I few years ago a friend of mine who lives and works in Italy told me, “the Italian government does not control Naples.” That was hard for me to believe, that a government doesn’t control one it’s own major cities.
But as I reflect back on that statement and look at what’s been happening around the world as a result of the financial crises, it makes me ask, “do the world governments really have control of the financial sector?” I have to say no, they don’t. In fact it seems to be the other way around, the financial sector has more control over governments.
The way the financial sector has put pressure on the countries in the European Union is unprecedented. They have been able to put Italy and now Spain “in play” the way they have driven up the rates on their borrowing costs. I wonder what will happen now that the EU leaders have decided to drop their pursuit of a financial transactions tax. Will the borrowing rates for these countries return to more reasonable rates? We’ll have to wait and see.
One thing is certain – the governments of Europe do not control the financial sector.