Thursday, December 13, 2012

Italy and the fight against austerity economics in Europe

Like the Great Depression, the current one has brought some surprising developments in politics in Europe and the United States, hopefully none of which will turn out to have the sort of adverse military consequences that some of them in the Great Depression did.

The latest event to cause the eurozone house of cards constructed by German Chancellor Angela "Frau Fritz" Merkel was the announcement by crooked rightwing plutocrat Silvio Berlusconi that he wants to become Prime Minister of Italy again. He's ready to seize the opportunity offered by the damage being done to Italy by Frau Fritz' Heinrich Brüning economic menu,

Wolfgang Münchau explains in Willkommen zurück, Cavaliere! Spiegel Online 12.12.2012

Der Grund meiner Freude liegt darin, dass er im bevorstehenden Wahlkampf den hartnäckigen politischen Sparkonsens brechen wird. Durch seine Rückkehr in die Politik erleben wir jetzt zum ersten Mal, dass die Krisenpolitik zum Kernthema eines Wahlkampfs in einem großen Land wird. Das war bei den spanischen Wahlen 2011 nicht der Fall, auch nicht 2012 in Frankreich. Und Peer Steinbrück und Angela Merkel unterscheiden sich in ihrer Krisenpolitik eher durch rhetorische Nuancen.

[The basis of my happiness [at Berlusconi's attempted comeback] lies in the fact that in the forthcoming election campaign, the hard-necked political austerity consensus (Sparkonsens) will be broken. By his return to politics, we will now experience for the first time that the crisis policies will become the central theme of an electoral campaign in a large country. That was not the case by the Spanish election of 2011 and also not in 2012 in France.]
I would partially question his comparison to the French election. The Socialists' promises to push back on Frau Fritz' austerity madness and to force a renegotiaton of her fiscal suicide pact were prominent themes in that campaign and certainly were part of the program on which now-President François Hollande only to betray his voters and immediately embrace both. Not unlike what President Obama's is current doing with his trial balloon proposal for a major cut in Medicare benefits.

A chance for the Italian Social Democrats to exploit the situation and regain the political initiative for stimulus and a sensible solution to the euro problems, you say? Yes, that would make lots of sense. Except that, according to Münchau's account, social democratic leader Pier Luigi Bersani, whose party leads the polls and good pull well over 30% in the next election, pretty much aspires to be an Italian Heinrich Brüning: "Bersani verspricht noch mehr Härte, noch mehr Sparen, nur etwas gerechter." ("Bersani promises even more [fiscal] toughness, even more cuts, only somewhat more just ones.") Again, not unlike President Obama's sad and endlessly repeated call for our present-day American robber barons to just pay "a little bit more" in taxes.

Awesome. Like President Obama in the US, Europe's social democrats now aspire to become the largest conservative parties! It's not working very well so far, and it's likely to wind up with their losing their relevance and their ability to become ruling parties at all. Their current leaders may be well compensated for getting them to that point. But their base constituencies are being very poorly served by this process.

Italy actually has two official social democratic parties, i.e, members of the Socialist International: Italian Socialist Party (PSI) Democrats of the Left (DS).



David Dayen explains in Berlusconi's Return Roils Italian Markets FDL News 12/10/2012 - his coverage of the euro crisis is also something I'll miss when David stops blogging at FDL News on the Mayan-calandar-not-really-the-end-of-the-world date of December 21 - that the austerity policies and the bullying by Germany that essentially forced Berlusconi out of government to be replaced as Prime Minister by a non-elected "technocrat" are issues that have to be taken into account, apart from Berlusconi's more unpleasant characteristics:

I hardly hold any brief for Berlusconi, a corrupt tyrant who has been bilking the Italian public for well over a decade now. Alexander Stille’s book The Sack of Rome details this expertly. However, the fact that he was basically overturned by international bureaucrats in favor of an unelected member of their posse should not be lost here. Especially because that unelected bureaucrat, Mario Monti, did not really do that great a job if you look at key indicators ...

While Monti – with a giant assist from Mario Draghi’s backstop at the ECB – did stabilize borrowing costs for a time, the economy suffered with the austerity measures, growth went negative and unemployment rose. This is not the pedigree of a saviour of Italy. And it risks a return to power for Berlusconi, who has a long list of indignities forced on the Italian people by the last government to call on. He can merely say that Italians deserve a voice in their nation’s future rather than a set of policies imposed from the outside.

Monti wasn’t able to deliver on growth because his prescriptions inhibited growth. His obsessions with “reform,” aligned with the European leadership, ended up sinking Italy deeper into recession and depression, without building a coalition of support. And so the slightest shift can and will cause chaos, as we’re seeing today.

And incidentally, Italy is the third-largest economy in the Eurozone. If it wobbles, so do the other member states, as we’re seeing today.
William Black has an interesting piece skewering the New York Times for their reporting on two contrasting political figures, one who conforms to the Washington Consensus (Italy's Mario Monti) and another who isn't completely sold on the neoliberal gospel (Ecaudor's Rafael Correa), Why Is the Failed Monti a 'Technocrat' and the Successful Correa a 'Left-Leaning Economist'? Huffington Post 12/09/2012

Here is a Spanish-languagen video of Rafael Correa discussing, among other things, the European crisis, El presidente de Ecuador en Buenos Aires: La crisis europea según Correa 12/08/2012:



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