mercoledì 12 dicembre 2012

Financial Times contro Monti

Mentre in Italia si continua a piangere la prematura dipartita del governo Monti, altrove le cose vanno diversamente. Vero, tutti o quasi i giornali internazionali hanno criticato il ritorno di Berlusconi. Ma alcuni hanno anche apertamente applaudito alla dimissioni di Monti, i cui risultati sono giudicati negativi (ed a ben ragione!). Dopo che nei giorni scorsi avevamo visto come anche nella comunità finanziaria non si apprezzassero i nostri 2 Mario, oggi proponiamo un articolo del Financial Times, a firma Wolfgang Muchau - tedesco ed esperto di Europa - che attacca apertamente Monti.
L'articolo si può anche trovare in italiano presso Keynesblog, dove si trova anche la traduzione di un recente post di Krugman contro Monti (ed anche un articolo del Telegraph)

Politics have burst the Monti bubble

Two things need fixing in Italy, both of which are beyond the scope of the technocrats
The announcement by Mario Monti that he intends to resign as Italy’s prime minister tells us two things: politics is intruding, and the crisis is getting worse again.
I have always respected Mr Monti as a European commissioner and a wise observer of European affairs, but I am more sceptical about his performance as Italy’s head of government. The sometimes uncritical adulation he enjoyed was based on the notion that you could solve Italy’s problems by putting politics aside, imposing a few reforms and a lot of austerity. The consensus in Italy was that only a technocratic government could deliver these policies.
The Monti magic seemed to work for a while – much longer than I had expected. The yields on Italian 10-year bonds dropped about 200 basis points during his term because investors, desperate for good news, wanted to believe the magic.
But Mr Monti’s year in office has been a bubble, which felt good for investors while it lasted but has deflated. And it will probably take Italians and foreign investors not all that long to realise little has really changed over the past year, except that the economy has fallen into a deep depression.
There are now two things that need fixing in Italy, both of which are intensely political and beyond the scope of technocrats.
The first is to reverse austerity immediately – essentially to undo Mr Monti’s work. The tax rises and spending cuts are having a counterproductive effect. By reducing both debt and growth, the debt-to-GDP ratio has increased in the short term and I doubt that it will fall by much in the long run. The deterioration in Italy’s debt sustainability will become much clearer next year, as we get more statistical evidence of the calamitous effect of austerity.
The effects are already being felt before the 2013 budget kicks in. The tax burden on Italian families almost doubled this month – a result of the introduction of a new property tax system – which has had the immediate effect of killing off the pre-Christmas retail business. Confcommercio, an association of service companies, estimates a consumption fall of 13 per cent.
The second priority is to stand up to Angela Merkel. This was something Mr Monti was unwilling – and incapable – of delivering. He tried a bit of grandstanding at the European summit in June, but he never managed to confront the German chancellor on the one issue that mattered: that without some form of debt mutualisation – a eurozone bond – it was hard to see that a country with a debt-to-GDP ratio of 130 per cent and virtually no growth could remain a member of the eurozone, and keep on rolling over its debts for ever. Only an elected leader is in a position to force a choice. A technocratic prime minister cannot be expected to produce a credible counter-threat if the answer is no.
I am often asked what Germany would do if confronted with the choice between a eurozone bond and an Italian departure. I believe that Berlin would blink first in such a stand-off. The reason Mr Monti was so popular in Germany is because his bubble and his austerity played into the chancellor’s hand of delaying hard decisions on debt resolution and institutional reform beyond next year’s German elections.
Is the required type of leader in sight? Pier Luigi Bersani, the recently elected leader of the Democratic party, is clearly not that man. He is part of the conservative wing of the centre-left that is supportive of Mr Monti’s austerity and less supportive on structural reforms – the worst combination.
Matteo Renzi, the young mayor of Florence who lost to Mr Bersani, would have been a more likely candidate to bring self-confidence back to Italian politics. But with the latter on top and his party firmly ahead in the polls, I expect the establishment will now try to fashion him as the next safe pair of hands, the man most likely to inflate some air back into the bubble.
Another possibility is a return of Mr Monti as a campaigning politician, and candidate for a centrist alliance.
What about Silvio Berlusconi, whose return to frontline politics is what triggered the impending departure of Mr Monti? He will not become prime minister. Italians have had enough of him, though he still enjoys some residual popularity among the right.
But as useless and comic as Mr Berlusconi may have been during his last term in office, his diagnosis of Italy’s problems since he left has been spot-on. Italy needs a new deal in the eurozone, he has said, adding that even a departure should not be treated as a taboo. And he has said repeatedly that austerity is not working. He should have said that when he was prime minister.
The outcome of the election is further complicated by the role of the anti-euro Five Star Movement led by comedian Beppe Grillo, which has maintained second place in the polls for some time.
The best outcome for Italy would be a political leader who forces the issue of Italy’s future with a clear-headed sense of what choice the eurozone and the country will need to make. Otherwise, Italy risks being pushed into a position like that of Greece, which pursued similar policies and has no choices left.


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Gli aggiornamenti delle rubriche di RI

The City of London
La UE fuori dalla realta': L'articolo di qualche giorno fa del commissario europeo Olli Rehn, responsabile per gli affari economici e monetari della UE, è un manifesto della stupidità dell'Unione. Non si possono davvero usare altre parole. Il commissario chiede di continuare con ancora maggiore austerity [continua la lettura]

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I 2 Mario hanno fallito

Proponiamo oggi un eccellente articolo di Christopher Mahoney su Project Syndicate. Mahoney è stato il vice Chairman di Moody's, dunque non proprio un uomo di sinistra e sicuramente, invece, uno molto ben informato su come funzionano i mercati finanziari.
La sua analisi è sferzante. Accusa entrambi i Mario di essere psicologicamente e politicamente subalterni ai paesi nord-Europei, facendo dunque di tutto per soddisfare le richieste di Berlino invece di preoccuparsi seriamente dei problemi dell'Italia (Monti) e dell'Europa tutta (Draghi). Altro che super Mario...

The Super Marios Have Failed

da Project Syndicate

The underlying pace of monetary expansion continues to be subdued...The December 2012 Eurosystem staff macroeconomic projections for the euro area foresee annual real GDP growth in a range between -0.6% and -0.4% for 2012, between -0.9% and 0.3% for 2013 and between 0.2% and 2.2% for 2014. Compared with the September 2012 ECB staff macroeconomic projections, the ranges for 2012 and 2013 have been revised downwards.”
--ECB president Mario Draghi, Dec. 6th, 2012

Here’s a brain teaser. Look at the two Marios, Monti and Draghi. No one would deny that they are exceptionally intelligent and perceptive people. Any country or central bank would be happy to have either of them at the helm. They are both Ivy League-trained economists (Monti at Yale, and Draghi at MIT). Either of them can think rings around most European or American politicians. I have had the occasion to meet them both a few times, and they are very impressive.
And yet, they are both pursuing policies that can only end in disaster, not only for Italy, but for Europe. I can’t believe that I could possibly know anything about economics or monetary policy that they do not; that is a truism: they know everything. So how do we explain the reckless and suicidal policies that they are pursuing today? I can offer a political explanation for their behavior and a psychological one, but neither are adequate. Politically, neither has sufficient authority to reject deflationism and to embrace reflation. Psychologically, Italian technocrats like the two Marios labor under the northern prejudice about the Latins, that they are lazy and hopelessly corrupt. It is understandable that these incorruptible technocrats would like to prove that the Latins are not constitutionally inferior to the Protestants and can live with a hard currency. Those are reasons but not very persuasive ones.
It is hard to believe that they are fully conscious of the fact that the policies they are pursuing are wrong and that they are both guilty of misfeasance and nonfeasance. Somehow they have convinced themselves that austerity, deflation and depression are, in the long run, good for Italy and for the eurozone. After all, every northern country has gone through austerity at least once since 1980 and they have all emerged stronger and more competitive. Why shouldn’t the south? I have to assume that their thought-process is that starvation is painful in the short-run but beneficial in the long run. If so, then one must ask: how large must the pile of contrary evidence grow before they can admit error, or have they gotten in too deep to ever admit error? I can understand that it is hard to call off a war just as you are starting to lose.
I can appreciate Monti’s logic: he wasn’t installed by Europe into the Italian premiership in order to hijack the ECB or to exit the eurozone. He was installed to act as Europe’s governor-general in order to ensure that Brussels’ orders are carried out to the letter, and that the corrupt politicians are unable to steal Europe’s money. Monti never had a chance to successfully revolt, although he tried (without success) at the June summit.
Now Monti wants to quit, and who can blame him? An honest professor in Italian politics is like Mother Teresa in Vegas. But I must say that one can only conclude that Monti has failed due to timidity or sheer exasperation.
Europe’s only hope is for the struggling countries to unite and to confront Germany, the Bundesbank and the ECB head-on. Monti, Hollande and Rajoy (and the others) simply must demand that (1) the ECB target growth and not depression, and (2) that the ECB buys the bonds of the peripherals without conditions or limits. If they don’t do that, then eurozone growth will remain negative, fiscal revenues will stagnate, deficits will grow, and credit spreads will start to back up. Just because the ECB’s bogus announcement of chimeric bond-buying has temporarily convinced the markets that all will be OK, it can’t last. Another market convulsion is just around the corner.
Which brings us to Monti and his “friend” Jens Weidmann of the Bundesbank. Monti, like all central bankers, has placed a very high premium on “institutional credibility” and consensus-building, and an apparently low premium on successful policies. Yes, the ECB has a single mandate (price stability) that it is fulfilling extremely well, as Draghi keeps emphasizing. But does the ECB really have a mandate to recreate the Great Depression, to bankrupt the peripheral countries and to destroy the eurozone? Was that the intention of the treaty that Italy, Spain, Portugal and Ireland signed?
I can only conclude that both men are brilliant but weak. Monti is afraid of Merkel and Draghi is afraid of Weidmann: “We can’t alienate the Germans, Finns and Dutch!” Why not? What have they done for the eurozone lately besides enforcing starvation?
It is astounding to me that a central bank of the importance of the ECB can casually forecast a shrinking GDP, as if it were an exogenous variable, like bad weather. The ECB advertises its failure by its own forecasts. Apparently Draghi and Weidman are satisfied with a prediction of a real recession and zero to negative nominal growth. If my numbers are correct, Italy’s GDP today is 27 billion euros smaller in nominal terms than it was in 2007, industrial production is down 20%, and youth unemployment now stands at 26%. This is taken to mean that the bank’s policies are “on track”. They must serve a lot of Kool-Aid at the ECB snack bar.

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