lunedì 10 ottobre 2011

Italy: Preparing a financial GOLPE


Preparing a financial coup

Italian Premier Silvio Berlusconi sees conspiracies everywhere. The communists - not the real ones as these are thin on the ground these days - can be found in parliament, in the international press and, above all, in the judiciary. The "red magistrates" are apparently hounding Berlusconi in court cases over corruption, tax fraud, abuse of power and paying for sex with a minor. This week he put his finger on a new, much more real conspiracy.
Rome has been under growing pressure for the size of Italy's public debt - more than €1.9 trillion (£1.6 trillion) or 120 per cent of gross domestic product, making it the second largest in the region after Greece - and the billionaire media magnate's inability to reassure international investors holding Italian treasury bonds that he can actually reduce it. Measures taken since the summer to shore up the country's finances have relied almost exclusively on spending cuts and taxes on the working and middle classes who keep Main Street in business. Growth, which could make a major contribution to cutting the debt, remains anaemic.
The thing about Italy, Europe's fourth largest economy, is that unlike Greece it is too big to fail. And that's really scaring other European governments and the institutions like the IMF, European Central Bank and European Commission that might be called upon to bail it out.
This week's downgrade over three levels to A2 from AA2 by credit agency Moody's - which warned that further downgrades of Italy were possible - and the rapidly unfolding meltdown of the global, but especially European, banking system is adding to investor worries.  Berlusconi, once highly favoured for keeping the left out of power and his promises of injecting dynamism in the Italian economy, is now considered very much part of Italy's international credibility problem. One leading Italian economist Tito Boeri has calculated that since this summer, his disastrous premiership has cost the country €20bn.
Berlusconi's former allies in the business world, from Confindustria  president Emma Marcegalia, to Fiat CEO Sergio Marchionne have deserted him. So too has conservative press - the bit that he doesn't already own.
"We are neither credible nor serious. Nobody invests in Italy anymore. And who lends to us wants usurious rates," said Ferruccio de Bortoli, editor of Corriere della Sera in a front page commentary of Wednesday.
But most seriously for Berlusconi is the collapsing support within his own political party, including his Finance Minister Giulio Tremonti, who suggested days ago that it was time for a new government. "The time has come for a handover," added Santo Versace, an MP who quit Berlusconi's People of Freedom Party last week.
A handover won't come through elections though, as these may result in Italians choosing to deal with their sovereign debt crisis in unpredictable ways, like conducting a debt audit to decide what part of the debt is legitimate, or to recover hundreds of billions of euros stolen every year from the Italian state by cracking down on corruption, organised crime, tax evasion, avoidance and other legal forms of financial treason.
Instead, just as in the 1990s when the Italian people were made to pay down debts they didn't create to prepare for entry into Europe's single currency, the plan is to put in place a technocratic government, possibly headed by former European Commissioner Mario Monti. To restore the nation's finances, Monti and other faceless technocrats could then implement more drastic welfare and public spending cuts. Along with structural reforms, these could include opening up new areas of public activity to profit and cuts to pensions and employment rights, ensuring that, as the unions have been saying, the same old people pay the bill.
These plans to curtail Italian sovereignty and democracy come after the European Central Bank (ECB) ordered the Italian government in August to implement "a comprehensive, far-reaching and credible reform strategy," a strategy that was spelled out in some detail by the Frankfurt-based central bank governor. The enforced measures were in return for the ECB purchasing Italian government bonds - debt.
Many Italian MPs - a high number of whom are former businessmen with continuing strong links to the international corporate world - will swing behind this technocratic administration, including the opposition centre-left "Democrats."
The plan, says Berlusconi in his usual conspiratorial tone, is a "financial coup."
And although I don't believe in conspiracies, or indeed much said by Italy's PM, he's absolutely right on this one.

Tom Gill writes for the Morning Star, where this article first appeared. The photo is by Roberto Gimmi. 

Nessun commento:

Posta un commento