*** MANDOS POST ***
Italy has essentially “caved” on its threat to run a high budget deficit and confront the managers of the Eurozone.
The Italian government will trim its deficit target for next year in its latest proposal that seeks to avoid European Union sanctions for violating the bloc’s budget rules, the Ansa news agency reported.
“We have reached agreement on everything,” Deputy Prime Minister Matteo Salvini said after a lengthy budget meeting in Rome Sunday night. The budget would be “within limits that should please the EU.”
In a previous Brexit thread, the idea that Italy was about to confront and maybe start the process of leaving the Eurozone due to the budget conflict was bruited about. I laid out the main path by which this could occur in a comment:
Right now, the main issue is Italy, and the deciding questions are:
- Whether the Five Star/Lega Nord government is really going to escalate the budgetary conflict with the Commission.
- Whether, in doing so, they will force the Commission to back down.
- Otherwise, whether the resulting conflict will cause them to back down.
- If they don’t back down, whether the Greece-like economic consequences will cause them to lose popularity.
The path to an EU breakup is charted with: (1) yes; (2) no; (3) no, and; (4) no. So far we are getting (1), maybe, and (2) no.
Italy has already departed this path at step (1), and with a non-buffoon “clever” right-wing agitator in the driver’s seat like Matteo Salvini.
Herman
I never much cared for Salvini, Lega Nord or the Five Star movement. They always struck me as more show than substance plus they are all essentially right-wingers if you look at most of their proposals. But with the massive unemployment in Italy, especially among the youth, I consider not putting the interests of Italians first and caving in to the EU to be tantamount to treason. The current situation in Italy is destroying the lives of millions of people so continuing on essentially the same path seems ridiculous.
My own prediction is that when the next economic crisis hits Europe we will see a new wave of right-wing leaders that will make politicians like Salvini look like cuddly liberals. My reasoning is that you cannot keep pushing people into destitution (and it really is destitution not just “First World problems”) and misery and expect them to take it. Westerners right now are living off of past prosperity but when that little bit fades away the consequences will be massive. Unless the left can put together an alternative I think we will see a resurgence of real fascism and not just the buffoonish right-wing populism of the likes of Trump, Salvini, Beppe Grillo, Nigel Farage and others.
UserFriendly
The common currency is more of an obstacle than you think. It would take at least 5 years for the international bodies that deal with various currencies to bring back the Liera. 5 years that will be full of economic chaos that no government could maintain popularity throughout. The Eurozone is the roach motel. I wish it wasn’t so, but that’s the truth. The only way it breaks up is by universal consent.
Hugh
The UK, the EU’s second largest economy is leaving. Italy is the EU’s 4th largest economy and its presence in the EU is looking shakier all the time. The example that Greece offers Italy is rather how a country can be destroyed by staying in the EU and EZ. In Germany, the EU’s largest economy, Merkel is diminished and on the way out, which is a good thing given her destructive anti-leadership of the Union. And if you think different, tell it to the Greeks she destroyed in order to bail out German banks. Meanwhile only some numbers fudging look to keep France from breaking the same budgetary limits the Italian government is accused of doing. And in the gilets jaunes, Macron is facing the same opposition from the forgotten and left behind of the EU that drove the Brexit vote in the UK. At the same time, nowhere is negative German leadership more evident than in the economic stagnation and slide into authoritarianism of the Eastern Tier.
EU propaganda is that the EU is a done deal, that Brexit is an aberration that has to do with deficiencies in the UK, not the EU, and that it is not that big a deal for the EU. But these are lies. The EU is a failure, and the responsibility for that failure rests with its neoliberal ruling classes, and if one had to name a country in particular for blame, it would be Germany. The slow motion train wreck that is the EU continues. In the absence of a fundamental rethink, not in the cards, it will only get worse.
bruce wilder
Italy, because of its large national debt, is moving inexorably on a trajectory that will ruin it. Its banking system will be wiped out and replaced. And then debt service will drain the country at an accelerating pace.
If your understanding of money, finance and debt is that of a typical right-winger, I would imagine you will have a moralistic fairy tale ready that will blame the victims.
What will not be at hand is an institutional solution. Running a modest budget debt in euro’s in a mere gesture toward pump-priming was never an adequate response to Italy’s stagnation, and the design of the Euro has never been in serious question, even in Greece, never unpopular. Questioning the Euro has been an element in the rhetoric and analyses of a few in the present coalition, but those figures were side-lined. Beppe Grillo’s act, back in the early days of Five Star, included “jokes” about the nature of money, but Five Star found itself in power as a representative of Italy’s south, where expectations of elite corruption run rampant over any positive political possibility, because it promised a simple giveaway it will not deliver.
anon y'mouse
Userfriendly,
so…to possibly deliberately strawman you: “stay with the abusive husband. life on the streets or in a women’s shelter is much to difficult to overcome”?
Mandos
That is precisely the choice, unfortunately, that many women facing spousal abuse make, because of a realistic assessment of the frying pan and the fire.
The analogy only goes so far, though, considering that we’re talking here about a consensus regulatory framework with two dozen partners.
Hugh
“a consensus regulatory framework with two dozen partners”
My understanding is that the EU’s regulations are made by its bureaucracy. “Consensus” and “two dozen partners”, especially when those “partners” are countries, is essentially an oxymoron. That is this kind of consensus has nothing to do with what people actually want, as witnessed by Brexit and the gilets jaunes. And none of this gets to Germany’s role as principal and really only string puller in the EU.
Mandos
Hugh: You are mistaken if you think that the regulations that matter for this discussion are made by “bureaucrats,” the most important things (such as the fiscal criteria) are decided by politicians representing the member states. That was something that Yanis Varoufakis learned very directly with the Eurogroup — he thought he was entering a room of financial bureaucrats and prepared accordingly, and if they were that, he might have succeeded in convincing them, but he actually entered a room of politicians whose main worry was how to get elected. That is the rock upon which the Greek insurgency broke — the Eurogroup elected politicians couldn’t figure out how to carve out a Greek-friendly compromise they could sell to their own electorates.
The way you talk about European politics is essentially full of inaccurate caricatures. Dutch and Finnish politicians are worried about what their voters will think if the gilets jaunes get their way. And that is precisely the kind of conflict that Eurozone architects explicitly engineered into the design of the Eurozone, in the hope of provoking crises leading to further convergence (they thought). It’s still not clear they were wrong, even Brexit (the departure of a reluctant member whose main interest was in blocking convergence) can be seen as serving their aims.
Whether those aims are good is another matter.
Mandos
Re: Germany. The main issue of German politics and the European economy is not whether Merkel is getting “edged out” (the CDU voted for business as usual under AKK). It is the paranoia of German savers, that attempts to keep the southern countries afloat are imperilling their retirements. The AfD started before the refugee crisis, which put wind in its sails, but the instigating issue was the fear that Merkel and Schäuble would concede too much to the “PIIGS”, turning the Euro into a Weichwährung (soft currency). This is a serious issue, because Germans had been encouraged to save rather than consume.
anon y'mouse
Mandos,
far be it for me to make that choice for any individual woman (or man. men can also be abused within relationships), but the people in these countries are not in that position. they are in the position of the children in the backseat hearing their mom debate whether she will go to the shelter “this time” or just endure.
being in that environment is not the choice of those children, and isn’t good for them or their future development. even if they are not suffering direct abuse, they are seeing and engaged in the cycle of it.
most of us aren’t driving the car. nor are we given meaningful ways to tell the person who is where to go, nor are we given any veto power. we’re just told to endure whatever crap flies our way, because “it’s worse out THERE”.
Hugh
Mandos, how can you not notice by now that the Europe you write about doesn’t exist?
Maybe there’s a language problem. Regulations are essentially what bureaucracies do. Criteria for or regulatory authority for regulations are not regulations. Elements of a political settlement are not regulation. They are policy.
German retirees were never faced with bailing out subhuman Southern Europeans but their own fucking banks who greedily, arrogantly, and stupidly lent money not so much to Greece but in Greece.
The reason that Europe is a failure is precisely that when the going gets tough or there is a bill to pay everyone stops being European and reverts to being German, Greek. whatever.
That Brexit is some sign of European convergence is just weird. The need to engage in such mental gymnastics is though a great way to destroy your credibility.
bob mcmanus
https://www.aljazeera.com/indepth/opinion/britain-stole-45-trillion-india-181206124830851.html
I’ll leave it as a link, the subject is there. Great article based on what appears to be a great book. Last sentence:
“We need to recognise that Britain retained control of India not out of benevolence but for the sake of plunder and that Britain’s industrial rise didn’t emerge sui generis from the steam engine and strong institutions, as our schoolbooks would have it, but depended on violent theft from other lands and other peoples.”
How does this apply to Germany vs Greece, or Brussels vs Italy? Simple.
All wealth in history and currently existing is derived from primitive accumulation and exploitation of labour. All of it. “Exploitation” is even too abstract and obfuscates, which is the entirety of what politics and economics and their theories intend to do, confuse disguise pacify.
Because labour is exploited by institutionalized violence in states. All differential wealth is stolen at the point of a sword or gun, washed in blood, be it Goldman-Sachs, Beyonce, or your next door neighbour.
Technology is irrelevant to wealth. Property is theft.
(Maybe, maybe, include resource extraction in there, theft from Gaia.)
S Brennan
It would appear that Germany continues it’s 100 year long pillage of Europe but…this time it’ll be different…yeah, it will be different, but similar.
I remember when Germany was reunited, unlike others around me, I did not cheer.
highrpm
@mandos,
on the subject of chronic spousal abuse, the dixie chicks “earl had to die” is pretty much the feasible alternative. and more judges should accept that and rule justifiable homicide. how does that metaphor play to member states of the EU? only time will tell.
Tom
https://www.wsj.com/articles/u-s-military-preparing-for-a-full-withdrawal-of-its-forces-from-northeastern-syria-11545225641
Trump finally put his foot down and gave the order over Bolton’s, State’s, and DOD’s objections. As Erdogan is preparing to finish off the YPG terrorists who are no different from ISIS, and have a track record of not racking up high civilian death counts or leveling entire cities to ash, and rapidly bringing security and reconstruction aid in, this is a positive development.
Right now north east Syria is a wasteland of destroyed villages and cities that have not been rebuilt since YPG and the US destroyed them and their is zero security or accountability.
Contrast with areas under Turkish/FSA control which are intact, with functional cities with services. Given that YPG is overhyped and incapable of gaining ground without massive US Airpower leveling entire cities while TSK and FSA often took entire cities intact with minimal air strikes if any, this will be a lopsided battle.
With this, partitioning of Syria into a Turkish Northern Protectorate and a joint Russian/Iranian Protectorate in the South and West will be completed. Given Iraq is increasingly unable to function as their state apparatuses break down under the weight of their own corruption, it is likely Northern Iraq could also be partitioned off as the Shiite Factions of Iraq fight an intra-Shiite Civil War.
Mandos
It sure does exist. It just drove the UK into a corner.
OK, this is the boring kind of nitpicking. The EU is a series of interlocking regulatory frameworks decided by treaty, which assigns regulatory authority via policies derived from political settlements. However, the politicians of the Single Currency Area are fairly deeply involved in the regulation of fiscal authority in the member states, because of the well-known problems in the design of the Eurozone (monetary power without fiscal power, making fiscal power in the member states a subject of regulation that can only be resolved through high-level political agreements).
Of course, the bank bailouts were the real subtext here, but you even get this wrong: the banks needed bailing out because of the interdependencies with the US subprime market, which meshed with pretty much everyone’s malfeasance in letting Greece in the the Eurozone in the first place. However, I was pointing out that German savers believe as a matter of course that they were promised that the Euro would be as solid as they imagine the Mark to have been, and that the danger in letting in Italy was the possible Lira-ization of the Euro due to Italian (etc.) politics attempting to bridge the same social gaps as they had before entry to the Eurozone.
Consequently, the German voter was promised more or less explicitly that European economic policy would act as a straightjacket on Italian politicians, forcing these politicians not to bridge those social gaps, i.e., that in return for joining a powerful currency, Italy would be converted through the inherent relative austerity of the arrangement into a German-like economy over time. There were (and still are!) many Southern Europeans who agreed with this and saw it as a source of hope.
Yes. This was precisely what the instigators of the single currency were trying to solve, by deliberately creating a trap in which it would always be more expensive to leave than to endure.
If you actually paid attention to the details of European politics, the UK was one of the major brakes on convergence. One reason why the rest of the EU is so united on the topic of the UK and Brexit (even Poland and Hungary have not ridden to the UK’s defense) and have given so little overall, is that the Brexit scenario is, from their perspective, a source of “win” from all likely outcomes:
* A No Deal Brexit is more catastrophic for the UK than for the EU,
* the May agreement is as bad for the UK as everyone says it is,
* any form of Brexit increases the chance of the likelihood of the breakup of the UK and attempts to rejoin from Scotland and NI,
* post-Brexit regrets and attempts to rejoin will be done without any rebates or special privileges,
* a Brexited UK cannot veto convergence on defense and other matters, due to its special US security relationship,
* if Article 50 is rescinded it alone will be an object lesson for everyone that no one really wants to leave the EU,
* it is extremely unlikely that even if Corbyn comes to power (not clear), he will be able to implement his program in a way that works, even (especially) under No Deal, so no benefit is likely to be accrued from the formal rescinding of austerity under Brexit.
The UK had no real cards to play (completely self-inflicted this time, not like Greece). So yes, Brexit too is seen by the EU as a convergence, not a disintegration phenomenon. If it had happened under a left-wing government already in place, the picture may have been different, but austerity-prone anti-immigrant Tories created a Brexit situation that is only made of win for the EU.
Mandos
Meanwhile, right-wing German media is histrionically presenting the deal now reached with Italy as a major win for Italian populists (and the impending theft of German savings), allowing 2% deficit targeting rather than the near-zero they were supposed to have had under the agreements with Gentiloni. (The deal, by the way, includes privatizations as placating factor for the Commission.)
Of course, some flexibility on Italy was eventually necessitated by the fact that France is definitely going to be able to target 3.2% at least, in response to the gilets jaunes.
That is, anti-austerity works in the EU if it is backed by popular movements in multiple countries. However, by the standards of this blog at least, Italy is still in a state of capitulation, because it still agrees in principle that it must come to a political agreement with the Commission that involves less deficit spending than a newly elected government deems necessary to improve Italian well-being.
bruce wilder
by the standards of this blog at least, Italy is still in a state of capitulation, because it still agrees in principle that it must come to a political agreement with the Commission that involves less deficit spending than a newly elected government deems necessary to improve Italian well-being.
Are we meant to read this as written in a tone of sarcasm?
Is to be all about the arbitrary abstractions of EU deficit rules? Not about Italian well-being?
(In the main, I thought your description of the politics quite accurate.)
Mandos
Bruce: I was not being sarcastic. I too agree that Italy has still capitulated, even if they did not capitulate to the extent that German right-wing newspapers believe represents compliance with previously made agreements. Pacta sunt servanda…
Whether the M5S/LN estimate of Italian well-being is served by their preferred targets is a whole other question, which includes the matter of whether they have the administrative competency to disburse the funds in a welfare-maximizing manner.
Mandos
highrpm: for the “Earl” scenario, you need a well-meaning friend who went to Atlanta and a plan to sell homemade jam by the road (in the music video), except that the plan has to work for the majority of two dozen countries plus a bit. And also a clever plan to serve Earl poisoned beans, and so on.
Hugh
If Mandos were on the Titanic, he would be arguing that running into an iceberg was a good idea because it would force passengers to acknowledge what a great ship it was, and having an insufficient number of lifeboats and keeping passengers from even those was genius because it would keep passengers committed to the whole Titanic enterprise.
The construction of Europe is neoliberal theft by the rich sold as improving the lives of ordinary people. The Brexiteers, the gilets jaunes, the Five Star Movement, and many other groups in virtually every EU country, however, are the tip of the iceberg, as it were, of the many whose lives have not only not improved but have been severely hurt by this bill of goods they were sold.
And note how little Mandos actually talks about Europe. It is all this country and that country. He will occasionally mention the EU and more rarely the EZ taking on individual countries. But when he does this he is not talking about the people of Europe but the out of touch, anti-democratic institutions they are. And none of this has anything to do with making Europe a better place for ordinary Europeans.
But Mandos is a true believer. Like a Trump supporter, he either ignores facts or contorts them until they fit his view. Even as the Titanic slipped beneath the waves, Mandos would still be coming up with explanations why we should not believe our lying eyes.
highrpm
@mandos,
now you’re talking cognition versus subconscious, reflection versus reflexion, slow versus fast thinking, the five second rule blah blah blah. both have their places. the more desperate a person is, the more appropriate to toss cognitive thinking. of course, suicide is the final option.
ps,
i’ll side with hugh’s titanic comment.
Mandos
Hugh: You are falling into a typical left-wing failure mode of confusing “works” with “is good”, and another error common to the whole political spectrum, shooting the messenger. There are lots of good things that don’t work, and bad things that really work, and lots of things in-between. The EU is somewhere in-between.
Europe needs a framework to organize a large number of different countries, sandwiched as it is between great powers that would use it otherwise as a strategic chessboard (Alanis-Morisette-ironically, exactly what it used to do to people outside Europe). Furthermore, the world needs to find ways to pool sovereignty into larger entities in order to mitigate future environmental catastrophes, etc. The framework that exists was partly constructed during the neoliberal revolution, so it encodes some of those values, which have proven in the long run harmful. It also contains a useful regulatory apparatus, such as the one that just issued a directive phasing out common single-use consumer plastics. The framework that they built was also deliberately designed to have particular contradictions to force convergence and prevent stalling/backsliding. Somewhere in-between.
Naturally, it could all come apart, but predictions of its demise have been repeatedly premature — it is increasingly clear that it is not meaningfully similar to the Titanic. I have even outlined paths by which it *could* come apart. So I perfectly well know that it could *become* the Titanic. But, I presume this is all lost on you: you confuse “good” with “works”.
Hugh
I love how Mandos finesses the anti-democratic, anti-populist nature of the EU with “contradictions to force convergence and prevent stalling/backsliding.” Yeah, the far sighted rich and elites realized and and made it an integral part of their plans to make sure the rubes and rabble, what we call ordinary people, were rendered and kept impotent and irrelevant. And per Mandos, this wasn’t a bug but a feature. If you had any doubts where Mandos is coming from, this makes it perfectly clear. He stands with the elites and believes that the rest of us should simply shut up and do what we are told.
Mandos
Hugh: *facepalm* It’s not a question of bugs or features in a normative sense. Again, you’re confusing “is good” with “works”. Yes, the anti-populist approach taken by the designers of European convergence (and yes, they were very suspicious of The People, some for bad reasons, others because they had lived through large populations simply ignoring or cheering the industrialized murder of millions of neighbours) might be morally wrong, a bad idea, unsustainable, etc. That is a whole other discussion.
However, a realistic assessment of where the European “project” is going cannot ignore the fact that this approach, for the moment, does still appear to be working. It may well stop doing so (due to extrinsic factors, the butterfly effect, etc), but it hasn’t yet, and the signs of conflict people have been witnessing are insufficient evidence to say that it is not working. The people who designed the Eurozone, a generation later than the overall EC/EU process, were well aware that it would be crisis-prone.
I wouldn’t have said this three years ago — I shared the view that the Eurozone, if not the EU, had dealt itself a major blow by the way it treated Greece. I was probably wrong about that. I was confusing “evil” with “not working”. This is a revised evaluation of the situation in the wake, particularly, of Brexit. It may yet hit the iceberg and become the Titanic. But right now, these are not the harbingers you’re looking for.