Il dottor Sottile, Giuliano Amato (author of the Lisbon Treaty and its predecessors) will be speaking on this attractive topic - Regulating Global Markets in Times of Crisis - at Rome's La Sapienza at three this afternoon. While many of us are most disappointed that he has not figured in the new Italian government (which is overloaded with a preachy Prime Minister and his grey, male acolytes) Angels remains convinced that he had a great deal to do with its installation.
There is no advance text. It's stand-up, ad lib. The audience of lawyers will find it is greatly augmented by interested political passers-by.
Wednesday, 30 November 2011
Tuesday, 29 November 2011
Pecking Orders
Everything continues quietly as nothing extravagant is promised, never mind done, about the Italian state debt. The Atlanticist media continues its hysterical screams that Italy is a baddy who owes lots of money, that Germany is a baddy who won't share even though it Lost the War, that France is a deeply baddy cheese eating surrender monkey etc. Admittedly there is something of a stunned silence over Poland's Foreign Secretary asking Germany to do something (for the first time in Poland's history, as he himself acknowledges).
Settled political stances cannot be turned round as quickly as money markets. Particularly when the most indebted nation on Earth is slipping from its pre-eminence and keeps using its remaining financial and other oomph to push Germany and central Europe off-balance as Europe gets itself organised; in the hope of somehow, any how, recovering US former planetary status.
We are resettling post 1945. It takes time; and this time the premier central European power has also taken care to make its arrangements and its settlements with the East. Just look at the painstaking work to organise relations with Russia, and with energy supplies, that Chancellor Merkel has undertaken in recent years - and their success.
The frenzied assault upon Italy is the high tide of turning back this new settlement, an assault enabled by Berlusconi's 10 years of criminal governance of a major European power. This is estimated to have caused 28.7% of Italy's total debt, which has been accumulated at twice the speed of any other government of the current Republic. On average it is 60 billion euros a year, ie, over 1000 euros per Italian citizen head per year. He's gone now, but even a national mess takes time to clean up. And that time is being organised.
Italy is not some kind of Spain, or even remotely a Portugal, Ireland, Greece or Cyprus. ( The comparison would be to rank the UK economy with that of Ireland.) But unless the global brinkmanship currently being practised is not called off we will all find ourselves in a very different kind of chicken run.
Settled political stances cannot be turned round as quickly as money markets. Particularly when the most indebted nation on Earth is slipping from its pre-eminence and keeps using its remaining financial and other oomph to push Germany and central Europe off-balance as Europe gets itself organised; in the hope of somehow, any how, recovering US former planetary status.
We are resettling post 1945. It takes time; and this time the premier central European power has also taken care to make its arrangements and its settlements with the East. Just look at the painstaking work to organise relations with Russia, and with energy supplies, that Chancellor Merkel has undertaken in recent years - and their success.
The frenzied assault upon Italy is the high tide of turning back this new settlement, an assault enabled by Berlusconi's 10 years of criminal governance of a major European power. This is estimated to have caused 28.7% of Italy's total debt, which has been accumulated at twice the speed of any other government of the current Republic. On average it is 60 billion euros a year, ie, over 1000 euros per Italian citizen head per year. He's gone now, but even a national mess takes time to clean up. And that time is being organised.
Italy is not some kind of Spain, or even remotely a Portugal, Ireland, Greece or Cyprus. ( The comparison would be to rank the UK economy with that of Ireland.) But unless the global brinkmanship currently being practised is not called off we will all find ourselves in a very different kind of chicken run.
Monday, 28 November 2011
Leaning Over Backwards
The pressures being applied to the euro have roots wholly other than reasonable doubt that debt can be sustained. The unwise insistence by Germany and France that private investors should bear some of the burden of debt restructuring has led to the US (and others') disorderly withdrawal from financial markets for euro sovereign debt. This has been exacerbated by the European Banking Authority insisting on the principle that such bonds should be marked to market instead of valued at their purchase price, coupled with applying this criterion to all European banks, not just those systemically important, as is the case in America.
There are other more technical problems, concerning the ratios between capitalisation and total assets that the EBA has accepted which are disadvantageous to large sections of European banking. (cf the illuminating article by Marcello de Cecco in today's Repubblica, Perche' L'EBA e' subalterna agli USA).
Considering that there is an Italian in charge of the European Banking Authority, not to mention the Italian in charge at the European Central Bank (who refuses to buy unlimited amounts of Italian bonds), an Italian is Chief Economist of the OECD, (which has just forecast zero growth for the Eurozone in general, and half a percentage point decline for Italy in particular, thus attracting Moody prognostications for multi-state default in the euro-area), an outburst of Italian self-hate seems to be contributing to the financial crisis.
There are other more technical problems, concerning the ratios between capitalisation and total assets that the EBA has accepted which are disadvantageous to large sections of European banking. (cf the illuminating article by Marcello de Cecco in today's Repubblica, Perche' L'EBA e' subalterna agli USA).
Considering that there is an Italian in charge of the European Banking Authority, not to mention the Italian in charge at the European Central Bank (who refuses to buy unlimited amounts of Italian bonds), an Italian is Chief Economist of the OECD, (which has just forecast zero growth for the Eurozone in general, and half a percentage point decline for Italy in particular, thus attracting Moody prognostications for multi-state default in the euro-area), an outburst of Italian self-hate seems to be contributing to the financial crisis.
Saturday, 26 November 2011
The DSK Scandal
The downfall of Dominique Strauss-Kahn is well on the way to becoming one of the great conspiracies de nos jours. Apart from his exclusion from running for the presidency of France, his abrupt departure from the IMF has had untold repercussions on global financial affairs.
This account from the New York Review of Books, reported again in the FT this morning, is detailed but contains nothing from DSK himself - who obviously knows what happened and why better than anyone else. Continued attempts to associate him with sexual scandal suggest the rest of this unfinished story may be published during the French presidential campaign.
This account from the New York Review of Books, reported again in the FT this morning, is detailed but contains nothing from DSK himself - who obviously knows what happened and why better than anyone else. Continued attempts to associate him with sexual scandal suggest the rest of this unfinished story may be published during the French presidential campaign.
Tuesday, 22 November 2011
Running
Taking advantage of acquaintance, Mr HG asked the banking association official who is nationally responsible for retail banking payments systems what are the rules on maximum cash withdrawals. The answer was that rules are not clear cut on the frequency of withdrawals, the treatment of joint accounts, or on cumulative limits. Nevertheless the sensation that there is a secret retail run on Italian banks is confirmed by the rapid increase of 500 euro notes in circulation in the entire euro area. And by the fact that the amount of cash that one is told by cashiers can be withdrawn on a single occasion falls steadily - from 10,000 to 5,000, to at present 2,500 with the warning that this might soon be reduced to 300 or even 100 euros. Certainly the media suggest that a 100 or 300 euro cash payment may be the maximum permitted in retail transactions.
Rather than attract attention by drawing 2,499 euros from the bank-at-the-bottom-of-the-hill last week, Mr HG was advised to withdraw 2,400. After repeating the operation a couple of times he was asked to sign a declaration on the uses to which this money was to be put. He then proposed to empty his current account into a safer and more private berth as it wasn't worth keeping our ready cash at 1% interest and suffer nosiness. To do so triggers yet another declaration that our money is going to be kept under our mattress.
Finding we had left the main door unlocked from Friday to Sunday on our return from Rome, I wouldn't be a bit surprised if it was no longer there.
Rather than attract attention by drawing 2,499 euros from the bank-at-the-bottom-of-the-hill last week, Mr HG was advised to withdraw 2,400. After repeating the operation a couple of times he was asked to sign a declaration on the uses to which this money was to be put. He then proposed to empty his current account into a safer and more private berth as it wasn't worth keeping our ready cash at 1% interest and suffer nosiness. To do so triggers yet another declaration that our money is going to be kept under our mattress.
Finding we had left the main door unlocked from Friday to Sunday on our return from Rome, I wouldn't be a bit surprised if it was no longer there.
Friday, 18 November 2011
Good Luck
The Italian parliament has handed out yet another vote of confidence (they're really good at this if at nothing else) and the Monti administration is now in full possession of the powers of government that pertain to the Executive. Using this circumlocution is necessary because much of the media has objected that Italian democracy has been replaced by a commission of technocrats. (Mr HG argued that though ugly, the word 'technocrat' means 'technician in power' and is more accurate than 'technician'). It has not.
Democracy is not homogeneous in form. Italy is different from the UK. The head of state has clearly-delineated, and wide, powers under the democratic constitution to act in specific sets of circumstances. This clarity of powers and of occasions for intervention does not exist in the UK, nor is the head of state democratically elected, nor is there a constitutional court to hold parties to the rules. Under the democratic principles and rules governing Italian democracy the Monti administration is not just acceptable but was required to be called into being. Now that it has been voted on and confirmed in the Upper and Lower house (with massive majorities in both votes) it's as democratic and representative as any other western government, though validated by different parts of the democratic structure.
The test is very simple: when Monti starts cutting, taxing, stripping privileges, opening closed shops and removing undeserved special statuses we will all see if the interests concerned can overturn his administration or are forced by the greater democratic will expressed through Parliament, head of state, and constitution, to accept their lot. He's not there at gun point. And his remit is much, much wider than driving down spread and yield in the interests of sustaining the Euro.
Monti's intention is to govern until the elections in 2013: he intends electoral reform, trade union reform, reform of the professions, bank restructuring, extensive changes in the levying and collection of tax, and to take a sword to the proliferation of the political classes.
He starts first thing Monday morning.
Democracy is not homogeneous in form. Italy is different from the UK. The head of state has clearly-delineated, and wide, powers under the democratic constitution to act in specific sets of circumstances. This clarity of powers and of occasions for intervention does not exist in the UK, nor is the head of state democratically elected, nor is there a constitutional court to hold parties to the rules. Under the democratic principles and rules governing Italian democracy the Monti administration is not just acceptable but was required to be called into being. Now that it has been voted on and confirmed in the Upper and Lower house (with massive majorities in both votes) it's as democratic and representative as any other western government, though validated by different parts of the democratic structure.
The test is very simple: when Monti starts cutting, taxing, stripping privileges, opening closed shops and removing undeserved special statuses we will all see if the interests concerned can overturn his administration or are forced by the greater democratic will expressed through Parliament, head of state, and constitution, to accept their lot. He's not there at gun point. And his remit is much, much wider than driving down spread and yield in the interests of sustaining the Euro.
Monti's intention is to govern until the elections in 2013: he intends electoral reform, trade union reform, reform of the professions, bank restructuring, extensive changes in the levying and collection of tax, and to take a sword to the proliferation of the political classes.
He starts first thing Monday morning.
Thursday, 17 November 2011
Rendering Unto Caesar
The new Italian government will outline its policies this afternoon. At the moment we are all fired-up with patriotic support and determination to deal with public debt. Angels proposes requiring the Church to pay rates and taxes and the South to be denied any special subsidies, together with a determined assault upon tax evasion (a southern speciality, although widely practised throughout the country.)
Should there be any attempt to raise property taxes before forcing the Church to pay property taxes at all, or should there be an attempt to cut pensions in general rather than concentrating on southern vitalizio abuse first, then the patriotic support will vanish at once. We are not going to put up with gross inequalities of treatment inflicted or enforced by Church or Mafia. Nor are we putting up with higher taxation after Berlusconi raised the tax burden from 43% of GDP to almost 50%. We need tax cuts, we need deregulation, we need the liberalisation of professions.
It is nonsense to say that this government of professors, lawyers and bankers is not political. Professors are the most exquisitely political of all breeds; closely followed by lawyers and bankers. But they are political dilettanti and like all dilettanti, they fancy themselves no end. Let's hope they are aware that they answer to us, still, and that the fattest should be the first to be sacrificed.
Should there be any attempt to raise property taxes before forcing the Church to pay property taxes at all, or should there be an attempt to cut pensions in general rather than concentrating on southern vitalizio abuse first, then the patriotic support will vanish at once. We are not going to put up with gross inequalities of treatment inflicted or enforced by Church or Mafia. Nor are we putting up with higher taxation after Berlusconi raised the tax burden from 43% of GDP to almost 50%. We need tax cuts, we need deregulation, we need the liberalisation of professions.
It is nonsense to say that this government of professors, lawyers and bankers is not political. Professors are the most exquisitely political of all breeds; closely followed by lawyers and bankers. But they are political dilettanti and like all dilettanti, they fancy themselves no end. Let's hope they are aware that they answer to us, still, and that the fattest should be the first to be sacrificed.
Last Resort
A lender of last resort, as Walter Bagehot taught us, is the central bank function of providing unlimited liquidity to commercial banks at a penal interest rate in exchange for good quality paper. Those who today advocate the ECB acting as a lender of last resort to Eurozone governments are misusing the terminology and thus misunderstanding the function of the central bank.
It is true that a central bank has a function of acting as treasurer to a government (or the state) providing unlimited liquidity to fund public expenditure if and when it might be necessary. However this traditional function has been limited over time by the myth of central bank independence and by legislative limits such as the debt ceiling in the US, or the Italian prohibition on lending money to the government (in 1980 Beniamino Andreatta introduced such a prohibition which reduced Italian inflation at the cost of paving the way to the accumulation of Italy's large public debt.)
Angela Merkel and general German opposition to ECB purchase of government bonds should be contrasted not by appealing for a non-existent role of lender of last resort but to the traditional function of the Bank acting as treasurer to the state. There is nothing in the EU treaties that forbids this; the problem is that there is no state. What needs to be resolved are distribution problems across the member states.
Willem Buiter refers to such a possible ECB role as "quasi fiscal abuse" of the ECB. Be that as it may it is a much less expensive alternative than a generalised, large-scale default of the larger part of the Euro area.
It is true that a central bank has a function of acting as treasurer to a government (or the state) providing unlimited liquidity to fund public expenditure if and when it might be necessary. However this traditional function has been limited over time by the myth of central bank independence and by legislative limits such as the debt ceiling in the US, or the Italian prohibition on lending money to the government (in 1980 Beniamino Andreatta introduced such a prohibition which reduced Italian inflation at the cost of paving the way to the accumulation of Italy's large public debt.)
Angela Merkel and general German opposition to ECB purchase of government bonds should be contrasted not by appealing for a non-existent role of lender of last resort but to the traditional function of the Bank acting as treasurer to the state. There is nothing in the EU treaties that forbids this; the problem is that there is no state. What needs to be resolved are distribution problems across the member states.
Willem Buiter refers to such a possible ECB role as "quasi fiscal abuse" of the ECB. Be that as it may it is a much less expensive alternative than a generalised, large-scale default of the larger part of the Euro area.
Wednesday, 16 November 2011
Pulling Out of the Death Spiral?
The expectation that Mario Monti will confirm his acceptance of the office of prime minister and present his list of ministers to the President is growing by the minute. Then, if the President accepts the administration and the ministers are sworn-in this afternoon, he's got to face Parliament. Both major parties, of the centre-right and of the centre-left, have confirmed their support for a Monti administration after discussions with him and within their own parties; and most of the minor parties, with the large exception of the Northern Leagues who are determined to go into opposition, have offered their support.
But is it all too late? Spread and yield were yesterday back to the earlier highs that forced Berlusconi's resignation and, not unnaturally, he is remarking that it wasn't to do with him but that there is a speculative attack upon Italy which is continuing. The consequences of his stubborn attachment to power, in pure self interest and self defence, are still reverberating.
Yet the Italian economy has: very low private debt: net private assets over four times larger than public liabilities: a primary surplus - a budget surplus before payment of interest, where the only other European country with the same status is Germany; it has a fairly long average maturity of debt, some 7 years; it has a relatively low average interest rate on its past debt of around 4%; and a large but stable debt to GDP ratio at 120%. The negative weighing on Italy really is the slowest growth rate in Europe. We must now add the rapidly rising marginal cost of borrowing which is inexorably driving Italy towards default (though not for the next 2 years, which of course is a very good reason not to want 10 year bonds)
The negotiations over the Monti administration are giving clear indications that some kind of immunity is being constructed, or at least favourable circumstance sought, for Berlusconi. That may be the price for his party's agreement to a Monti government. Which conflicts seriously with the urgent need to pin the blame for the market's loss of confidence in Italy where it belongs - on Berlusconi.
[An afterthought: to appoint a Justice minister named Pomodoro is not going to help the international perception of serieta']
UPDATE
List of ministers in the new Italian government:
MARIO MONTI Chancellor of the Exchequer
ANNA MARIA CANCELLIERI Home office
GIULIO TERZI DI SANT'AGATA Foreign Secretary
PAOLA SEVERINO Ministry of Justice
CORRADO CLINI Environment
CORRADO PASSERA Development and Infrastructure
FRANCESCO PROFUMO Education
GIAMPAOLO DI PAOLA Defence
MARIO CATANIA Agriculture
CATRICALA' vice Premier
ELSA FORNERO Welfare
PIERO GIARDA Parliamentary affairs
ENZO MOAVERO MILANESI European Union affairs
FABRIZIO BARCA Federal affairs and national cohesion
LORENZO ORNAGHI Culture
ANDREA RICCARDI International affairs
But is it all too late? Spread and yield were yesterday back to the earlier highs that forced Berlusconi's resignation and, not unnaturally, he is remarking that it wasn't to do with him but that there is a speculative attack upon Italy which is continuing. The consequences of his stubborn attachment to power, in pure self interest and self defence, are still reverberating.
Yet the Italian economy has: very low private debt: net private assets over four times larger than public liabilities: a primary surplus - a budget surplus before payment of interest, where the only other European country with the same status is Germany; it has a fairly long average maturity of debt, some 7 years; it has a relatively low average interest rate on its past debt of around 4%; and a large but stable debt to GDP ratio at 120%. The negative weighing on Italy really is the slowest growth rate in Europe. We must now add the rapidly rising marginal cost of borrowing which is inexorably driving Italy towards default (though not for the next 2 years, which of course is a very good reason not to want 10 year bonds)
The negotiations over the Monti administration are giving clear indications that some kind of immunity is being constructed, or at least favourable circumstance sought, for Berlusconi. That may be the price for his party's agreement to a Monti government. Which conflicts seriously with the urgent need to pin the blame for the market's loss of confidence in Italy where it belongs - on Berlusconi.
[An afterthought: to appoint a Justice minister named Pomodoro is not going to help the international perception of serieta']
UPDATE
List of ministers in the new Italian government:
MARIO MONTI Chancellor of the Exchequer
ANNA MARIA CANCELLIERI Home office
GIULIO TERZI DI SANT'AGATA Foreign Secretary
PAOLA SEVERINO Ministry of Justice
CORRADO CLINI Environment
CORRADO PASSERA Development and Infrastructure
FRANCESCO PROFUMO Education
GIAMPAOLO DI PAOLA Defence
MARIO CATANIA Agriculture
CATRICALA' vice Premier
ELSA FORNERO Welfare
PIERO GIARDA Parliamentary affairs
ENZO MOAVERO MILANESI European Union affairs
FABRIZIO BARCA Federal affairs and national cohesion
LORENZO ORNAGHI Culture
ANDREA RICCARDI International affairs
Monday, 14 November 2011
Goodbye Silvio
Handel on Saturday night. But after Berlusconi's broadcast last night, dripping with self pity and self justification, bitterly denouncing the celebrations on his going, Handel strikes again.
Nick Drew gives the whole opera at Capitalists@Work
Nick Drew gives the whole opera at Capitalists@Work
Sunday, 13 November 2011
Dealing with the South
If the Italian government that is to be installed this evening does not start dealing with the South and do at least these broad-brush things very rapidly, it is not serious about dealing with Italy's public debt.
- Gradual but steep reduction of all forms of income subsidies; including fake invalidity pensions.
- Instant curtailment of salaries of public officials such as members of regional administrations, consultants, and other unproductive labour.
- Removal of tax exemptions on all Church activities (a national measure which would be particularly effective in the South).
- Lower wages for the South to reflect relative local labour abundance; and to compensate also for the higher costs of local activities resulting from mafia taxation.
- Once and for all abolition of prestige and useless projects such as the Messina bridge (not least because of seismic exposure but also because it is an opportunity for mafia funding).
- No eligibility of investigated as well as convicted individuals for public office, or of firms for public contracts.
- Campaign to detect and penalize usury.
- Facilitated access to credit, but without subsidies.
- The removal of all tax exemptions that pertain to the South alone.
- An enhanced fight against tax evasion with stricter penalties in the South (where tax evasion has contributed greatly to national debt).
- Increase police funding (at the moment the Force is being starved of funds to the point of officers having to pay for their own petrol).
[There we are Yacht. (Weekend Yachtsman feared nothing could be done in the South as many Italian governments have accepted). Once all this is done, other southern distortions of the Italian economy and body politic can be tackled. ]
- Gradual but steep reduction of all forms of income subsidies; including fake invalidity pensions.
- Instant curtailment of salaries of public officials such as members of regional administrations, consultants, and other unproductive labour.
- Removal of tax exemptions on all Church activities (a national measure which would be particularly effective in the South).
- Lower wages for the South to reflect relative local labour abundance; and to compensate also for the higher costs of local activities resulting from mafia taxation.
- Once and for all abolition of prestige and useless projects such as the Messina bridge (not least because of seismic exposure but also because it is an opportunity for mafia funding).
- No eligibility of investigated as well as convicted individuals for public office, or of firms for public contracts.
- Campaign to detect and penalize usury.
- Facilitated access to credit, but without subsidies.
- The removal of all tax exemptions that pertain to the South alone.
- An enhanced fight against tax evasion with stricter penalties in the South (where tax evasion has contributed greatly to national debt).
- Increase police funding (at the moment the Force is being starved of funds to the point of officers having to pay for their own petrol).
[There we are Yacht. (Weekend Yachtsman feared nothing could be done in the South as many Italian governments have accepted). Once all this is done, other southern distortions of the Italian economy and body politic can be tackled. ]
Saturday, 12 November 2011
Stability Law Passed by Lower House in Italy
380 votes were cast in favour; the opposition Democratic party abstained.
UPDATE
Berlusconi has now resigned.
UPDATE
Berlusconi has now resigned.
Draghi With Monti
The Director of the European Central Bank, Mario Draghi, has arrived at palazzo Giustiniano for talks with Senator Mario Monti. (Good name 'Mario'.)
If Mr Berlusconi resigns today then it will be Senator Monti who runs the caretaker government up to early elections, should his planned administration not receive a vote of confidence. Which is a great deal better than having ages more Berlusconi and elections run under his government. By moving so swiftly, in hours not weeks or month before Berlusconi would have to resign, the President has stripped Berlusconi of a major weapon - his control over large sections of the Italian media.
If Mr Berlusconi resigns today then it will be Senator Monti who runs the caretaker government up to early elections, should his planned administration not receive a vote of confidence. Which is a great deal better than having ages more Berlusconi and elections run under his government. By moving so swiftly, in hours not weeks or month before Berlusconi would have to resign, the President has stripped Berlusconi of a major weapon - his control over large sections of the Italian media.
Friday, 11 November 2011
Pictures Speaking Louder Than Words in the Italian Senate
The Corriere della Sera has a series of photos showing the reception for Mario Monti, and the entrance of Berlusconi's Finance Minister, in the Senate where the stability law was passed today.
Monti was greeted with a great round of applause. Tremonti went silently to a seat on the government benches, next to the Finance ministry under-secretary.
Good Riddance to Bossi Too
While eyes are on Berlusconi the departure of the repellent Bossi of the Northern Leagues is just as worthy of celebration. The new stability law which has just been passed in the Senate has been stripped of the Northern Leagues' gun law which was to make possible the far easier acquisition of 'sporting' weapons. It should be remembered that in Italy wild boar is hunted with laser-guided rifles - little red dots flitting across the woods.
Berlusconi bought Bossi and the Leagues as a coalition party en bloc for 2 billion lira, cheap but then everything about Bossi and his party is cheap.
Berlusconi bought Bossi and the Leagues as a coalition party en bloc for 2 billion lira, cheap but then everything about Bossi and his party is cheap.
Thursday, 10 November 2011
Tax the Church and Deal with the South
There are two enormous elephants no-one wants us to look at in the salotto. The South and the Church.
Neither of them pay in any taxes and both of them slurp tax-payers' money out like, well, pigs at the trough (to borrow a phrase). Who wishes to govern Italy accommodates the South and the Church. And while the South has geopolitical form in many other European member-states, every one of which has its crosses to bear from regions of under- or post- development, none of them have to put up quite so much with the pretensions of the Holy, Roman, Catholic and Apostolic church as well.
Berlusconi bought the compliance of the Church in all his goings-on by exempting from tax all property associated with it; not just churches and monasteries, but land, commercial developments, businesses etc. Who wouldn't be a client for that? And deliver a micro-managed flock of voters.
The South, the Church, and (how shall I put this: more primitive governmental practices than democracy and the rule of law?) are intimately entwined with the governance exemplified by Berlusconi and his henchmen. The South, too, is wholly committed to the provision of a vitalizio for all (southerners, that is). The English word for vitalizio is annuity but it doesn't at all cover the extraordinary expectations of the South that it should be supported for life from wealth generated elsewhere in Italy and, indeed, the rest of Europe.
There wouldn't be an Italian public debt without the Church and the South. And public debt throughout Europe would be much reduced if the 'south' problem in Europe, North and South, were faced up to.
Neither of them pay in any taxes and both of them slurp tax-payers' money out like, well, pigs at the trough (to borrow a phrase). Who wishes to govern Italy accommodates the South and the Church. And while the South has geopolitical form in many other European member-states, every one of which has its crosses to bear from regions of under- or post- development, none of them have to put up quite so much with the pretensions of the Holy, Roman, Catholic and Apostolic church as well.
Berlusconi bought the compliance of the Church in all his goings-on by exempting from tax all property associated with it; not just churches and monasteries, but land, commercial developments, businesses etc. Who wouldn't be a client for that? And deliver a micro-managed flock of voters.
The South, the Church, and (how shall I put this: more primitive governmental practices than democracy and the rule of law?) are intimately entwined with the governance exemplified by Berlusconi and his henchmen. The South, too, is wholly committed to the provision of a vitalizio for all (southerners, that is). The English word for vitalizio is annuity but it doesn't at all cover the extraordinary expectations of the South that it should be supported for life from wealth generated elsewhere in Italy and, indeed, the rest of Europe.
There wouldn't be an Italian public debt without the Church and the South. And public debt throughout Europe would be much reduced if the 'south' problem in Europe, North and South, were faced up to.
Wednesday, 9 November 2011
Another Fallen Angel?
Angels' faith in President Napolitano has been shaken terribly. How could he have agreed to Berlusconi remaining in office? Certainly the vote on the budget was not formally a vote of confidence, and certainly it was passed - but to have voted against and failed to pass the state budget accounts for a second time would have been the height of irresponsibility. We all know what those abstention numbers signalled.
Berlusconi himself has acknowledged that the Parliament is in a state of paralysis. Votes cannot be given against essential legislation but that does not mean that the Prime Minister has maintained democratic legitimacy. In such circumstances the Constitution does indeed provide for presidential intervention in the governance of the country (as does the UK constitution - there would have to be such provision, wouldn't there).
So what possible assurances could have been offered to the President that would justify leaving such a man as Berlusconi in full possession of the powers of a prime minster after the Parliament has indicated their withdrawal? What unpublished deals have been done? And why has there been such a lack of transparency in what seems to have been arranged?
Just look at the yield and the spread.
UPDATE
President Napolitano has issued a note insisting that Berlusconi's resignation will be forthcoming. He has also made Mario Monti a life Senator.
Berlusconi himself has acknowledged that the Parliament is in a state of paralysis. Votes cannot be given against essential legislation but that does not mean that the Prime Minister has maintained democratic legitimacy. In such circumstances the Constitution does indeed provide for presidential intervention in the governance of the country (as does the UK constitution - there would have to be such provision, wouldn't there).
So what possible assurances could have been offered to the President that would justify leaving such a man as Berlusconi in full possession of the powers of a prime minster after the Parliament has indicated their withdrawal? What unpublished deals have been done? And why has there been such a lack of transparency in what seems to have been arranged?
Just look at the yield and the spread.
UPDATE
President Napolitano has issued a note insisting that Berlusconi's resignation will be forthcoming. He has also made Mario Monti a life Senator.
Fin des Jeux
So, after all the heart-searching, the constitutional consultations, the references to past crisis solutions, the suggested names: Monti, Letta, Alfano - even Amato, the possible forms the crisis government could take: 'technical', government of national unity, early elections. All this and now we have the answer.
The post-Berlusconi administration will be led by - Berlusconi. And the form of the administration will be a coalition of his (scattered and shrunken) party and the Northern Leagues. Their purpose? Ad hominem legislation for the interruption of legal proceedings against Berlusconi; special statuses for his family companies; generalised assaults upon the powers and independence of the judiciary. Social butchery in the name of Europe will come as a bonus, laying the ground for recast labour relations, the hollowing out of social security (in the best meaning of the term) for all from the youngest to the oldest; the extensive mulcting of the working population in higher taxes.
How do we know? Berlusconi tried some of it with the Decree that President Napolitano refused to sign, requiring that such measures must be agreed first by Parliament. This new Berlusconi Executive will divide the factious opposition readily, and now has the opportunity to scoop the board.
He's even got the European Union, the European Central Bank and the IMF to help him.
The post-Berlusconi administration will be led by - Berlusconi. And the form of the administration will be a coalition of his (scattered and shrunken) party and the Northern Leagues. Their purpose? Ad hominem legislation for the interruption of legal proceedings against Berlusconi; special statuses for his family companies; generalised assaults upon the powers and independence of the judiciary. Social butchery in the name of Europe will come as a bonus, laying the ground for recast labour relations, the hollowing out of social security (in the best meaning of the term) for all from the youngest to the oldest; the extensive mulcting of the working population in higher taxes.
How do we know? Berlusconi tried some of it with the Decree that President Napolitano refused to sign, requiring that such measures must be agreed first by Parliament. This new Berlusconi Executive will divide the factious opposition readily, and now has the opportunity to scoop the board.
He's even got the European Union, the European Central Bank and the IMF to help him.
Tuesday, 8 November 2011
Now?
Berlusconi is at the Quirinale with President Napolitano.
With him is Gianni Letta, vice premier, urbane, clever, well thought of - Berlusconi's keeper and advisor, widely touted as a possible successor.
Coalition Lega Nord leader Umberto Bossi, speaking to journalists at the Parliament has said,
“Aspettiamo qualche minuto. Deciderà cosa fare al Quirinale.” [Wait a moment, he will decide what to do at the Quirinale]
when asked if Berlusconi was on his way to resign.
UPDATE
No. He's still with us. He may still be with us till the end of November, given the stages needed to pass a bill through parliament. Getting him out of palazzo Chigi is like getting Brown out of Downing Street; even down to the suggestion that he's been asked to stay on by the Head of State while matters are sorted out. Just look at the difference in body-language on entering and on leaving the Quirinale.
Spread hit 500 today. It'll be worse tomorrow when the realisation dawns that he hasn't gone at all.
Coalition Lega Nord leader Umberto Bossi, speaking to journalists at the Parliament has said,
“Aspettiamo qualche minuto. Deciderà cosa fare al Quirinale.” [Wait a moment, he will decide what to do at the Quirinale]
when asked if Berlusconi was on his way to resign.
UPDATE
No. He's still with us. He may still be with us till the end of November, given the stages needed to pass a bill through parliament. Getting him out of palazzo Chigi is like getting Brown out of Downing Street; even down to the suggestion that he's been asked to stay on by the Head of State while matters are sorted out. Just look at the difference in body-language on entering and on leaving the Quirinale.
Spread hit 500 today. It'll be worse tomorrow when the realisation dawns that he hasn't gone at all.
Quite an Agenda
The ribaltone refers to the overturning of the centre right 2008 election victory if a 'technical' or national government is installed. It notes there are 8 'traitors'.
- Resign, he writes.
- Pres. Repubblica.
- A solution.
Who Did What
These are the deputies who denied their vote to Berlusconi this afternoon:
Pdl (Berlusconi's own party):
Roberto Antonione,
Fabio Fava,
Giustina Destro,
Gennaro Malgieri (who says he was in the loo and missed the vote!),
Alfonso Papa (who is under house arrest).
Coalition members who were absent:
Calogero Mannino,
Giancarlo Pittelli,
Luciano Sardelli,
Francesco Stagno D'Alcontres
Santo Versace.
Abstained:
Franco Stradella, Pdl.
The opposition coalition abstained en masse.
The state Budget accounts passed by 308 votes.
Berlusconi needed 316 votes to demonstrate that he commands a majority in the Lower House.
He has now left the Parliament and gone to palazzo Chigi (or Downing Street, so to speak) to consider what this can possibly mean.
Pdl (Berlusconi's own party):
Roberto Antonione,
Fabio Fava,
Giustina Destro,
Gennaro Malgieri (who says he was in the loo and missed the vote!),
Alfonso Papa (who is under house arrest).
Coalition members who were absent:
Calogero Mannino,
Giancarlo Pittelli,
Luciano Sardelli,
Francesco Stagno D'Alcontres
Santo Versace.
Abstained:
Franco Stradella, Pdl.
The opposition coalition abstained en masse.
The state Budget accounts passed by 308 votes.
Berlusconi needed 316 votes to demonstrate that he commands a majority in the Lower House.
He has now left the Parliament and gone to palazzo Chigi (or Downing Street, so to speak) to consider what this can possibly mean.
Language, Language
Berlusconi's behaviour is becoming more and more eccentric. His language resembles that of a mafioso gangster rather than a democratic political leader and prime minister.
"I want to look in the eyes of traitors as they betray me"?? He'll want to send them all to sleep with the fishes next. Having agreed an exit strategy with his party and its allies in Rome, he returns from spending the day in his private house in Milan with his family and personal advisors ("That dickhead has left Rome for Milan... ", fumed a leading centre right politician) to announce he's soldiering on; perhaps it was thought at Arcore that his private business interests and firms' interests are better served by this change of plan.
Pity about Italy's exposure to an unnecessary debt crisis - but he's only prime minister in his spare time, as he remarked recently to one of his whores.
"I want to look in the eyes of traitors as they betray me"?? He'll want to send them all to sleep with the fishes next. Having agreed an exit strategy with his party and its allies in Rome, he returns from spending the day in his private house in Milan with his family and personal advisors ("That dickhead has left Rome for Milan... ", fumed a leading centre right politician) to announce he's soldiering on; perhaps it was thought at Arcore that his private business interests and firms' interests are better served by this change of plan.
Pity about Italy's exposure to an unnecessary debt crisis - but he's only prime minister in his spare time, as he remarked recently to one of his whores.
Monday, 7 November 2011
Italian Politics Moves On
The Italian media is reporting that Berlusconi will go today. He has gone to Milan but will be returning to Rome this evening.
Whether this turns out to be correct or no, political debate rages now on whether there should be early general elections (Italy has fixed term parliaments and elections are not due until 2013); whether another centre right politician should be asked to form an administration and put it to a parliamentary vote of confidence (but the centre right coalition elected in 2008 has collapsed and reformed so often that it is hard to argue that the original election-winning grouping exists any more); or whether a 'technical' government be formed to put in place the measures promised by Italy to deal with public debt.
This last would face real difficulties in achieving a parliamentary confidence vote because of the unpopularity of all and any debt-cutting measures. In truth it is a fig leaf to hide the installation of a centre left administration that runs against the democratic vote of the last elections.
So unpopular are reforms proposed, and required by lenders, to various parts of the electorate, and so unpalatable the likely further measures that would be brought in by a centre left 'technical' government (wealth taxes, levies on current accounts, worsening of pension rights etc.) that it is hard to see any democratic way of resolving decisions on the choices for cutting state debt other than by holding early elections. Furthermore, before proceeding to general elections there is a pressing need to reform the electoral rules (known as the porcellum - the pig's breakfast) introduced before the last elections which place the choice of candidates on the party lists entirely in the hands of party leaders (hence showgirls reborn as waged and expenses-endowed politicians, and other corruptions).
President Napolitano has held extensive consultations with all political parties in the last week. The President is required to consult with specific people - previous presidents, constitutional advisers etc., but in the end, apart from the need for a caretaker administration to return the electoral rules to their pre-porcellum form, only a general election can assure the markets that the people have consented to the measures about to be visited upon them.
UPDATE
“Le voci di mie dimissioni sono destituite di fondamento e non capisco come siano circolate [word of my resignation is without foundation and I don't understand why it is circulating]”, Silvio Berlusconi has stated to the Italian news agency Ansa. Look at the bonds, Silvio.
Further UPDATE mid afternoon
Mediobanca (+5,82%) Intesa Sanpaolo (+5,15%). Fiat (+5.12% ). Fiat Industrial (+4,06%)
Spread German - Italian 10 year bonds below 470 (it was above 490 this morning)
Early evening UPDATE
Spread Italian German bonds back up to 487. Yield on Italian 10 year bonds back to 6.67%. The yoyo effect of Berlusconi's exit timing is quite extraordinary.
Whether this turns out to be correct or no, political debate rages now on whether there should be early general elections (Italy has fixed term parliaments and elections are not due until 2013); whether another centre right politician should be asked to form an administration and put it to a parliamentary vote of confidence (but the centre right coalition elected in 2008 has collapsed and reformed so often that it is hard to argue that the original election-winning grouping exists any more); or whether a 'technical' government be formed to put in place the measures promised by Italy to deal with public debt.
This last would face real difficulties in achieving a parliamentary confidence vote because of the unpopularity of all and any debt-cutting measures. In truth it is a fig leaf to hide the installation of a centre left administration that runs against the democratic vote of the last elections.
So unpopular are reforms proposed, and required by lenders, to various parts of the electorate, and so unpalatable the likely further measures that would be brought in by a centre left 'technical' government (wealth taxes, levies on current accounts, worsening of pension rights etc.) that it is hard to see any democratic way of resolving decisions on the choices for cutting state debt other than by holding early elections. Furthermore, before proceeding to general elections there is a pressing need to reform the electoral rules (known as the porcellum - the pig's breakfast) introduced before the last elections which place the choice of candidates on the party lists entirely in the hands of party leaders (hence showgirls reborn as waged and expenses-endowed politicians, and other corruptions).
President Napolitano has held extensive consultations with all political parties in the last week. The President is required to consult with specific people - previous presidents, constitutional advisers etc., but in the end, apart from the need for a caretaker administration to return the electoral rules to their pre-porcellum form, only a general election can assure the markets that the people have consented to the measures about to be visited upon them.
UPDATE
“Le voci di mie dimissioni sono destituite di fondamento e non capisco come siano circolate [word of my resignation is without foundation and I don't understand why it is circulating]”, Silvio Berlusconi has stated to the Italian news agency Ansa. Look at the bonds, Silvio.
Further UPDATE mid afternoon
Mediobanca (+5,82%) Intesa Sanpaolo (+5,15%). Fiat (+5.12% ). Fiat Industrial (+4,06%)
Spread German - Italian 10 year bonds below 470 (it was above 490 this morning)
Early evening UPDATE
Spread Italian German bonds back up to 487. Yield on Italian 10 year bonds back to 6.67%. The yoyo effect of Berlusconi's exit timing is quite extraordinary.
Saturday, 5 November 2011
Princess Celestia Rides Again
For those who are behind in My Little Pony story lines here they are. Many grown-ups have allowed their My Little Pony knowledge to date and atrophy quite shamefully. The WSJ draws timely attention to this failing.
Get along to the shops now and make your consuming contribution to saving-the-global-economy-and-the-world-as-we-know-it from collapse. Christmas is coming so no-one will know your Pony-purchase is really to complete your own set.
[The Little Ponies are in the soffitta, Small, in a box. I'm not sure about the stable.]
Thursday, 3 November 2011
Fatigue and Disbelief
Financial crisis fatigue has struck. I look at the spectacular, manicured landscape, the gleaming cities (Rome is looking particularly fine as we watch the polished motors ferry ministers and officials about through imperial grandeur), the streets full of new cars, the holidaymakers returning from their extended break for All Souls, the banks functioning perfectly normally, the gold bars resting under the beds, the net private wealth, some 8,500 billion euros, and the 1,900 bn euro Italian government debt with its 180 billion a year interest [no, 90 billion, doubled it by mistake, sorry] and simply don't care any more about the hysteria of euro-hate that is filling the media.
Lamberto Dini, former prime minister, (there are quite a lot of those in Italy but this is the one who looks like the un-kissed frog) is probably right. The euro is under assault for reasons nothing to do with its stability and functionality and a great deal to do with the decline of the dollar and the decline of America. It's quite cheeky of President Obama to turn up in the South of France, basking in its wealth and sunshine, and tell us to pull ourselves together. We are together, much more so than poor America. The G20 is looking more and more threadbare and irrelevant - just another global jolly for the politicians and their hangers-on who travel from venue to venue living off our governments' largess, using our taxes and networking among themselves ostensibly for undesirable and unobtainable ends (like global governance) but in truth chasing a free lunch (and dinner, and lodging, and transport, and unearned life-style).
Greece is another matter, of course. It's a country burdened by poverty and corruption, by intransigent politics of right and left, by recent military rule and the costs of getting rid of it. Anyone who had any money made for the exit ages ago. We could beneficially show some understanding towards Greece -and recognise its greater claims on us than any country further afield on whom we spend money
Lamberto Dini, former prime minister, (there are quite a lot of those in Italy but this is the one who looks like the un-kissed frog) is probably right. The euro is under assault for reasons nothing to do with its stability and functionality and a great deal to do with the decline of the dollar and the decline of America. It's quite cheeky of President Obama to turn up in the South of France, basking in its wealth and sunshine, and tell us to pull ourselves together. We are together, much more so than poor America. The G20 is looking more and more threadbare and irrelevant - just another global jolly for the politicians and their hangers-on who travel from venue to venue living off our governments' largess, using our taxes and networking among themselves ostensibly for undesirable and unobtainable ends (like global governance) but in truth chasing a free lunch (and dinner, and lodging, and transport, and unearned life-style).
Greece is another matter, of course. It's a country burdened by poverty and corruption, by intransigent politics of right and left, by recent military rule and the costs of getting rid of it. Anyone who had any money made for the exit ages ago. We could beneficially show some understanding towards Greece -and recognise its greater claims on us than any country further afield on whom we spend money
Tuesday, 1 November 2011
Parliamentary Governance Should not Operate Through Referendums
Greek constitutional arrangements are, well, Greek, to most of us. Reuters reports that:
"...the constitution... does not allow referendums on economic issues, only on matters of great national importance.
The last time Greeks held a referendum was in December 1974, when they voted to abolish the monarchy shortly after the collapse of a military dictatorship.
"It's debatable whether the constitution allows such a referendum," said Fotis Kouvelis, leader of the small Democratic Left party. "The country must go to early elections. Given the situation, it's the most honorable solution."
For a referendum result to be binding, there must be a minimum 40 percent turnout on issues of "crucial national importance" and 50 percent on a law that has already been voted on in parliament and "regulates a serious social issue,"
That's a very high threshold to clear on turnout alone, regardless of the vote itself.
As has been widely pointed out, if the Greek Socialist prime minister feels that his government cannot govern through Parliament the honourable course is to resign, not call spurious referendums in vainglorious terms.
And if the Italian Centre-right prime minister finds that he cannot govern, through Parliament, to deliver what is required of Italy (which he clearly cannot as his repeated defeats except on dearly-bought votes of confidence demonstrates) the honourable course is for his resignation to be offered too.
"...the constitution... does not allow referendums on economic issues, only on matters of great national importance.
The last time Greeks held a referendum was in December 1974, when they voted to abolish the monarchy shortly after the collapse of a military dictatorship.
"It's debatable whether the constitution allows such a referendum," said Fotis Kouvelis, leader of the small Democratic Left party. "The country must go to early elections. Given the situation, it's the most honorable solution."
For a referendum result to be binding, there must be a minimum 40 percent turnout on issues of "crucial national importance" and 50 percent on a law that has already been voted on in parliament and "regulates a serious social issue,"
That's a very high threshold to clear on turnout alone, regardless of the vote itself.
As has been widely pointed out, if the Greek Socialist prime minister feels that his government cannot govern through Parliament the honourable course is to resign, not call spurious referendums in vainglorious terms.
And if the Italian Centre-right prime minister finds that he cannot govern, through Parliament, to deliver what is required of Italy (which he clearly cannot as his repeated defeats except on dearly-bought votes of confidence demonstrates) the honourable course is for his resignation to be offered too.
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