How
Berlusconi will win the next election and....
Last
December (see my previous post) I suggested that Monti should have adopted a tougher negotiation
stance in Europe.
I,
provocatively, explained why, after a thorough modernisation of the Italian
society, the majority of the Italians would be better off with the lira.
Six
months later, I still think that Monti should be much tougher in his
negotiations: the cost the Italian Republic have to pay to refinance her debt
is simply too high and makes the pain the population is going through de
facto useless. In addition even the competition among companies is distorted
since the cost of capital for almost any German (or Dutch) corporate is much
lower than for any Italian blue chip.
Given the
inability of the present government to be assertive enough in Europe, and of
the German government to be able to overcome their short term selfishness, I
think we are heading for very dangerous times.
In few
months we will be having elections in Italy and it seems that Mr Berlusconi
will run again for the Prime Minister position.
The most
logical step for Berlusconi will be to position himself as the strong man (does
it ring a bell?). He will most
probably run as the leader of a new party and become the only choice for the euro unhappy fast growing
minority.
He will most likely support a strong confrontation with the
Germans, he will highlight their selfish attitude, the incredible advantage
they are enjoying in paying negative yields. He will suggest that Germany
should leave the Euro. Berlusconi will explain why without a central bank as a
lender of last resort there is no future for the Italian (or Spanish) economy.
And....
Berlusconi will win!
At least
35% of the votes will go to him as antieuro hero, as the only man with the stamina
to stand strong in front of the German Prime Minister, he is the man who called
nazist capo a german euro mp. He will also try to have a personal vendetta on Mrs
Merkel who, in his eyes, humiliated him.
This will
be very dangerous: for Europe, for the Euro and for Italy.
Italy
might go back to the worst of the Berlusconi times. The opposite of what we need. The opposite of what Germany needs.
Do we
want to see this happening?
What is
needed now is a proper firewall: unlimited resources to limit the spread for
countries with a serious primary deficit reduction program in place.
It's so
clear, it's so simple, it's so necessary.
