The ascension of Mario Monti to the Italian prime ministership is remarkable for many reasons. By replacing the scandal-surfing Silvio Berlusconi, Italy has dislodged the undislodgeable. And by putting a senior adviser at Goldman Sachs in charge of a Western nation, it has taken to new heights the political power of an investment bank that you might have thought was politically toxic.
This is the most remarkable thing of all: a giant leap forward for, or perhaps even the successful culmination of, the Goldman Sachs Project. It is not just Mr Monti. The European Central Bank is under ex-Goldman management, and the investment bank's alumni hold sway in the corridors of power in almost every European nation.
Even before the upheaval in Italy, there was no sign of Goldman Sachs living down its nickname as "the Vampire Squid", and now that its tentacles reach to the very top of the eurozone, sceptical voices are raising questions over its influence. The political decisions taken in the coming weeks will determine if the eurozone can and will pay its debts – and Goldman's interests are intricately tied up with the answer.
Simon Johnson, former International Monetary Fund economist, in his book 13 Bankers, argued against Goldman Sachs' influence in the US. "What you have in Europe is a shared world-view among the policy elite and the bankers, a shared set of goals and mutual reinforcement of illusions," he said.
This is The Goldman Sachs Project. Put simply, it is to hug governments close. Goldman is there to provide advice, and financing, for governments, to send its people into public service and to dangle lucrative jobs in front of people coming out of government; to create such a deep exchange of people and ideas and money that it is impossible to tell the difference between the public interest and the Goldman Sachs' interest.
Mr Monti is one of Italy's most eminent economists, and he spent most of his career in academia and thinktankery, but it was when Mr Berlusconi appointed him to the European Commission in 1995 that Goldman started to get interested in him. As commissioner for competition, he has made decisions that could make or break the takeover and merger deals that Goldman's bankers were working on or providing the funding for. Mr Monti also later chaired the Italian Treasury's committee on the banking and financial system.
With these connections, it was natural for Goldman to invite him to join its board of international advisers. The bank's two dozen-strong international advisers act as informal lobbyists for Goldman's interests with the politicians that regulate its work.
Other advisers include Otmar Issing, who, as a board member of the German Bundesbank and then the European Central Bank, was one of the architects of the euro. Perhaps the most prominent ex-politician inside the bank is Peter Sutherland, attorney general of Ireland in the 1980s and another former EU Competition Commissioner. He is now non-executive chairman Goldman's UK-based broker-dealer arm, Goldman Sachs International.
Picking up these supremely well-connected policymakers on their way out of government is only one half of The Goldman Sachs Project. Sending Goldman alumni into government is the other half.
Like Mr Monti, Mario Draghi, who took over as president of the ECB on 1 November, has been in and out of government and in and out of Goldman. An economist by training, he was a member of the World Bank and managing director of the Italian Treasury before spending three years working as managing director of Goldman Sachs International between 2002 and 2005 – only to return to government as president of the Italian central bank.
Mr Draghi has been dogged by controversy over the accounting tricks conducted by Italy and other nations on the eurozone periphery as they tried to squeeze into the single currency a decade ago. By using complex derivatives, Italy and Greece were able to slim down the apparent size of their government debt, which euro rules mandated shouldn't be above 60 per cent of the size of the economy. Goldman traders created a number of financial deals that allowed Greece to raise money to cut its budget deficit immediately, in return for repayments over time or at a later date.
When this issue was raised at confirmation hearings in the European Parliament for his job at the ECB, Mr Draghi said he wasn't involved in the swaps deals either at the Italian Treasury or at Goldman.
Under the latest EU proposals, Greece is effectively going to default on its debt by asking creditors to take a "voluntary" haircut of 50 per cent on its bonds, but the current consensus in the eurozone is that the creditors of bigger nations like Italy and Spain must be paid in full.
These creditors, of course, are the continent's big banks, and it is their health that is the primary concern of policymakers. The combination of austerity measures imposed by the new technocratic governments in Athens and Rome and the leaders of other eurozone countries, such as Ireland, and rescue funds from the IMF and the largely German-backed European Financial Stability Facility, can all be traced to this consensus.
"My former colleagues at the IMF are running around trying to justify bailouts of €1.5trn-€4trn, but what does that mean?" says Simon Johnson. "It means bailing out the creditors 100 per cent. It is another bank bailout, like in 2008."
So certain is the financial elite that the banks will be bailed out that some are placing bet-the-company wagers on just such an outcome. Jon Corzine, a former chief executive of Goldman Sachs, returned to Wall Street last year to lead a firm called MF Global. He placed a $6bn bet with the firm's money that Italian government bonds will not default. When the bet was revealed last month, just as investors were losing confidence in Italian bonds, clients and trading partners decided it was too risky to do business with MF Global and the firm collapsed. But Mr Corzine might yet be proved right on his bet.
The grave danger is that, if Italy stops paying its debts, creditor banks could be made insolvent. Goldman, which has written over $2trn of insurance on peripheral eurozone countries' debt, would not escape unharmed, especially if some of the $2trn of insurance it has purchased on that insurance turns out to be with a bank that has gone under.
This is the rationale for the bailouts and the austerity, the reason we are getting more Goldman, not less. The alternative is a second financial crisis, a second economic collapse. Shared illusions, perhaps? Who would dare test it?