye-opener! Couldn’t believe I was just quite so naive before!

  24. […] Governments everywhere: should European sovereigns default on their loans, Goldman Sachs would be one of the players who would have to pay up as the ultimate counter party in the Credit Default Swaps market and this would vaporize them long […]

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