Former Bill Clinton Labor Secretary Robert Reich yesterday attacked Hillary Clinton’s refusal to back reinstating Glass-Steagall—according to her economic advisor Alan Blinder—as “a big mistake”— politically, because many believe she is too close to the Wall Street banks, and “economically,” because “the repeal of Glass-Steagall led directly to the 2008 Wall Street crash.”

Reich goes through the Glass-Steagall basics: it was passed after the 1929 crash to restore the public’s faith in the banking system, by preventing banks from both taking deposits and gambling.

Reich quotes Sen. Elizabeth Warren on her Glass-Steagal bill: “The idea is pretty simple behind this one. If banks want to engage in high-risk trading — they can go for it, but they can’t get access to insured deposits and put the taxpayers on the hook for that reason.”

Noting that it worked for six decades, until its 1999 repeal, Reich adds, “A personal note. I worked for Bill Clinton as Secretary of Labor and I believe most of his economic policies were sound. But during those years I was in fairly continuous battle with some other of his advisers who seemed determined to do Wall Street’s bidding. On Glass-Steagall, they clearly won.”

Reich then debunks the canards about Glass-Steagall’s irrelevance to the 2008 crash:

• “The real culprits were non-banks like Lehman Brothers and Bear Stearns.” 

Reich says, “Baloney. These nonbanks get their funding from the big banks” as lines of credit, mortgages, and repurchase agreements. How could they get easy credit on bad collateral? Because Glass-Steagall was gone.”

• “Mortgage brokers” were the culprits.

Reich says they share some of the blame, but again, it was the big banks who were enablers. “The mortgage brokers couldn’t have funded the mortgage loans if the banks hadn’t bought them, and the big banks couldn’t have bought them if Glass-Steagall was still in place.”

• “None of the big banks actually failed.”

This, Reich says, is like arguing that lifeguards are no longer necessary at beaches where no one has drowned. If the government hadn’t thrown them lifelines, many would have gone under. They were bailed out because they were too big to fail.”

“This is precisely what the Glass-Steagall Act was designed to prevent—and did prevent for more than six decades. Hillary Clinton, of all people, should remember.”

In a long interview with the New Statesman published July 13, former Greek Finance Minister Yanis Varoufakis described how the Eurogroup and the ECB from the beginning plotted to put Greece up against a wall and force it into a humiliating defeat.

In the Eurogroup, comprising the euro area finance ministers, Varoufakis was simply ignored by his fellow finance ministers; his interventions and proposals at meetings were not responded to. The Eurogroup used dilatory tactics and then accused Greece of implementing those tricks. Germany’s Schäuble once blurted out that he would not discuss the program, because it has been accepted by the previous government and “we can’t possibly allow an election to change anything. Because we have elections all the time, there are 19 of us; if every time there was an election and something changed, the contracts between us wouldn’t mean anything.”

At that point, Varoufakis stood up and said: “Well, perhaps we should simply not hold elections any more for indebted countries,” and there was no answer.

In Varoufakis’s reconstruction, the decisive role of the ECB in strangling Greece is briefly but clearly described: 

Reuters was leaked a copy, Tuesday, of an IMF staff report dated July 14, that candidly admitted that the austerity deal struck over the weekend between the EU and Greece cannot work, and that Greece needs a huge debt write-down. The leaking of the report, the second such document produced by the IMF staff in the past two weeks, caused a firestorm of news coverage in Europe and the United States, and put the full genocidal nature of the deal in stark relief.

The IMF report began with a blunt assessment: “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 staff document concluded that, under the terms of the weekend deal, Greek debt would soar to more than 200% of current GDP within two years.

The concluding paragraph of the IMF document spelled out three options:

Under the IMF charter, the Fund cannot make loans that are judged “unsustainable.” In effect, the report, along with its public disclosure, was tantamount to an announcement by the IMF that they were pulling out of the Greek bailout. Germany had insisted that the IMF had to be a participant in any new debt agreement.

The media coverage of the IMF report and its implications was thunderous. The New York Times headlined a story by Josh Barro “The IMF Is Telling Europe the Euro Doesn’t Work.” The article made clear that the Greek crisis has brought the euro system to its “Emperor has no clothes” moment, “one that may finally force eurozone members to either move closer to fiscal union or break up.” Since fiscal union is out of the question, the Times openly admitted that the entire Maastricht System is going down.

Business Insider headlines screamed, “The IMF Has Triggered a ‘Political Earthquake’ in Greece’s Bailout Negotiations.” Zero Hedge announced, “IMF May Walk Away from Greek Bailout,” and Ambrose Evans-Pritchard, writing in the Daily Telegraph, wrote, “IMF Stuns Europe with Call for Massive Greek Debt Relief,” leading with, “The International Monetary Fund set off a political earthquake in Europe, warning that Greece may need a full moratorium on debt payments for 30 years and perhaps even long-term subsidies to claw its way out of depression.”

A prominent U.S. intelligence official told EIR that he sees a danger of an outright military coup in Greece to overthrow the Tsipras government in what he called a “fascist turn in Europe.” It may be, the threat of such a coup and similar threats were behind the fact that, late Wednesday night, the Greek Parliament ratified the debt deal. The German Bundestag will convene on Friday, July 17, for a similar vote. Schäuble and an even more hardline faction in the CDU/CSU oppose the deal, preferring to kick Greece out of the euro altogether.