Friday, 7 June 2013

Berlusconi All Mouth and No Trousers

"We face  a straight choice: either the economic motor is decisively activated within the Eurozone, including  expansionary policies in the financial sector,  abandoning the paralysing emphasis on public debt or  the strategic foundations of European solidarity, from banking union to  all the rest, shrink and ultimately vanish, ending in the collapse of the current set-up."* 

Sounds like such clear-minded common sense, doesn't it?  Berlusca does it again, cutting through to the heart of Italy's difficulties and expressing so succinctly what we all feel.
C'mon Germany!

But what is involved?

First of all, Silvio ignores all the things that can be done by Italy within the current set-up.

 - pay off state debt to enterprises (the EU has given permission for a bit of an overspend for this).
 - end Italian intervention in foreign wars
 - stop the purchase of the F35s
 - a modest wealth tax based on all wealth-forms, not on housing regardless of actual market values and  outstanding mortgages
 - ensure the Church pays taxes like everybody else
 - auction tv frequencies properly.
 - end all state political funding - parties, newspapers, other media, internet.

Say 70 to 100 billion euros.  As long as the state put that into the hands of enterprises that should do a great deal of good.  Not to Silvio though so he proposes none of the above.  He has suggested:

 - cut taxes  on hiring workers
  - cut VAT, cut income tax
but without proposals on how, other than "abandoning the paralysing emphasis on public debt" - perhaps if we don't look all those trillions won't frighten anyone anymore.

What could, indeed must,  be read into his remarks (if they are to be taken with the seriousness the media are reporting them as 'plain speaking') is:

 - monetary expansion - after all, in 2011 he thought Italy could just print its own Euros.   That's what led to his defenestration by Napolitano (88) and substitution with Monti.

 - lower  the interest rate - even to a negative interest rate.

 - buy government debt (they'd have to change the law brought in to control inflation but who needs law when Italy has Napolitano (88).

 - reschedule debt  and reduce debt interest.

-  nationalize under-capitalised banks

- re-organise learning and research

 - migration controls  (filling only high and missing skills categories, though a nod to genuine asylum for political reasons might help those being rendered currently.)

- an industrial policy setting out criteria for enterprise support: ie exports, high value-added, environmentally sound initiatives (very important in Italy - no more steel works in the South, no more chemical plants in Venice etc.)

 - devalue 10-15% .  Well,  leaving the Euro will deal with that; the devaluation will be 20 -25%.

 - Concert the exit otherwise Italy will be victimised worse than  Greece and Spain and Portugal have been already and, as it's best to leave with friends, Cyprus and France had better come too.

Not unnaturally, after that lot,  a robust foreign  and defence policy (other than buying F35s) will be necessary.

- introduce national service and military training on the Swiss model.
- enlarge the Italian navy for a lot more welly in the Mediterranean.

Finally, institutional reforms applicable in our out of the Eurozone

 - Abolition of provincial levels of government.  All regions to become autonomous.  Parliament made up of a federal Senate and a  national lower house.  Constitutional reform on the lines of Germany except for a directly elected president but, as in Germany, whose powers are residual and ceremonial.

That'd do it, or a lot of it. But it isn't what he wants at all, never mind what Europe (and Napolitano (88) intends to have.

* "siamo di fronte a una alternativa secca: o si rimette in moto in forma decisamente espansiva il motore dell'economia, compreso quello finanziario legato alla moneta unica, uscendo dalla paralizzante enfatizzazione della crisi da debito pubblico, oppure le ragioni strategiche della solidarietà nella costruzione europea, dall'unione bancaria a tutto il resto, si esauriscono e si illanguidiscono fino alla rottura dell'equilibrio attuale".

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