05-22-2018, 10:34 PM
*** 23-May-18 World View -- European markets in turmoil over Italy's unbridled spending proposals
This morning's key headlines from GenerationalDynamics.com
****
**** European markets in turmoil over Italy's unbridled spending proposals
****
![[Image: g180522b.jpg]](http://Media.GenerationalDynamics.com/ww2010/g180522b.jpg)
Five-Star Movement leader Luigi Di Maio, left, and La Liga leader Matteo Salvini (AFP)
Italy's Banco Monte dei Paschi di Siena (MPS), founded in 1472, is the
world's oldest operating bank. It may also be the world's worst
managed bank, since by 2016 it had $55.2 billion in bad loans on its
books. Even worse, salesmen working for the bank sold people
high-risk high-yield bonds in place of ordinary savings accounts, so a
collapse of the bank would mean hundreds of thousands of people,
including many pensioners, would have their life savings wiped out.
In fact, Italy's entire banking system was close to collapse. There
were €350 billion in bad loans on the books of Italy's banks, a
third of the eurozone's total bad debt.
It's a violation of European Central Bank (ECB) rules for a member
country to bail out its own banks, since that forces the taxpayers to
pay for the mistakes of the bank managers, who should be held to
account for their mistakes. Nonetheless, an MBS collapse would have
been so disastrous for Italy's economy, that the EU was forced to
agree to allow a bailout in July of last year, adding to Italy's
already huge debt.
Today, Italian debt stands at around €2.17 trillion, or 133% of
gross domestic product (GDP). That's worse than Greece's situation
when it was being bailed out in 2010. At that time, Greece's debt as
"only" 127% of GDP.
Furthermore, Italy has been struggling with years of crisis. The
youth unemployment rate has remained stubbornly well above 30%, and
Italy has felt abandoned by the EU as it had to deal with hundreds of
thousands of migrants arriving on it shores across the Mediterranean
Sea from Libya.
As I've been writing for years, most nations of the world have entered
a generational Crisis era, and in a generational Crisis era,
nationalistic and xenophobic behaviors of the population increase.
This is happening in countries around the world. You can argue
whether this is good or bad, but it's like arguing whether a cyclone
is good or bad. It doesn't matter whether you think it's good or bad,
since it's going to happen anyway.
In Italy, these nationalistic and xenophobic behaviors are converging
into a potential major crisis, as it now appears that Italy is about
to form a government which is anti-euro, anti-EU, anti-immigrant, and
with no fiscal discipline whatsoever.
Italy's March elections failed to produce a governing coalition, and
so Italy hasn't had a government since then. The political fighting
has been raucous and bitter, and two parties that were particularly
bitter rivals were the left-wing Five Star Movement (M5S) that got 32%
of the vote, and the right-wing La Liga (The League) that got 17% of
the vote.
These two parties are far apart on many issues, but they do share a
nationalistic anti-euro attitude, a xenophobic anti-immigrant
attitude, and a complete lack of fiscal discipline, and so much to the
shock and surprise of many EU politicians, they are forming a
governing coalition, based on those principles.
Luigi Di Maio is the leader of M5S, and Matteo Salvini is the leader
of The League. However, neither of them will be prime minister.
Reports indicate that they have jointly agreed that Giuseppe Conte, an
obscure law professor, should be chosen as prime minister. Conte is a
professor of public administration law at the University of Florence
and is a political novice, so the obvious intent is that he would be a
figurehead and Di Maio and Salvini would control him. BBC (25-June-2017) and
Deutsche Welle and International Banker(6-Oct-2017)
Related Articles
****
**** Key proposals from Italy's M5S-League coalition
****
Matteo Salvini is a 45 year old member of Generation-X, a generation
known for its destructiveness and self-destructiveness. Luigi Di Maio
is a 31 year old member of the Millennial generation, a generation
known for its lack of knowledge about almost anything, and a belief
that everything should be free.
Those generational descriptions are, of course, stereotypes, and apply
only to a minority of each generation. However, the policies proposed
by Salvini and Di Maio suggest that the stereotypes apply fully to
them.
Here are some of the proposals in their policy document:
The nightmare scenario is an Italy fiscal crisis similar to the Greece
fiscal crisis. Italy's economy is ten times as big as Greece's, so an
Italy fiscal crisis would be a catastrophe. AFP and Pound Sterling Live and Bloomberg and AFP
Related Articles
KEYS: Generational Dynamics, Italy, Banco Monte dei Paschi di Siena, MPS,
Five-Star Movement, M5S, Luigi Di Maio,
La Liga, The League, Matteo Salvini, Giuseppe Conte,
Libya, Mediterranean Sea, Russia
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
This morning's key headlines from GenerationalDynamics.com
- European markets in turmoil over Italy's unbridled spending proposals
- Key proposals from Italy's M5S-League coalition
****
**** European markets in turmoil over Italy's unbridled spending proposals
****
Five-Star Movement leader Luigi Di Maio, left, and La Liga leader Matteo Salvini (AFP)
Italy's Banco Monte dei Paschi di Siena (MPS), founded in 1472, is the
world's oldest operating bank. It may also be the world's worst
managed bank, since by 2016 it had $55.2 billion in bad loans on its
books. Even worse, salesmen working for the bank sold people
high-risk high-yield bonds in place of ordinary savings accounts, so a
collapse of the bank would mean hundreds of thousands of people,
including many pensioners, would have their life savings wiped out.
In fact, Italy's entire banking system was close to collapse. There
were €350 billion in bad loans on the books of Italy's banks, a
third of the eurozone's total bad debt.
It's a violation of European Central Bank (ECB) rules for a member
country to bail out its own banks, since that forces the taxpayers to
pay for the mistakes of the bank managers, who should be held to
account for their mistakes. Nonetheless, an MBS collapse would have
been so disastrous for Italy's economy, that the EU was forced to
agree to allow a bailout in July of last year, adding to Italy's
already huge debt.
Today, Italian debt stands at around €2.17 trillion, or 133% of
gross domestic product (GDP). That's worse than Greece's situation
when it was being bailed out in 2010. At that time, Greece's debt as
"only" 127% of GDP.
Furthermore, Italy has been struggling with years of crisis. The
youth unemployment rate has remained stubbornly well above 30%, and
Italy has felt abandoned by the EU as it had to deal with hundreds of
thousands of migrants arriving on it shores across the Mediterranean
Sea from Libya.
As I've been writing for years, most nations of the world have entered
a generational Crisis era, and in a generational Crisis era,
nationalistic and xenophobic behaviors of the population increase.
This is happening in countries around the world. You can argue
whether this is good or bad, but it's like arguing whether a cyclone
is good or bad. It doesn't matter whether you think it's good or bad,
since it's going to happen anyway.
In Italy, these nationalistic and xenophobic behaviors are converging
into a potential major crisis, as it now appears that Italy is about
to form a government which is anti-euro, anti-EU, anti-immigrant, and
with no fiscal discipline whatsoever.
Italy's March elections failed to produce a governing coalition, and
so Italy hasn't had a government since then. The political fighting
has been raucous and bitter, and two parties that were particularly
bitter rivals were the left-wing Five Star Movement (M5S) that got 32%
of the vote, and the right-wing La Liga (The League) that got 17% of
the vote.
These two parties are far apart on many issues, but they do share a
nationalistic anti-euro attitude, a xenophobic anti-immigrant
attitude, and a complete lack of fiscal discipline, and so much to the
shock and surprise of many EU politicians, they are forming a
governing coalition, based on those principles.
Luigi Di Maio is the leader of M5S, and Matteo Salvini is the leader
of The League. However, neither of them will be prime minister.
Reports indicate that they have jointly agreed that Giuseppe Conte, an
obscure law professor, should be chosen as prime minister. Conte is a
professor of public administration law at the University of Florence
and is a political novice, so the obvious intent is that he would be a
figurehead and Di Maio and Salvini would control him. BBC (25-June-2017) and
Deutsche Welle and International Banker(6-Oct-2017)
Related Articles
- Bank run worsens Italy's banking crisis (28-Dec-2016)
- Italy announces bank bailout that will 'bail in' ordinary depositors (22-Dec-2016)
- Italy bank crisis more dangerous to EU than Brexit (05-Jul-2016)
****
**** Key proposals from Italy's M5S-League coalition
****
Matteo Salvini is a 45 year old member of Generation-X, a generation
known for its destructiveness and self-destructiveness. Luigi Di Maio
is a 31 year old member of the Millennial generation, a generation
known for its lack of knowledge about almost anything, and a belief
that everything should be free.
Those generational descriptions are, of course, stereotypes, and apply
only to a minority of each generation. However, the policies proposed
by Salvini and Di Maio suggest that the stereotypes apply fully to
them.
Here are some of the proposals in their policy document:
- Debt: To tackle Italy's crushing public debt, the new
government will remove the debt by cutting taxes and spending more
money. (I wish I could tell you that this is a joke, but it isn't.)
According to the policy document:
<QUOTE>"The government's actions will target a program of
public debt reduction not through revenue based on taxes and
austerity, policies that have not achieved their goal, but rather
through increased GDP by the revival of internal
demand."<END QUOTE>
Here you see how the two sides are supporting each other. The
left-wing M5S will spend more money, and the right-wing League will
reduce taxes.
- Basic income: Five-Star's flagship basic income plan will
be implemented, guaranteeing a minimum income €780 per month to
each person.
- Minimum wage and economy: There will be a minimum wage, but
the amount was unspecified. The development of the "green-economy"
and use of electric cars is also a priority.
- Immigration: They'll crack down on smuggling networks, and
speed up expulsions of illegal immigrants. They also want the rest of
the EU to share in the responsibility for the immigrants, but the EU
has abandoned Italy on this issue for years, and that's not likely to
change.
- Muslim integration: Unauthorized mosques will be closed
down, and a new law on the inclusion of "community involvement" in the
building of mosques will be reversed.
- Pensions: The retirement age will be reduced from 67 to
enable retirement when the sum of a person's age and years of social
security contributions reach 100. So someone who works continually
starting at age 18 would retire at age 59.
- Security: In the name of self-defense individuals would be
allowed to shoot anyone who enters their home, even in the absence of
a clear physical threat.
- Russia: Sanctions against Russia should be removed.
- Education: Free nursery schooling for children of "Italian
families." All illegal Roma camps to be closed and Roma children who
don't attend school removed from their families.
- Leaving the eurozone: This is supported by both parties,
but it's been removed from the policy proposal, apparently to avoid
scaring people.
The nightmare scenario is an Italy fiscal crisis similar to the Greece
fiscal crisis. Italy's economy is ten times as big as Greece's, so an
Italy fiscal crisis would be a catastrophe. AFP and Pound Sterling Live and Bloomberg and AFP
Related Articles
- France, Italy have bitter feud over migrants as quota system collapses (16-Jun-2015)
- Italy begs for help after 12,000 migrants arrive in four days (30-Jun-2017)
- After Brexit and Trump, Italy's Five-Star-Movement may be the next surprise (18-Nov-2016)
- German official says that 'two clowns have won' in Italy (01-Mar-2013)
KEYS: Generational Dynamics, Italy, Banco Monte dei Paschi di Siena, MPS,
Five-Star Movement, M5S, Luigi Di Maio,
La Liga, The League, Matteo Salvini, Giuseppe Conte,
Libya, Mediterranean Sea, Russia
Permanent web link to this article
Receive daily World View columns by e-mail
Contribute to Generational Dynamics via PayPal
John J. Xenakis
100 Memorial Drive Apt 8-13A
Cambridge, MA 02142
Phone: 617-864-0010
E-mail: john@GenerationalDynamics.com
Web site: http://www.GenerationalDynamics.com
Forum: http://www.gdxforum.com/forum
Subscribe to World View: http://generationaldynamics.com/subscribe
