I think that what the last financial crisis shown us is that "too big too fail" is the way to go. If you're big enough, you'll be saved and forgiven, because your fall could create too many problems.
This government, with all its shortcomings, is the first in some decades that tries to put italian people first, rather than finance, the euro, or banks.
That said, the bet is risky. Salvini started his activities by showing how the EU is inept at solving the issue with immigrants from Africa and Middle East (eu countries could not agree on an eu-wide solution, leaving border states to deal with it).
Now the government wants to transfer that ineptitude feeling to the economy.
> This government, with all its shortcomings, is the first in some decades that tries to put italian people first, rather than finance, the euro, or banks.
Sorry, but this is just false.
In which way they are trying to put the italian people first? The abolition of Fornero (pension reform) will not solve any issue but will only cause more problem down the road, similarly for the re-branding of the "unemployment benefits" into "citizenship income".
I am afraid that Italy is both too big to fail but also too big to be saved.
I am afraid that Italy is both too big to fail but also too big to be saved.
You mean the French and German banks and pension funds are too big to be saved? The Italian banks will be insolvent as soon as anything substantial happens, as was shown 3 years ago. The only reason to 'bail them out' would be to bail out forign banks, as was the case in Greece.
Having the perma-surplus countries of Europe enforce austerity and permanent contractionary policies on sovereign countries that share a currency (The Fiscal Compact) is an impossible combination, which we also know because we've tried it many times before.
> In which way they are trying to put the italian people first?
I'm not saying they are succeeding. I'm saying they're trying.
> The abolition of Fornero (pension reform) will not solve any issue but will only cause more problem down the road
It will solve the problem for people who are, right now, too old to stay at work. At least they're not saving pointless banks, aren't they? But, sure, it could be even worse for young people.
> re-branding of the "unemployment benefits" into "citizenship income".
Universal Basic Income is deemed necessary even by people like Elon Musk, do you know that? Sure, citizenship income won't work the same way. It's quite small in comparison with UBW.
What I agree is that, probably, Italy, like other countries, would need totally different and more drastic measures. It's hard to change things in a country where retired people earn large sums of money that they don't deserve (because they haven't saved for that).
But, I don't trust the markets, the finance sector or the economic system to change that; those "tools" are used by people who just want to extract the maximum rent, and they'll always use them to achieve that: extract the maximum rent. Unless we start aiming at a different target, which could be "a fair distribution of basic wealth and income", we won't reach a different outcome.
I agree on some things the current bunch of muppets is doing (as opposed to the previous bunch of muppets, I am not partisan), but some of the arguments put forward are very dangerous.
> At least they're not saving pointless banks
That would be the same pointless banks who allow people to take out pointless mortgages to live in pointless houses, or to finance pointless businesses who pay pointless salaries.
I did not like the way the world got out of the 2008 crisis (I would have nationalised the shit out of the EU/US banking sector, it was a golden opportunity to make history), but letting huge banks fail would have been world-ending.
> Universal Basic Income is deemed necessary [...] citizenship income won't work the same way
Then why do you mention it to justify a Blair-style "workfare" law that has nothing to do with UBI (for one thing, it won't be universal, which is kinda the point)? Beyond the propaganda, there will be no UBI - it's just a reshaping of unemployment benefits to make certain areas of the country electorally beholden to a certain party, like it happened in the "good old days".
Quoting a holy text, "you were supposed to bring balance to the Force, not leave it in darkness".
> I don't trust the markets, the finance sector or the economic system to change that
On that I agree, but the realities of the XXI century are that the system is bigger than any single country, and solutions must be co-operative or won't be. I trust demagogues even less than bankers.
There were plenty of banks that were solvent and solid.
But the politically connected big banks were not. They could have been reorganized but they were not. In fact not even 1 of the senior management were punished.
> Universal Basic Income is deemed necessary even by people like Elon Musk, do you know that?
Providing UBI through debt financing is a recipe for disaster.
Someone, somewhere has to earn this "income" so you can't just magically produce it out of thin air, if the Italian tax base can't service the current debt then how is it supposed to service further debt to provide a "citizenship income"?
This idea that if someone critics something MUST also propose a solution is destroying any kind of sensible political discussion.
Anyway I would suggest to focus on long term growth strategies, simplification of the business, incentive for companies growth. Our economic system is formed by too many small medium companies that simply cannot compete anymore in the global market.
Doesn't this false dichotomy between "the Italian people" and "Financial institutions" bother you?
> Salvini started his activities by showing how the EU is inept at solving the issue with immigrants
Yes, an intercontinental large problem caused by poverty and wars could not be quickly solved by an institution that couldn't get a mandate to handle it.
> solving the issue with immigrants
Doesn't this bother you even more? I mean, there does exist an "easy fix" for the hard problem of immigration, but that doesn't transfer to having an easy fix available for all the other hard problems that any country will need to navigate.
> Doesn't this false dichotomy between "the Italian people" and "Financial institutions" bother you?
If I thought it to be a false dichotomy, probably. But (I can't find the link right now as I'm in hurry) as far as I remember when some italian banks were saved some years ago, something like the 80% of the amount of non-performing loans for such bank was composed of loans of 1 million euros or more. So, money that was borrowed by large companies or for very large houses (Yes, one million EUR is a luxury apartment or house in Italy, even in Milan or Rome). A lot of issues for financial institutions were not caused by small companies or "normal" people, and yet those are to bear the burden of saving those institutions.
> solving the issue with immigrants
> Doesn't this bother you even more?
I'm not saying it's correct. But this is a game they're playing.
As others have said, i think the EU by itself is interesting and should go on, but the euro seems an half-baked project. I think that each country should walk its way and have its liabilities. European countries are quite different from each others and would like to solve their problems in a different fashion, rather than following a path chosen by others.
As the Australians have shown: if you have the testicular fortitude to house illegal immigrants on desolate islands where they are safe from the oppression and starvation they claim to be fleeing, then very, very soon the flow dindles to a trickle.
Since most of the country-shoppers aren't real refugees - they just wanted to live in Sydney with an Australian passport and a hard currency.
Ah yes, I want to live and love in a world without starvation and violence, so of course I should happy to be on a desolate island with no hope for growth, love or life. That’s a paradise!
While we are at work on these kinds of solutions, I propose we just put immigrants in cryogenic sleep. It’s probably better than I definitely holding people on desolate islands.
Also the irony is rich, given than Australia was the desolate place to dump criminals.
If your idea of 'solving problems' gets any more wide adoption, then I fear for the world.
Out of sight, out of mind. Put them on paradise islands, in shithole camps, violate some basic human rights. The islanders can be capo's. A true win-win.. except for the refugees, then.
Populism is always hard to define, but for me it’s largely about treating symptoms directly without treating causes.
Socialism, communism, conservatism, liberalism, all the established political movements have a theory or philosophy of what goals they want to achieve, yes, but also what means they can use to achieve them. They have an economic or social theory.
Populism doesn’t, so all it tries to do is address the symptoms, not the causes. People are poor, let’s give them money. Problem solved! Foreign goods are cheaper than ours, let’s slap an import tax on them to make them more expensive. Problem solved!
The trouble is the reasons why people are trapped in poverty, or why local manufacturing isn’t competitive are not addressed, and populist tactics make those causes much harder to tackle.
The Italian governments policies will, if carried through, impoverish Italy for a generation. Just look at Greece to see what massive debt driven overspending can do to a country. The idea that growth will lift you out of the hole is a fantasy because the factors holding down growth aren’t being faced.
Populism is an appeal to popular opinion without contributing any leadership IMO - i.e. you basically just send the broadest possible opinions of the population back at them, without attempting to shape or direct them into actionable strategies.
It always looks simplistic, because it is - there's no attempt to capture a defined, practical policy, just do whatever people will in general like as a sentiment.
Populism is just the antipode to elitism. Too much elitism (e.g. pre-revolution France, gilded-age America or any kleptocracy of which there are numerous examples) is problematic too. A dose of populism can be a useful solution to that problem. For example, the New Deal seems to have worked out pretty well.
Just like anything else, populist policies need to be considered carefully and applied judiciously to work out well. To hold that all populist policies are simply to give out free money is a straw man argument.
A knee jerk response to any populist policy is a low-effort way to implicitly support elitist systems. These policies should at least be fairly considered on their own merits in the context of the actual economic system.
I'm not making an argument for any specific policy here, but I've seen far too many policy proposals waved away as "populist" and therefore not serious.
If Italy falls, it would drag the EU with it. At the same time, Italy is too big to be kept alive with financial aids from the EU.
So the answer is No:
1.) Italy is not too big to fall. A state bankruptcy of Italy is possible. It would occur if e.g. another external crisis hits the EU.
2.) The EU would do anything in their power to prevent that, but in a real emergency it couldn't do much. Italy would have to be excluded from the Eurozone and default.
None of this is likely to happen, though.
As for the Italian government, it's just another proof of the fact that modern Western, Christian, humanist values are mostly a lip service and given up at the earliest sign of causing inconvenience. We already know from the war in former Yugoslavia how fragile modern culture is. We're basically just a bunch of stupid monkeys, and that definitely includes the Italian government. :(
This government, with all its shortcomings, is the first in some decades that tries to put italian people first, rather than finance, the euro, or banks.
That said, the bet is risky. Salvini started his activities by showing how the EU is inept at solving the issue with immigrants from Africa and Middle East (eu countries could not agree on an eu-wide solution, leaving border states to deal with it).
Now the government wants to transfer that ineptitude feeling to the economy.
Is Italy actually too big to fail? We'll see.
Disclaimer: I'm italian.