A Quieter Night for Northern Italy

Thirty further tremors in the North last night were all below 3 on the Richter.  Tremors were felt throughout the Veneto but no obvious damage was reported - just a good shake to Palladio's villas: Vicenza is another World Heritage Site.

What this shock has taught is that all of Italy is an earthquake zone.  Of course this was recognized at a technical level - always has been - but implementing measures and requirements flowing from this has been uneven.  The collapse of the industrial sites, where much is of this century's construction, is the object of the magistrates' enquiries.  It shouldn't have happened and it seems that the anti-seismic regulations themselves, to which many of the fallen buildings conformed, were inadequate.  Most of the people who have been killed died in the factories.  (It is noteworthy that the factories were working three shifts, seven days a week, and many in the advanced manufacturing sectors; the factories around Mirandola supplied the biomedical needs of Italy's and a considerable proportion of  Europes's health services).

The plant of firms like Ferrari, Maserati, Lamborghini were undamaged although they did close partly because just in time supply was interrupted from smaller manufacturers and mostly to allow workers to support family and community in these days.  Some of the oldest buildings resisted.  The inadequacy of modern  minimum anti-earthquake standards must have some role in all this; the engineering standards of those that withstood the shocks must become the norm.

The civil response to the emergency has been impressive.  Water, gas, electricity, transport systems have been checked and kept running when there might reasonably have been an expectation that the Peninsula would be cut in two by all this.  The people who have lost their homes and even their entire villages and towns have been sheltered and fed in temporary conditions and are now being settled in more permanent housing from surrounding comunes.  Most importantly communities have been kept together.

 The emotional blow has been awful: people are, quite literally, spaesato,  disoriented, their paese both physical and cultural, gone.  The Church, which might have been expected to have much to offer in this, is notably absent.  It is the civil powers that have responded.  It may be that the Church's efforts are not being reported but that would be surprising; the Church, apart from remarks of almost formal regret from Pope Ratzinger , is silent. 

The response of the central government, banks and local financial institutions and foundations, and of the professionals - the doctors, surveyors, architects, engineers - has been generous and efficient.  Tax collection has been delayed, loans have been made available, mortgage payments lifted for a year... and the services of those best qualified to restore the built environment made freely available through their professional organisations (Florence and its region, for instance, has already sent dozens of professionals to help with assessing the damage and determining the remedies).

The Prime Minister has suspended the Growth and Stability Pact for local authorities in the North.  Leaving the factories in ruins, the towns and cities unsurveyed, the anti-seismic measures not raised to meet geophysical conditions would be economic barbarism. 

Here is a perfect example of the uses of deficit financing for investment.  Not windmills, not funding welfare benefits for voter clients, not deficit financing after decades of deficit financing wasted on political rather than economic ends.  (The difference between now and the depression of the 1930s is that then there wasn't the previous abuse of economic good sense and deficit financing wasn't applied quickly enough.  Now, in 2012, we  must recognise that deficit financing was used improperly for decades, culminating in folly of the New Labour years.)

Deficit financing for investment is a specialised economic tool not a generalised condition of economic life.  Mario Monti has correctly  instigated its use in investment oriented circumstances.  It still has no place in fuelling house price booms and buying votes.