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']

List of ministers in the new Italian government:

MARIO MONTI  Chancellor of the Exchequer



PAOLA SEVERINO  Ministry of Justice

CORRADO CLINI  Environment

CORRADO PASSERA  Development and Infrastructure



MARIO CATANIA  Agriculture

CATRICALA'  vice Premier


PIERO GIARDA  Parliamentary affairs

ENZO MOAVERO MILANESI  European Union affairs

FABRIZIO BARCA  Federal affairs and national cohesion


ANDREA RICCARDI  International affairs


a musician said...

And to have Mr Malinconico as sottosegretario... sounds like Gianni Rodari made them up

hatfield girl said...

Or Gilbert and Sullivan, musician.

Perhaps ND might feel a song coming on?

I'd give the full list but Monti has been in the private study (not the vetrata) for over 2 hours and there is no list.

hatfield girl said...

Nope, no song-worthy names apart from dr Ignudi.

Indeed, names that are far from all those suggested.

No shield for Berlusca.

Now we wait to see if the votes of confidence will be forthcoming, tomorrow and Friday, after the swearing-in late this afternoon.

But Berlusconi is no longer even caretaking. No more suprise broadcasts from the palazzo Chigi.

Nick Drew said...

a Profumo, eh ?