Posts Tagged ‘Italian politics’

The dog has it

February 25, 2013

As polls closed in Disneyland today, it looked like the big winner was Goofy. And why not? Given the choice between Mickey Mouse, Mini Mouse and Donald Duck, I might well have voted for Goofy myself.

The result puts Disneyland right back at the centre of global entertainment. All that stuff about a post-global crisis return to normality was so much hot air. It is time to tune in for the next episode of the Disney story — the biggest, most unbelievable, most enduring cartoon of them all.

Ital election goofy

Ital election grillo red beret

Ital election Grillo votes buffon

That is sooo not all folks!

See where Goofy’s votes came from:

This graphic from Corriere della Sera is useful. It shows the fall in the popular vote for, in turn, Berlusconi’s mob, Berlusconi’s pro-fascist Northern League allies, Bersani’s mob, and the rump of the Christian Democrats (UDC).  All the ‘traditional’ parties haemorrhaged votes. In terms of what people who turned away from the traditional parties did, around half of Beppe Grillo’s vote came from the centre left Democratic Party. To me, that says Bersani has to go. But of course he won’t go, because Italian politicians of the left don’t understand principle any more than ones from the right.

Elections in Disneyland

February 18, 2013

Only a week now and the kids are asking: ‘Who’s gonna win, daddy?’ How do I know, when the people running are larger than life itself.


Mickey Mouse. The original cartoon character. He’ll make you laugh. He’ll make you cry. And if you are under 20, he may well offer you cash for a quick one. Mickey has posted a late surge in the polls as many Italians conclude that no one will ever be funnier.

Ital election Mickey face

Ital election berlusconi face



















Mini Mouse. Billed as a new kind of mouse, Mini turned out to be much like Mickey — all talk, talk, talk — but not nearly as funny. Mini speaks English, but who cares except the foreigners who pay Disneyland’s bills? May have to move to Brussels.

Ital election mini

Ital election monti



















Goofy. Definitely funny. Appears daily in the piazza encouraging citizens to shout ‘Fuck Off’ at no one in particular. Indubitably a new kind of political animal. However a lack of facial grooming and tendency to piss on public monuments leaves the average Italian concerned he undermines the national image for form over substance in all things.

Ital election goofy

Ital election grillo red beret
















Donald Duck. What’s the problem with Disneyland? If only everyone listened to Donald, Disneyland would run fine. Donald is a well-meaning, somewhat gruff old time favourite, yet somehow never quite as funny as Mickey.

Ital election donald duck

Ital election bersani


















Projected outcome: Coalition of family favourites. Loads of laughs for everyone except Italians.

Ital election that's all folks

The cavalry mounts up

September 6, 2012



It isn’t yet Custer’s last stand, for Euroland is the longest Hollywood movie ever made. But Flexible Mario’s press conference today gave us the predictable shape of the final showdown.

Mario’s ECB holds in one hand the promise of unlimited sovereign bond purchases of up to three years maturity (this may include buying long bonds with less than three years to expiry, his language was unclear on the detail). The seniority of the ECB claim on the bonds will be no greater than that of private investors. In the other hand, Mario holds the great northern European stick of what he repeatedly called ‘strict and effective conditionality’. Indeed Mario promised a stick more flesh-splitting still, holding out the prospect of not only EFSF-ESM supervision, but also IMF involvement as well.

As a former Italian bureaucrat who was closely involved in his country’s successful efforts to avoid structural reforms in the 90s and 00s, Mario knows better than most that you need to point the gun directly at the heads of club-Med types such as himself.


If conditionality is agreed, and sov’ bond buying in the primary market goes ahead, it will be known as OMT. We must be careful not to confuse this with OMD. OMT means Outright Monetary Transactions. OMD was the 1980s’ band Orchestral Manoeuvres in the Dark. Clearly, the two things are unrelated.

Mr Market, meanwhile, is very happy. He continues to believe that Flexible Mario’s pronouncements mean that Frau Merkel will pick up the tab for Club Med Europe. But it is not so. All that Flexible Mario has done is to prepare the stage on which politicians will play, a point which he repeatedly stressed.

Finally, the other salient point today: Mario claimed there was zero discussion in the ECB council of the possibility of NOT sterilising some of the bond purchases, if they happen. In other words, quantitative easing is not yet under discussion.

Comic interlude of the day:

Some genius from Fox News asked Mario how dangerous it is that the ECB already has bonds to the value of 33% of Euro-area GDP on its balance sheet. The ECB balance sheet actually contains bonds to the value of about 3% of Euro-area GDP. Yo, Murdoch…

Graphic of the day

This BIS graphic shows how French banks, which had the biggest exposure to the mess to begin with, have also been slower than their German counterparts to unwind their exposure to ‘peripheral’ Europe. Put another way, when you are very deep in ‘le poo poo’, it is that much harder to climb out.


Forgot to mention:

Since the cavalry are mounting up, I should repeat my little ditty of December 2011

IMF, IMF, riding as to war

We all hope you will not be…

As clueless as before

Oh! [repeat indefinitely until IMF arrives]

What is it with the FT and Italians?

The FT’s love affair with Monti spilleth over (sub needed) even unto Draghi… I can only assume it is because the badly-dressed FT journalists suffer well-cut suit envy.

What price incompetence?

February 17, 2012

We now know. US$4m is to be paid for Amanda Knox’s story of torture at the hands of Italy’s ‘professional’ classes. It is a lot of money. But then the publishers have calculated that the appetite for a tale of medieval habits sustained in a modern society is considerable. I reckon they will get their money back. Italy is something truly special.


Here is Douglas Preston, who already wrote a book about Giuliano Mignini.

What’s the Greek, Portuguese, and Italian for ‘escrow’?

February 6, 2012

Naughty children shall not have their pocket money. So says every right thinking parent, and so says Frau Merkel about the insufferable Greek ruling class. Even if Greece does get its new bail-out, it won’t see the money. Instead, funds are to be held in an escrow account and released to little Johnny as and when he applies himself to various jobs in hand.

I really can’t say I disagree. Brave Dave Cameron has been urging Merkel and Sarko to ‘just bloody well hand over the dosh’, but since it’s not his money and he doesn’t even participate in Europe, he and the Fat Controller would say that.

Escrow, I think, will be a model arrangement for forthcoming bail-outs for Portugal and Italy. Europe has been round the block with Italy already in the 90s over Euro accession and not a thing got done in terms of structural reform. Frau Merkel is leading Europe. In another 20 years people will look back and realise how important this was. (And what a dreary footnote the Brits were.)

Meanwhile, Reuters seems to have arrived at my view of the Monti government’s efforts so far, posted a couple of weeks ago here.

This is the FT on escrow (sub needed).

Super Mario?

January 22, 2012

The FT seems to have fallen in love with Mario Monti since being granted an exclusive interview with him last week. The paper’s correspondents have both hailed a package of Monti reform measures, and asserted that Monti is making Italy’s path diverge from that of Greece.

This is premature. Much of the FT coverage has highlighted moves to end legislated rents enjoyed by groups like lawyers, notaries, geometras, and pharmacists. In reality, the biggest of these rents have been abolished already, while long-run economic weakness has forced professionals to give up many of their remaining minimum charges. Notaries could be squeezed further, but their last really juicy rent — the requirement to use a notary every time you buy or sell a car –went years ago. Lawyers and geometras were long since forced by the weight of their numbers and the weakness of the economy to either dispense with official fee schedules altogether or to operate at the bottom end of them. There is such a ridiculous number of lawyers, accountants and geometras in Italy that they have to bid each other down. The nominal level of professional fees in Italy is not the real problem.

What has destroyed the Italian economy is transaction costs — the nominal fee plus the time-and-aggravation cost of getting anything done. The Euro7,000 charge for our leaking roof case would have been unreasonable but for the fact the case took seven years for the magistrate NOT to reach a decision. Italy requires systemic change to create institutions that allow the economy to be more efficient.

The biggest necessary change is a functioning legal system. Monti has offered nothing on this front, save plans for a special business court to try to encourage foreign direct investment. This is a remarkably third-worldy as a policy proposal. It is reminiscent of when a country like China sets up a ‘one-stop’ investment office for multinational companies or agrees to abide by international arbitration decisions in business cases. That kind of thing works for emerging economies if they have high growth rates, which are what attract investors. Italy has no growth. If any investors are to become active in the Italian market, foreign or domestic, they require a legal system that works. Mario should get on and propose one.

The wrong menu

December 5, 2011

With the publication of Monti’s ‘nation saving’ budget in Italy (here in Italian) and news that Frau Merkel and Sarko have agreed a ‘fiscal compact’ to save the Euro we can see the shape of a week that may postpone Italy’s exit from the Euro but which will surely make it yet more likely in the long run.

First, Monti’s budget looks like a classic Italian serving of pointless, bureaucratic complexity. There’s another expensive-to-collect tax on yachts, and one one private aircraft, which will doubtless raise a net of about 8 euros. There is the return of property tax on first homes, but at a pretty low level and with various possible exemptions. Note that there is no attempt at simplification of different house-related taxes by, say, merging the new levy with the tax on rubbish disposal (known by the acronym TARSU), and sacking half the people who collect these taxes. Monti, may be a technocrat in theory, but this looks like the standard, tried-and-failed fare of the left-of-centre parties. On that note, the Welfare Minister cried while announcing pension cuts (perhaps troubled by the enormity of her own salary).

Why not do tax like Italy does its food? Simple, digestible and to the point. And then apply the tax. You never get to leave a restaurant without paying.

Meanwhile Frau Merkel and Sarko are coming up with a scheme to sanction countries like Italy that don’t stick to budget targets. This plays to German political opinion, but completely misses the point.

It treats Italy as a debt problem. But it isn’t. Italy is a growth problem that can only be resolved with legal system, bureaucratic and labour market reforms that make growth possible. Italy needs to be made to work institutionally.

All this Merkel-Sarko deal is likely to do is to keep the fiscal squeeze on Italy and provide a temporary respite for the Euro. But if Italy cannot grow it will never be able to pay its debts, even at 5% interest.

What we are likely to get this week will be the worst possible outcome. There won’t be pressure for pro-growth reforms from Merkel. And Mario’s budget performance suggests he can’t produce institutional change either.

The Italian economy will just shrink away faster than cuts can be made and taxes levied.


The FT (sub needed) on Merkel and Sarko’s agreement.

Improbable ideas

December 1, 2011

Martin Feldstein pens a curious opinion piece (FT sub needed) arguing that Italy is perfectly capable of saving itself from a Euro exit. Did anybody ever suggest otherwise? Italy is capable of anything. The problem is that the country’s political and professional classes are incapable of putting national interest before their own.

Is there a mechanism to make the professional class behave? My thought is that rather than some counter-productive tax raid on bank accounts (as is often suggested in Italy), what would be much more effective would be a mandatory conversion of a share of bank deposits over a certain minimum into government bonds yielding 5 percent interest. No one would have their savings confiscated — indeed they would get more interest than in the bank. Such a move would have the effect of forcing the Italian elite to take responsibility for debt and therefore for economic reforms that would lead to growth.

The cash raised could be used to pay down a chunk of debt, thereby reducing interest demanded on the rest. But the real objective would be to get Italians focused on reform.

It is often pointed out that Italy’s private wealth is three to four times its public debt. The real issue is getting people to take responsibility.

The problem? Can you imagine Monti calling the MPs into a closed-door meeting of parliament and demanding they vote to support such a move? They’d all be trying to make mobile phone calls to their bankers ordering TTs to Switzerland.

The fork in the road

November 17, 2011

It isn’t easy to see amid all the goings on, but there is a fork in the economic road. A third week of improving jobless claims in the US signals the very slow recovery of the world’s biggest economy. Meanwhile the spreading of the stress in European debt markets signals that the worst in that region is yet to come.

The world is suffering two different macro crises. A private debt disaster hit countries running the Anglo-Saxon model. As Hyman Minsky would have expected, the US is beginning to escape from this because its government carried sufficiently low debt that it could step in and bail the problem out with monstrous sums of public money. The US is also assisted by having a diversified economy that contains the planet’s best manufacturing firms in addition to its biggest banks (something not considered in Minsky’s ‘financial instability hypothesis’, but then he never claimed it was a complete theory). The UK, and Ireland, and Spain, are more one-dimensional and hence more stuffed. As this article makes clear in Britain’s case.

The second macro crisis is the public debt one of the Eurozone. Here the state cannot step in because its debts are the problem. Instead the state has to negotiate its way out. Which involves politics. Which is why the problem is more intractable than the private debt disaster where the solution is automatic (deleveraging, falling asset prices, misery for anyone who failed to ‘play the market’).

The major ‘negotiation’ of the public debt crisis in Europe is Italy’s, which is now in its ‘Chin Up, Let’s All Stand Together Phase’, under Mr Monti. The press today is being terribly positive. But I cannot see where a good outcome could come from. Italians are all in favour of Mr Monti because he has not yet set out clear policies. Once he does, the political parties will attack him, and allege that dark, conspiratorial forces are behind him. Without a clear roster of policies that have to be approved by a referendum, there is no practicable way forward. And no party is urging a referendum because it would involve making policy choices clear. The parties were not even willing to offer up ministers for the government. The preference is to let the ‘technocrat’ dig his own grave.


The gentle breeze of British hypocrisy

November 12, 2011

The Economist has published its sixth, and presumably final, cover story on Silvio Berlusconi. The headline – ‘That’s all folks’ – is supposed to evoke the cartoon quality of his premiership. But coupled with a backdrop of Sil set in a painting of end-of-Empire Roman lassitude, it is too busy. Far more visually effective was the June 2011 cover with a simple photo of Sil and the line ‘The man who screwed an entire country’.

I haven’t been the biggest fan of The Economist’s coverage of Italy because it has focused so overwhelmingly on Sil — rather than on a the malaise of an entire professional class which he symbolises. What sets Italy apart is that, relative to its level of economic development, it has the most backward, self-serving professional class and professional institutions of any state in the world. This includes, but is far from limited to, its political and legal and fiscal institutions.

There is also a very English undercurrent of hypocrisy in the manner in which the British elite discusses the Italian crisis with a told-you-so attitude. The Economist is particularly guilty of this, putting the boot in to the German response to the crisis on a weekly basis.

What is forgotten is how the Germans are left to do the political heavy lifting in Europe almost single-handedly. They have a French ‘assistant’, but he is barely worthy of the name.

If Britain had joined the Euro, things would have been different. There would be two big political grown-ups in the Euro-zone instead of one, and that would have made the job of dealing with Italy so much easier.

You cannot argue with Britain’s decision to stay out of the Euro from a selfish, pragmatic perspective, but anyone who supported that decision should limit themselves when yelling from the sidelines about what to do now. How would you like to be Merkel, put in a team with Sarko, and expected to sort out Greece and Italy?

If Britons are honest, they must concede that post-war Germany has done the bulk of the work in creating a stable, prosperous and progressive Europe while the British — famed as people of action — stood around bitching. And when Britain realised it desperately needed to be inside the Common Market in the early 1970s, it needed German support — against French opposition — to get in.

Germany, not Britain, is the moral leader of Europe in the past half century.

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