“We must leave the austerity cage,” he told leaders of his Democrat Party
(Pd), responding to Italy’s electoral earthquake by tearing up his pre-election
programme. “A change of course is absolutely necessary given that five years of
austerity and attacks on workers have pushed up public debt levels across
Europe,” he said.
“The vicious circle between belt-tightening and recession is putting
representative government at risk and making it impossible to govern. The
immediate emergency is the real economy and joblessness,” he said. The pledge puts Mr Bersani on a collision course with the ECB, which is
constrained from helping to shore up the Italian bond market unless Rome
complies with Europe’s austerity agenda. “Italian voters may have effectively voted away the ECB safety net,” said
Christian Schulz from Berenberg Bank. The central bank cannot activate its bond
purchase programme (OMT) unless Italy requests a rescue from the EMU bail-out
fund, and that in turn requires a vote in Germany’s Bundestag.
“The ECB cannot – and will not want to – do anything to help Italy after the
inconclusive election result, even if borrowing costs spiral out of control,” he
said.
Mr Bersani’s Democrats (Pd) and its allies control the lower house but failed
to win the senate. He is hoping for tacit support on a law-by-law basis from the
Five Star Movement of comedian Beppe Grillo. Mr Grillo has responded with a volley of anathemas, calling Mr Bersani a
relic from a defunct political order that must be swept away by civic
revolution. Yet many of his 163 senators and deputies say the movement should
seek common ground with the Pd.
Mr Bersani said Italy should mobilize its EU voting weight to push for an
EU-wide change of course. He has natural allies in Paris.
French finance minister Pierre Moscovici warned EMU colleagues on Monday that
current policies “risk a loss of social and political confidence across Europe.
We must not pile austerity on top of recession”. Mr Moscovici said France would need an extra year to meet its deficit target
of 3pc of GDP and called for action to tackle the root of the crisis with an
EMU-wide growth strategy.
French officials are deeply alarmed by the relentless upward rise in France’s
unemployment rate to 10.6pc, or 26.9pc for youth. President Francois Hollande’s
popularity ratings have crashed from 55pc to 30pc since his election in May, the
fastest decline ever recorded for a French leader.
Italy, France, and Spain toyed with a Latin bloc alliance last year to
confront Germany over EMU’s contractionary policy mix, but the initiative faded.
Mr Hollande pulled back from a showdown with Berlin and ultimately pushed
through further fiscal cuts and reforms, while Italy’s Mario Monti was never
willing to jeopardise the European Project that he served for ten years as a
commissioner.
Critics says Mr Monti, whose Civic Choice list won just 10pc of the vote,
went native in Brussels long ago and has been slow to understand the deeper
political crisis unfolding in Italy.
The outgoing premier gave them fresh ammunition today, saying that it would
be better to hold fresh elections than to see an anti-EU government to take
power.
It is unclear whether a second vote would achieve what he intends. The latest
snap polls show that Mr Grillo’s support is still rising, jumping from 25pc to
28pc.
Ominously, nostalgia for Fascist leader Benito Mussolini has started to
emerge as the post-War order crumbles. Two key figures have praised elements of
Fascist rule over the last two days.
A leader of the Five Star Movement professed “fascination” with the Fascist
sense of the Italian state and the family, while the deputy state secretary of
the economy said Mussolini “governed well until 1935.” (source telegraph)
5 comments:
Aside from economics news...
A Ukip MEP has been found to have misused taxpayer-funded allowances following a crackdown by Olaf, Europe's anti-fraud watchdog
and apparently several UKIP MEPs claim they were pressured by Nigel Farage to break EU rules to get financial benefits for UKIP thrrough EU funds.
So the UKIP which proclaims the EU and corrupt and wasting taxpayer money, has in fact wasted taxpayer money through fraud. But not only that, they were exposed by the EU's anti-fraud watchdog. Sweet irony.
Lagarde sees light at end of tunnel for Ireland
Lagarde is asked about the potential for economic relapse. She clarifies that she meant that on a global basis.
In Ireland she says she has seen resilience and dedication to the improvement of the situation, "creating growth and creating jobs and restoring hope".
This is really being done in this country. Sometimes there is a worry about what is at the end of the road. There is clearly hope at the end of this road.
The Bank of Italy has released some fairly eye-watering statistics, showing bad loans in the country rose 17.5% in January, compared with the same month last year.
At the same time, Italian banks cut lending to the private sector, with business lending down 2.8%, and lending to households down 0.6% on the year.
That is largely down to a lack of demand, as the eurozone's third-largest economy stays mired in recession. Interest rates on loans in January were below their 2012 average even though volumes declined.
Italian bank deposits, however, rose 7.7% in January
Bank of Italy says household lending falls 0.6% on year in January
Bank of Italy says business lending down 2.8% on year in January
The Bank of Italy has released some fairly eye-watering statistics, showing bad loans in the country rose 17.5% in January, compared with the same month last year.
At the same time, Italian banks cut lending to the private sector, with business lending down 2.8%, and lending to households down 0.6% on the year.
That is largely down to a lack of demand, as the eurozone's third-largest economy stays mired in recession. Interest rates on loans in January were below their 2012 average even though volumes declined.
Italian bank deposits, however, rose 7.7% in January
Bank of Italy says household lending falls 0.6% on year in January
Bank of Italy says business lending down 2.8% on year in January
Well yes, you could say that Europeans are “rejecting austerity”, but that is, in reality, an incidental ‘side effect’ of rejecting the greedy practices of the rich and powerful: especially the political and business classes which brought about this mess in the first place. People want revenge, they want punishment, they want justice – hence the 26:1 vote in favour of banking bonus caps and a financial transaction tax. The fact that their political leaders are advocating austerity is neither here nor there, except that to the ordinary citizen, it feels as if nothing has changed and nothing has been learned and the punishment continues.
But at the same time as condemning the greedy and self-serving antics of the European political and business/banking classes, European citizens at a local level, are deriving a great sense of solidarity from the fact that, across Europe – even in France and Germany – ordinary people everywhere are protesting about the same things. So you’d think that events in Europe are “sowing the seeds of discord within and between countries” but only if you don’t actually live in those countries or know or understand anything much about them.
To conclude by saying that “European citizens are rejecting austerity” is simplistic in the extreme and to go on to infer that the "European project" is somehow falling apart, is just ill-judged rubbish.
Forget about statistics, facts, figures and news wires for a moment, because when it comes down to it, if you take a walk in the towns and countryside of modern France or Spain or Italy, you can take away the cars and a few of the trappings of 20th century life, and easily see how communities could revert and ‘carry on’ only marginally affected.
You just can’t imagine that to be the case in overcrowded countries like the UK, which have transformed themselves utterly, from their former agrarian, medieval selves.
So in the event of a breakdown in complex industrial society, I fear far more for the future of the UK than I do for most of the rest of Europe.
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