There were three trains at the Berlin station. The first, loaded with spoilers, left for the European Monetary Union (EMU); the second, loaded with the promises of the Recovery Fund, left for the European Union (EU); the third, with the Troika on board, is stopped on the dead track … More likely the French ECB arrives at its destination than the Mes …
The train of spoilers – The first train, that of the spoilers, a troop chosen by Karlsruhe, leverages the apparent indocility of the ECB to submit and continues tirelessly towards the final goal.
Meanwhile, the French ECB is sending out signals. On the one hand, continuous provocations towards the Bundesbank: the last Thursday, when the chief economist Philip Lane called the PSPP (subject of the German judgment) "open-ended" (in flagrant contradiction with the same sentence). On the other, signs of love for Italy: it does not seem to want to demand, in exchange for QE or PEPP, new Troika- style structural reforms… on the other hand, it would not make sense to kill Italian aggregate demand, more than what has been done so far, since Italian external debt and external trade balance are more than safe; on the contrary, the French foreign debt today is similar to the Italian one of 2011, but France would keep the ECB first and foremost in the defensive aim of avoiding the cure of Monti to itself. With all due respect to the last Austerians de 'noatri .
While the FAZ publishes a correspondence from Paris, to warn that Macron would resume listening to "Eurosceptics" like Jean-Pierre Chevènement, Hubert Védrine, Philippe de Villiers even, and recalls the now ancient departure of the "Germanophile" Gérard Collomb.
The train of promises – The second train, that of the promises of the Recovery Fund , would bring in Italy cash advances of 173 billion, spread 6 percent in 2021, 16 percent in 2022, 50 percent in 2023-2024, the rest until 2026 (a delay now admitted by anyone, Tremonti, Fubini, Verderami, the Democratic Party, Gentiloni, even Count). In the face of a future outlay of 65 billion in contributions, which Penati defines as debt "tout court" , in addition to another 91 billion in actual debt, as well as a "gift" of 17 billion net (Perotti), but only if the Commission will have approved our investment projects (since we are not talking about current expenditure).
In a video conference on Tuesday 9 June, the ministers of economics were able to recite each other's respective litany of objections: from how much money, to those who take them, to those who pay them, to conditionalities, in short; being still open (and despite an incessant series of meetings at the diplomatic level) all the alternatives that we already described on the Atlantic . We will limit ourselves here to pointing out: how the youthful idea that new Community taxes can provide for reimbursement is rapidly disappearing, in the face of the clear American opposition to an eu-digital-tax ; how Ecofin has not even addressed the issue of the 2021-2027 multiannual budget, of which the new instrument is part; how the Eastern countries would agree not to be net beneficiaries of the extraordinary component, only in the face of strong benefits in the ordinary component of the multi-year balance sheet; how France does not seem to really intend to serve as a net taxpayer; how Germany has already taken steps to reduce the project by 1/3, saying it is against the loan component (Conte is an ostrich and still talks about "170 billion" for Italy); how Finland joined the opposition of Holland and Austria. A rebelotto such as to have forced the fans to underline, not the economic contribution, but the political one to a supposed federalist transformation of the European institutions (Vittorio Grilli, Monti, Centeno …).
The fans have thus offered Sweden the right (which is not part of the Euro), to wish good luck and escape "tout court" : the maximum that Minister Andersson and former Minister Pagrotsky would be willing to co-finance, as well with modest imbalances between the money given and received, it is "the normal functioning of the single market"; concept that we could translate as: everything the EU could do even without the EMU. Germany itself, on the other hand, by choosing to let the so-called Recovery Fund pass through the EU budget, could not have had a different thought: what has "ecological or digital transition" got to do with the single currency? Finally, theoretically beneficiary countries tend to reject macroeconomic conditionality, while they could more easily accept conditionality for spending projects, as it already is for normal European funds. Possibly accompanied by a review of the national spending and control procedures, as Moavero and Grilli seem to suggest.
We would not be surprised, therefore, if the end result was very "Swedish". The EU, without the EMU, can very well co-finance a new Alpine pass; or the IT infrastructure (as also proposed by Alain Minc, for example the latest Franco-German initiative called Gaia-X , a sort of cloud platform). Without Italy being a net taxpayer, it never becomes a net beneficiary.
When the six-monthly German presidency obtains the political agreement of the 27, we imagine it: in correspondence with the exit of Bundesbank from QE, in order to respond to the almost end of the EMU with an investment on the EU. So as to offer fans a prompt response on talk shows.
The Troika train – The third train, the one with the Troika on board, is stopped on the dead track. Burdened by the entire macroeconomic conditionality of the relative Treaty, useless to activate the OMT, the latter however not unlimited, as we already pointed out on the Atlantic ; this certainly gives a premium on a modest rate advantage, but still uncertain and exorbitant compared to the status of privileged creditor.
Of course, the Italian Treasury has sent the letter of adhesion to the loans of the SURE support program for layoffs, as already authorized by Parliament. But there are no macroeconomic conditionalities attached to the treaty here, and the allocation of funds is univocal, immediate and certain.
Of course, the Italian Treasury has not hitherto taken advantage of the PEPP to finance the new debt needed (despite the favor of the market): uncertain of the ECB estate – as he explained at the end of May in Le Monde Shahin Vallée, very close to Macron – it was held mes cartridge ready; but reluctantly knowing full well that it was a matter of "accepting a mass under guardianship, as Athens has already experienced it ten years ago".
Of course, the Democratic Party cultivates a perverse passion for anything that resembles a Troika , in the logic declared by Stefano Folli: "Joining the Mes means entering a well-defined path, anchoring Italy to precise criteria for future debt management (… ) when the ECB implements a powerful effort with the assumption, it is assumed, of the major capitals of the Union ". It's supposed … well, Folli guesses badly. Since not everyone has the slices of salami on their eyes, it is not surprising that Conte goes on postponing, waiting to be able to say: "It is not needed, so much does the French ECB" . While the 5-star takes a noble victory and the daily fact can make the excellent Palombi say: "Lagarde archives the Mes" .
The "Mes" discussions that are still taking place appear to be masks of the real debate underway. Since it does not seem possible that Minister Speranza really believes he can finance business and transport, ABI will reduce the IRES. Liturri notes: "Can you imagine the face of the official who will have to certify that these are costs indirectly connected to the crisis from Covid-19 ?". Tremonti says: "It will end up financing a little more than the masks".
The Money of Europe – We don't know if the first two trains will reach their destination. We doubt the third ever starts because, in this case, Italy could always act in advance by imposing the control of the movement of capital and doing it by itself ( as we said on the Atlantic , and as Hans Werner Sinn reiterated, in a curiously reviewed text by Vincenzo Visco sul Sole Thursday). However, we have faith in the German spoilers, to the point that we are asked if the money they are waiting for in Rome is not that of the French ECB. This would explain a certain apparent schizophrenia, of Moavero for example, who says he is preparing to invest anyway, regardless of the stall from the ongoing negotiations in Brussels; as well as a certain indifference to the dramatic ongoing economic crisis, as if it were known that there will be money in the fall. To do what?
Recapitalize banks, perhaps, meeting the regulator who, in the meantime, has shown an evident change of pace: on the other hand, better capitalized banks will have less difficulty using the guarantees already offered by the state on loans to businesses; moreover, the banking union rules were de facto aimed at preventing interventions in high debt countries, which would no longer make sense in the world of monetization.
Financing the reindustrialisation, too: transfers to companies in which the state participates, plausibly listed, perhaps Franco-Italian, according to a model that we would call neo-Gaullist and that monetizing the debt (present and future) would make it possible again. Borsa Milano , for example, could soon merge with Borsa Parigi-Euronext , controlled 8% by the French CDP , which would be joined by an Italian CDP stake.
Invest in infrastructure. So Conte recites a litany of High Speed (Genoa-Rome, Milan-Venice, Rome-Pescara, Rome-Ancona, then down to Sicily postponing only the Bridge over the Strait), ports, water networks … to make Berlusconi appear an amateur of the "contract with the Italians". But, at present, it would only have a list of titles on an excel sheet. The Colao plan reads: "The ubiquitous development of the fiber optic network is the top priority". Conte speaks of 120 billion "already allocated" (political jargon which means "not funded"). The Ministry of Infrastructure would have a list of 196 billion works, of which 84 would not need projects and authorizations, in theory. The remaining 113, on the other hand, certainly need this, so they are at least 7-8 years away from the opening of the construction sites. Il Sole 24 Ore notes: "The real knot lies in the cut to the authorization times that are upstream of the race: planning, environmental impact assessment, landscape authorizations", as well as in the very generic definition of crimes of abuse of office and tax damage. The Colao plan speaks of "defensive bureaucracy" and suggests the promising way of self-certification and assent silence; while it circumvents the obstacle of the penal reform by the timid and much less promising way of the hierarchical responsibility of the official, after assigning an insurance policy to the management against the risks of tax damage.
The Nimby gang and the Onestah gang – It is said that Conte Cianci to cut time from 7-8 years to 6-12 months, even said "5 weeks" on Friday; in the alternative, a "white semester (or perhaps year), in which to experiment with new exceptional and emergency procedures that will eliminate bureaucracy". But there are those who do not see the reaction of the politician or the voter of the Democratic Party and / or grillino, in the face of the imposition of the silent assent to the superintendencies, in the face of the abolition of the crime of abuse of office. Already today the " Nimby band" of those who would like to invest everything in cycle paths and electric scooters or in "a million trees", while the " Onestah band" warms up on the edge of the field. A taste is offered by the 5-star minister Catalfo who wants to finance us "the reduction of the wage gap for men and women and the minimum wage", the minister Di Maio who wants to finance us "the lowering of taxes", Boeri and Perotti against the Tav and in favor to "build many football and basketball pitches", Penati who simply says that we are not capable of investing and compares Conte directly to the guillotined Louis XVI. Their prevalence would end up preventing any sensible investment. In this regard, the hope of redeeming them seems vain, attributed by some to Conte, finally condemned "to the listening line" to be celebrated in a curious happening called "States General". Officially prodromal Happening to a National Reform Plan framed in "a shared plan of government action linked to the National Reform Plan" (whatever this expression means) to be presented "in September", unofficially aimed at "sending a strong signal to the 'EU', indeed useful to deceive the public that they have the Nimby gang and the Onestah gang in hand, that is, that they are still politically alive. In a word, the Grillino party and / or democratic justicialism do not seem adequate to the new external structure to which our country could soon belong. It would be better to engage the support of the right, Tremonti notes, better with elections but in the alternative even without , taking care to evacuate the (prime) minister-tourists. We could not blame him.
The post States General: Conte under consideration sells smoke, while the French ECB runs faster than the Mes appeared first on the Daily Atlantic .
This is a machine translation from Italian language of a post published on Atlantico Quotidiano at the URL http://www.atlanticoquotidiano.it/quotidiano/stati-generali-conte-sotto-esame-vende-fumo-mentre-la-bce-francese-corre-piu-veloce-del-mes/ on Mon, 15 Jun 2020 04:14:00 +0000.