Yet again, we have a financial crisis in Europe. After the bailouts in Greece and Portugal we are told that Italy, once described as “too big to fail”, is once again on the verge of bankruptcy and the rest of the EU will be forced to ride in to rescue it,
Apparently the financial press has it in for the Italians. We have been seeing similar prophecies of pending doom since 2016. The argument being that Italy is being slowly destroyed by the Euro, as its essential lack of competitiveness cannot be offset by manipulation of the lire, as previously. There is now a revival of talk about inventing a parallel currency to keep the country afloat, even though this idea has been dismissed by the European Commission
Yet that same financial press seems less able, or at least less willing, to explain the positive indicators of the Italian economy: falls in bankruptcies, seemingly low inflation, a widening trade surplus and the best unemployment figures for five years
So maybe it isn’t all doom and gloom after all: the national airline Alitalia may be going bankrupt, but plenty of big carriers want to buy it, which they wouldn’t if it had no commercial potential within Italy.
So what is going on here? Time and again economies have fallen and then risen again. We have also been told again and again that the Eurozone will be toppled by one country, and that the Euro will destroy newly entering countries, even as far back as Spain’s entry in 1986. But if you mention the name “Italy” everyone automatically assumes the worst, whilst at the same time enjoying their Italian wine, driving their Italian cars, eating their Italian food washing their clothes in Italian made washing machines.
Is there some inherent trait in the Italians which makes them financially incompetent, in stark contrast to their forebears in decadent and sleazy Ancient Rome? It is not so much a moral issue but apparently one which we can beg the question as if there is something structurally weak in the Eurozone which affects Italy alone?
This latest “financial crisis which could destroy Europe” is just like the others: a political stunt designed to protect vested interests which no one would actually vote for if they raised their ugly heads. Italy’s many migrants aren’t going to go back to their home countries fleeing the crisis, and the Eurozone won’t be affected.
The only loser if Italy survives is the US – and that is why its mainstream media friends are once again quite happy to bring down a whole country, if need be, to protect the myth of intrinsic American superiority, i.e., American exceptionalism.
As anyone taking a course in Economics 101 knows, financial markets and consumer spending are driven by confidence. That confidence usually varies depending on which political party is in power. Some parties are regarded as fiscally competent by definition, others not, and this is the prism through which their deeds are judged, regardless of what they actually do.
In the UK the Conservatives are considered financially competent and Labour more interested in spending money than managing it. Under Labour’s Tony Blair the UK experienced a boom in trade, confidence and reputation, being dubbed “Cool Britannia”. This contributed largely to the public finding his Labour Party totally different from previous incarnations of it: you can’t be Labour and also financially competent, it doesn’t make sense to the voters.
When the global financial crisis occurred during the same period of government the public felt that Labour was reverting to type, and couldn’t be trusted to resolve it. Support swung back to the Conservatives, simply because they still had the better long-term reputation as financial managers. The succeeding Conservative-led governments have only kept the UK in business by borrowing more than all previous Labour governments put together, but still they enjoy greater public confidence than Labour because they are supposed to be better at managing finance
In Italy the same pattern applies. Silvio Berlusconi’s centre-right Forza Italia is considered better at finance than the centre-left Olive Tree. When Berlusconi proposed the parallel currency idea it was regarded as a sensible move, a finance manager’s way of approaching a problem, whereas if the Olive Tree had done it it would have been a confession of failure by a bunch of financial incompetents who had mucked the country up again.
But Italy now has a new player: the Five Star Movement, the populist party begun by a comedian, as a joke, which has nevertheless struck a chord with the Italian public. In a country weary of corruption scandals, and low level corruption such as dodgy procurement which is so commonplace it is no longer a scandal, Five Star simply says what every Italian knows. What began as satire is too serious to treat as a joke, and those who say it have more public credibility than anyone in the murky world of conventional politics.
Every European country has a recently-formed populist movement such as Five Star. The differences between them are what define a country’s health. Emanuel Macron’s En Marche is centrist, meaning France is a comparatively wealthy and secure country. Hungary’s Jobbik is extreme, in that case on the right, meaning the country has serious economic and identity issues, as the re-election of Viktor Orban and his desire to create an “illiberal state” also testify.
Five Star is different: it is simply human. It doesn’t need a position, it just tells people what they already know. It can’t be neatly categorised into anything other than anti-political, and this makes it a greater threat than the reviled Austrian Freedom Party, or even Erdogan or the Russians, could ever be.
The most likely outcome of the present government negotiations in Italy is a coalition between Five Star and the League, an older movement which sought to replace politics with regional chauvinism which need not be justified. If this works, it would make politicians redundant, and with them their kickbacks. A great many people all over Europe have a great deal to lose from a genuinely popular populist movement running a major country successfully, so it can’t be allowed to happen.
Both Five Star and the League are Eurosceptic, but know they can’t walk away from the Euro without causing domestic problems greater than those the UK, rapidly returning to its 1970’s “Sick Man of Europe” status, is currently experiencing. Their seemingly radical policies, such as universal income, have already been trialled in other countries without fanfare. So they are not proposing anything which isn’t regarded as fiscally sound elsewhere, when real politicians try it
But the politicians of any country can only justify their existence by saying that they are the experts, they know best, and they are more capable than outsiders of handling public affairs – and particularly finances. So Italy has to be going bankrupt because the politicians won’t be running it much longer. It is that simple – but it is not only Europe’s failing politicians who have an interest in seeing genuine democracy fail.
Those predicting the bankruptcy of Italy have one thing in common. The various journals and their owners have extensive business interests in the US. In theory they are in favour of unfettered capitalism. But in practice it has to be capitalism on their own terms, which are not very pretty for those on the receiving end.
The US has traditionally been in favour of the EU because it increases US dominance. Integrating Europe’s economies after World War Two did indeed make war between the member states impossible. But it also meant that they shared in a common debt to their paymaster.
Some members of the new EEC had been on the winning side, some not. Some had to pay reparations; some gave out rebuilding and reconstruction loans. But both winners and losers needed US financial support to get going again, and many had taken out US loans to fight the war to begin with. Integrating European economies made all the EEC countries ultimately indebted to the US rather than each other, and consequently no European state could gain enough dominance over the rest that it could eventually challenge the US in the international arena.
At the time, European states had very little choice. The UK wasn’t part of the European project because it was declining anyway, and had the problems of post-empire syndrome on the horizon. It was encouraged to continue relying on its special relationship with the US because both parties saw it got more out of that than being a small part of a more dependent alliance, which had no idea how the grand project would actually develop.
Given the histories of its members, no one thought a “European union” would actually work. But by buying each member off with a different unfair advantage, it did. Italy got away with its internal corruption because EU competition rules were ignored, France continued its inefficient farming because the EU both complained and encouraged it and Luxembourg got institutions and diplomatic and civil service trade. Everyone had a nose in the trough, and wanted to keep it there, so they forgot their differences and prospered enough to become genuinely liberal states, unafraid of embracing others on equal and mutually agreed terms.
The EU not only reduced the US debt to very manageable proportions, it overtook the US as a trading bloc. It started making its own rules on things like food safety and workers’ rights, without consulting the US. The US saw the previous relationship being reversed. That would mean people wouldn’t automatically think the US was the best country on earth, with the best values and best methods. As we have seen, the US can’t survive without thinking it is all these things.
It wasn’t the European financial markets which starting causing problems for EU countries, but those run by the US, under US regulations. George Soros made billions betting against the pound, and now funds a wide range of very dubious “aid projects” which seek to introduce American systems and methods to countries which don’t have them.
When countries need bailouts they have IMF rules imposed on them, which have never yet produced the promised returns in any “beneficiary” country but keep on being wheeled out against all fiscal logic
The differences between the European and American approaches to economics lie in the human dimension. The EU doesn’t take economic measures which do not protect the rights of workers, and thinks state aid is sometimes justified. The US takes a moral stance against such views, the situation which once allegedly led President George W. Bush to exclaim in exasperation to a British colleague that “the French have no word for entrepreneur.” Even those that were in doubt as to his stupidity were now convinced.
It is beating the same drum now with the US determined to make out that taking care of people doesn’t work. Europe is so much of a threat to it that EU states have to mess up, or be congenitally inclined to mess up, the further they get from US-thinking.
Existing fears and assumptions are exploited for that purpose because the workings of economics give the US space and time to do this. Then the US alternative is imposed upon those countries to prevent them finding answers to the problems the US itself also suffers from, and largely created in any given case.
If Italy had the same old corrupt politicians in charge we would not be hearing about its comparative weaknesses threatening the Eurozone and being about to destroy Europe. But the same newspapers which puffed Brexit to further US ambitions and make the UK dependent on it won’t let Italy be run by people who have a genuine connection with their voters, and thus provide an even greater threat to the assumptions lying behind the global order.
Italy will always be Italy. A Five Star-League coalition will be different, but not too different. There are too many people with too much to lose to let it do as the public demand, and eventually the public will want the security of thinking all their politicians are still crooks, whatever their stripe.
This “crisis” demonstrates what the election of Trump did: that the US is increasingly unwilling to take risks. The global leader is so scared of itself that it is demonising everyone else, from immigrants to Pakistanis to Italians, to make it appear better in its own eyes as well as the world’s.
Once the US offered a home to everyone, and a chance to help them build a brighter future for the whole world. Now it pounces on everyone with sniffer dogs, like an airport security post erected 100 miles from the nearest airport because somebody might think of building one there one day.
This “crisis” has nothing to do with Italy and everything to do with the US. The EU makes the US justify itself, and it can’t do that except with soundbites. There are undeniable advantages to the American system of government and American values. But the US doesn’t remember what they are, which is why it has ignored them itself for so long and does its best to prevent others having them. It is increasingly being caught out as the world comes to understand this.
Rome is the Eternal City, not Washington D.C. If the US tries to bring down Italy through newspaper headlines and financial aggression it might just find that it becomes what Afghanistan was for the Soviet Empire, and as in that case it will only have itself to blame.
by Seth Ferris