Europe’s president Herman Van Rompuy swooped in to Rome to clinch the Putsch. "Italy needs reforms not elections," he said.
We are not that far from use of EU judicial coercion, and then EU police power, and ultimately EU "border troops" - for those old enough to remember Soviet methods of fraternal assistance.
Chancellor Angela Merkel tells us that peace in Europe can no longer be taken for granted, and she is right. Her own Gothic actions and her inflexible imposition of 1930s Gold Standard contraction and debt-deflation on Southern Europe is itself preparing the ground for Europe’s civil war (hopefully pacific), a rebellion by the South against the North.
Italy’s youth are turning. Watch the footage of students chanting "democracy" and brandishing their "95 Theses" of Wittenberg revolt as poet Van Rompuy tried to speak in Fiesole.
"No to Austerity," starts the Luther List: "Troika out of Greece", "IMF and ECB out of Italy, Ireland, and Portugal", it goes on.
"The EU has become ever less accountable to the people of Europe. The undemocratic structures have infiltrated the very structures of the Union," they said.
Behold "the EU’s furious reaction to the Greek government’s effort to seek popular consent over the financial stranglehold imposed on the country. No longer are expressions of popular consent simply ignored, it is now impermissible to consult citizens."
Let us agree that Greece’s Lucas Papademos and Italy’s Mario Monti are excellent men (Mr Monti has been picked for the task by President Giorgio Napolitano, himself a former Stalinist who later switched his loyalties to the sublime Project).
But the two good men also represent the EU enforcement machine. Papademos was ECB vice-president. Monti was an EU commissioner for ten years.
Professor Monti enjoys great goodwill in Rome but it is far from clear that he can put together a durable government able to implement Project demands.
Antonio di Pietro’s Party of Values has spurned a technocratic regime that lacks democratic legitimacy, saying Italy is "under EU tutelage". La Lega Nord’s Umberto Bossi has denounced the stitch-up.
"The game is getting dangerous," said Il Sole. Some suspect that the Berlusconi camp would not do too badly in snap elections, if allowed, campaigning against the "hated euro and EU bosses". Is that why Brussels is now so afraid of Italy’s voters?
If Mr Monti relies on the Left, how can he comply with EU orders to break the power of the trade unions and impose "Anglo-Saxon" wage-bargaining? A large bloc in parliament will die in a ditch to defend Article 18 of the labour code.
Labour minister Maurizio Sacconi warned last week that careless handling of this issue threatens to unleash another round of terrorism in Italy. It is only nine years since Marco Biagi was assassinated by the Red Brigades for threatening the sacred cows of the Sindicati.
No doubt Italy needs a blast of Thatcherism. The country has fallen down the World Bank rankings in ease of doing business from 74 (2009), to 76 (2010), to 80 (2011).
Its average economic growth rate has been 0.6pc over the last decade. Productivity and per capita income have declined, and this before the demographic crunch hits with a vengeance.
The old age dependency ratio will reach 59pc by mid-century, compared to 56pc for Germany, 45pc for France, and 38pc for the UK, according to Commission data).
But those of us who wrote years ago that Italy’s sclerosis and inflation proclivities were going to cause a train-wreck within the rigours of EMU were told by Europe’s authorities to curb our insolence.
In 2009 the European Commission praised Italy’s "spectacular job creation" and its "greater resilience to external shocks". In 2008 in said Italy was making "good progress" on the Lisbon reform agenda. In 2007 it said Italy’s debt sustainability risk was "broadly in line" with France and Germany.
Italy’s four sets of pension reforms were held out as a shinging example. Finance minister Giulio Tremonti was feted in Brussels, lauded for his iron discipline and primary budget surplus.
And now these same EU bodies tell us that Italy’s failure to grasp the nettle of reform and tackle its debts is so egregious that Europe must step in to overthrow an elected government.
Let us end this EU lie - propagated by Berlin’s uber-bully Wolfgang Schauble - that Italy is suddenly guilty of economic crimes and debt debauchery.
What has changed is the industrial recession in Italy that began over the late summer and the likelihood of full-blown depression next year.
As you can see from this chart below, all three monetary aggregates in Italy have been collapsing for months, a lead indicator of Hell to come.
The ECB could have prevented this monetary implosion in Italy. Instead it tightened further, without a squeak of protest from the governor of the Banca d‘Italia, then Mario Draghi.
Europe’s own policies of synchronized fiscal and monetary contraction are surely to blame for this sudden lurch downwards in Italy’s prospects.
We all agree that Italy’s economic model is unfit for the 21st Century, but it was also unfit for EMU. The Schumpeterian shock was needed before Italy locked its self into the D-Mark forever.
It is too late now for Italy to claw back 40pc in lost labour competitiveness against Germany within the constraints of monetary union. Any attempt to do so by grinding debt deflation will prove self-defeating for a country with a public debt stock of 120pc of GDP.
Such a policy - already tested to destruction in Greece - will itself cause Italy’s debt dynamics to spiral out of control.
There is no possible way at this late stage to reconcile Italy’s needs for massive devaluation with Germany’s hard-money doctrines. One or the other must give.
No comments:
Post a Comment