The Mafia Bank
In his book, McMafia, Misha Glenny describes how mobsters filled the vacuum left by communism in Eastern Europe and Russia.
The new circumstances bewildered old international institutions. All had to improvise and no party quite understood the implications of its actions or their unintended consequences.
One group of people, however, saw real opportunity in this dazzling mixture of upheaval, hope, and uncertainty. These men, and occasionally women, understood instinctively that rising living standards in the West, increased trade and migration flows, and the greatly reduced ability of many governments to police their countries combined to form a gold mine. They were criminals, organized and disorganized, but they were also good capitalists and entrepreneurs, intent on obeying the laws of supply and demand.
Which appears to be what’s happening in Italy, too, where the mafia now constitutes the country’s largest “bank.”
Organized crime has tightened its grip on the Italian economy during the economic crisis, making the Mafia the country’s biggest “bank” and squeezing the life out of thousands of small firms, according to a report on Tuesday.
Extortionate lending by criminal groups had become a “national emergency,” said the report by anti-crime group SOS Impresa.
Organized crime now generated annual turnover of about 140 billion euros ($178.89 billion) and profits of more than 100 billion euros, it added.
“With 65 billion euros in liquidity, the Mafia is Italy’s number one bank,” said a statement from the group, which was set up in Palermo a decade ago to oppose extortion rackets against small business.
Now, obviously, the strength of the Italian mafia is nothing new. Nor is its role in loan-sharking.
Nevertheless, it appears that the chaos caused by the financial crisis–and the oligarchs’ refusal to pursue a sane approach that puts the interest of society ahead of bond-holders–has created another vacuum the mob can fill.
Of course, that just makes Italy like many other countries in the world, where the mob has similarly accrued more power in recent years.
The refusal to inconvenience the oligarchs is really going to increasingly empower a more obviously brutal form of oligarchs. Something to look forward to!
Something, indeed, and you can bet we will never really hear of this detail in the corporate media. That would interfere with the meme-du-jour that Austerity must be implemented. I see some of the Eurozone is getting unhappy about the latest financial plan. Tee hee hee.
Semi-OT: What do libertarians have to say about organized crime in these situations and their like (the Gilded Age and urban machine politics here)?
Loretta Napoleoni has been following this kind of criminal capitalism world-wide for decades now. Her book, Rogue Economics, is a good introduction. Her latest book is on Chinese capitalism, Maonomics.
http://lorettanapoleoni.net/
I don’t know that I see that much difference between the Mafia Bank and our financial services industry which looks a whole lot like organized crime to me.
EW wrote:
I hold the opposite view: I think the crisis happened in large part **because of** the underlying criminality.
Consider: we never learned the details of the AIGFP derivatives, yet that activity all occurred in Londongrad – site of the big oil exchanges (Iran, Iraq, Russia, Angola, Nigeria, god-only-knows-who was placing bets on spot prices, then manipulating supplies). And that’s just for starters.
The mortgage fraud was organized and systemic criminal behavior on a huge scale, and we’ve never had a clear explanation of how much of it was linked to money laundering and tax havenry. Some of the real estate hot-spots were CA, FL, NV, NC – all linked to Mexican cartels laundering money; no doubt some of it laundered via flipping houses.
The crisis occurred BECAUSE of the fraud and criminality, and not the other way around.
With the emergence of the Internet and globalization, dark forces saw their chance to loot, and they did it. Now, they’re more powerful than the governments – or, as with Berlusconi, Ghaddafi, or Putin – they ARE the governments. And the neoclassical economic bullshit, a la Maggie Thatcher and St Ronald Reagan, was an ideal cover for this kind of looting (while wearing elegant suits and traveling very First Class). The neoliberal economists were either duped, or willing participants.
(Phil Gramm, Richard Shelby, and other GOP members who pushed deregulation all either played into the hands of the Mafia, or else they were complicit. I leave the determination to the others.)
@readerOfTeaLeaves:
Hear,hear!! GREAT commentary,rotl.
A coupla days ago,I posted a link to an earlier EW thread about the outsourcing of US jobs,with some commentaries about Carlyle and Panama.(Of specific interest to me was the discussion re: Bank of Montreal,Carlyle and the Port of Galveston.)
Interestingly,and coincidentally enough,just yesterday there was reportage about the salaries and bonuses of the TOP Carlyle execs.*(And ofcourse, Carlyle, and Bain Capital have Dunkin’ Donuts in common,IIRC,among other things.)
Just for the sport of it,sometime use your search engine and research Bush ,Carlyle and Bank of Montreal; or ForEx and Carlyle.
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*Three Carlyle founders each land a $138m payday
With the private equity sector facing scrutiny in the public sphere during the Republican nomination race, one firm’s founders enjoy a massive payout
Dominic Rushe guardian.co.uk, Wednesday 11 January 2012 17.24 EST
The trio who founded private equity powerhouse Carlyle Group took home more than $400m in compensation last year, according to a regulatory filing.
The huge payday for the firm, which claims presidents and prime ministers among its advisers, comes as the private equity industry has fallen under intense scrutiny over the course of the race for the Republican nomination.
Current GOP frontrunner Mitt Romney has come under fire for his time at Carlyle rival Bain Capital, where he amassed a large personal fortune.
Carlyle founders David Rubenstein, Bill Conway and Daniel D’Aniello each received $138m in pay last year, according to documents filed with the top US financial watchdog the Securities and Exchange Commission (SEC).
More:
http://www.guardian.co.uk/business/2012/jan/11/carlyle-founders-land-400m-payday
@gmoke:
So has Lucy Komisar,over at the Komisar Scoop.
But thanks for the info-new to me.