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Liquidity Decree, ESM, role of the European Union and Italy againstcoronavirus emergency: we had the pleasure of talking about all this Giulio Tremontiin theexclusive interview that the teacher has kindly awarded to Money.it.
The topics covered are really many, like many doubts. More than an hour of conversation in which Professor Tremonti has allowed us to investigate some important topics, all of great relevance.
In fact, it is not easy to address political, economic, social and fiscal issues that are clearly intertwined with judgments of merit, always complex to provide and evaluate.
Question: Professor, in your last book “The three prophecies Notes for the future“Recently updated in light of the global emergency we are experiencing, you speak of three different scenarios that had been anticipated in some way in the past: the drift of global capitalism mentioned by Marx, the Mephistotelian power of money and the digital world of which Goethe spoke and of the crisis of cosmopolitan civilizations of which Leopardi spoke.
What considerations can we add today in light of the incredible situation that we are experiencing in Italy and in the world due to the ongoing pandemic?
Answer: the fourth prophecy, after the ones he mentioned, is that they took us, despite not having the iPad or the computer, but 200 years ago they had intuited or predicted what would have happened if the man had done what he really did with the globalization.
What emerges from the past? Ancient clues and myths that somehow show us what is happening.
I give an example, the earthly paradise: we certainly do not believe the story of the apple or the snake, but in the Bible we read “crossed the mountains, the peoples of the East have descended to our plains“; it means that there was a dramatic variation in human life. Heaven is there first and then not. Or, another ancient myth is that of the universal flood, then you go up to the ark …
Here, I think all of these stories have a true background.
The expulsion from earthly paradise, related to today, could be associated with end of the golden thirty years of illusions produced by globalization.
Now we see that there is a dark side to globalization. Also, back in 1995, if you allow me to register, I had the opportunity to predict what would happen in my book “The ghost of poverty“
To think that the fall of the Berlin Wall or the free market was enough “open the garden of Eden to menIt was not realistic.
Q: In your book you also talk about a European Union “too elitist, too totalitarian, too financial“It also highlights the need for a change in structure, especially financial, which necessarily goes from instruments such as eurobonds, which he also proposed informally in 1994, and then again by the Berlusconi IV government of which he was minister in 2010.
We are in 2020 and we are still talking about it. For what reason? And, in your opinion, will the next Eurogroup, established for the end of April, manage to go beyond mere declarations of intent?
A: Eurobonds are an idea born in 1994 by President Delors; then it was taken over by the Italian government during the second half of the 2003 European presidency. I presented it as an idea to develop Europe. By the way, Delors was talking about infrastructure, he had added defense.
I remember the reaction in English that was: “this means nation buildingwould be the construction of a political Europe“And he said no. I filmed it in 2010 with an article about Financial times and the discussion continued.
If you look at the documents in March 2011 in two days, the European Parliament passes a motion on notorious month and the Eurobonds, the speaker of the Honorable Gualtieri, today Minister of Economy and Finance.
Po the Monti government arrives and never imagined such an action, taken suddenly to save the German and French banks and use our money to distort attention as if the crisis was in the public budgets and not in the middle banks failure waiting for collapse
Not only were there risks in Greece but also the derivative risks.
That said, what was supposed to be a tool for making Eurobonds has become a tool for coercive collection in Greece, on behalf of Europe and on behalf of German and French banks.
Going back to that tragic August 2011, when a letter arrives “atypical“It is amusing that Professor Monti, the beneficiary of that operation, today accuses the ECB of having written that same letter …
That said, no one could imagine what would happen next, with the “call from abroadThe Monti government takes office and does two things:
- abandon eurobonds;
- approves the use of the Save States (MES) fund for “save“Greece.
It turns out that, for five years, the ESM has disappeared from the national and European public debate; reappears in the fall of last year with the proposal of transform ESM into a bank savings fund.
And we come to the opposition of our oppositions.
In the Italian government program at the time, but especially in the European agreement, just read the article written by me and Jean-Claude Juncker about Financial times in 2010 it was very clear that eurobonds were the target.
Note that Juncker was the President of the Eurogroup. And then there are the cards from March 2011. In two days in parallel, you can see first the vote to make the Eurobonds and then the vote in the European Parliament targeting the Eurobonds themselves.
Eurobonds had to have a fund as a starting point and the sequence was “let’s make the fund and then the eurobonds”. The sweet coup d’etat, the precipitate of the differential crisis, the call from abroad to Italy, the fifth internal column, intervene in this whole process, whether correct or incorrect, which had its own logic.
Recently, during a conference in England, I met a very important British Labor politician who said to me:
“In 2011, the UK’s mistake was to leave Italy because of Germany’s decline; something that went against the UK’s interests that were to contain Germany.”
It was a revelation to me, I hadn’t thought about it, but if I think about it, I was right.
Even Christine Lagarde, IMF president at the time, felt like apologizing to Greece, and it will mean something. If you feel a duty to apologize to a people, it means that something terrible has been done.
The real fact is that the vote on the ESM has been under the Monti government; Sign the ESM only as a prerequisite for Eurobonds, so much so that it was a provisional vote. The final vote was under the Monti government. I would never have signed that agreement without the Eurobonds.
D: Professor, the last Eurogroup seems to have revealed the desire of European countries to follow four different guidelines to face the current and future crisis:
- MONTH without conditionality;
- INSURANCE, or European integration fund for workers;
- EIB intervention in support of companies.;
- Recovery Fund financed by the EU budget for the revitalization of the post-restart European economy.
The Commissioner for European Economic Affairs Paolo Gentiloni He said the European Commission will present its proposal in late April. In your opinion, what should we expect?
A: Europe that could have been the temple of ideas, as it could have been with Eurobonds, is in crisis.
The idea of today’s Europe. is bankrupt: There is no political plan, there is only multiple credit openings, is what I call the “Europe in installments“
Point number one: that money, many or few who are sianom I’m still a loan, must be returned, with defined rates and terms.
Second: the mechanism itself must adapt because it is based on states that have the euro, but now it must also adapt to countries that, although they are part of the European Union, have not adopted the single currency.
So it is clear that although it is aimed at health logics, the ESM is controlled and, in the light of current rules, control must also be syndicated by the German Parliament. This is what Mr. Monti wanted and it is somewhat distressing for Italy.
However, once the controlled phase ends, the restriction in the financial statements returns, so I have the impression that everything is very questionable.
With regard to SURE, the European dismissal mechanism, these are really four cents and, furthermore, they are not contributions but other funds, which will have to be repaid sooner or later.
The same goes for the EIB. In fact, worse, given that the EIB already has many industrial losses in the investments it has made. You may even need a capital increase. For now Europe has become a financial window.
There is another speech about the Recovery Fund (or Recovery Bonus). It is a tool that:
- it would only come into force with the approval of the European budget, therefore, from January 1, 2021, not earlier (obviously too long a period compared to the urgent needs of the moment, editor’s note);
- It is a terribly complicated tool and still to be defined. And, in any case, the idea of Eurobonds, proposed by Delors in 1994 and by us, was based on the idea of financing European investments. Now it is European debt, and then to the European capital thus collected national debts would be added on which the States would have to pay interests. Doesn’t seem like a great idea.
D: The government appointed Vittorio Colao, former CEO of Vodafone, to lead the task force for the economic and social reconstruction of Italy. What do you think and what will be the guidelines that this group of experts should follow, in your opinion, to restart the Italian economy after this shock?
A: Look, I have no idea and I can’t evaluate now.
I will only say this: on the plane of financial liquidity the language (“firepower“,”things never done“, Etc.) that does not correspond to reality and how this plan can be implemented.
In other countries, companies have already had liquidity..
The Italian plan – obviously refers to the so-called Liquidity Decree – is doomed to failure And this is all very serious.
If you don’t give liquidity to the economy, there will be a disaster.
Who should have paid the VAT now and is unemployed? No, probably not. And the damage to the state, in terms of income, will be enormous.
Now you have to choose when to restart the economy and business, are tragic choicesWe need to see how much we risk in economic terms and in terms of a pandemic.
But if you put it in terms of a pure economy: if the economy does poorly and the public budget is not sustained, the effects will again be on health. I was a minister until 2011 and health spending was perfectly in line with European spending. Those who came later to save us have cut their healthcare costs.
If there is no money and medical care will not be financed, the consequence will be the Greek scenario also for Italy. The deeper the recession, the longer the crisis, the greater the consequences on the social fabric: despair, suicide, illness, depression.
The choice is tragic, but it is necessary to choose: if the economy falls, the consequence (also) will be the health crisis.
A government that announces the liquidity decree in one way and implements it in another has some huge responsibilities.
D: Professor, the Government has also recently created a working group “fake news“Which should put a kind of stamp of truth on the COVID-19 news and perhaps not only. This has sparked several controversies, both on the right and on the left, due to the unusual choice of establishing such a commission at the Palazzo Chigi, and not with a third party guarantor.
What would have happened if one of the governments of which it was a part had made the same decision, accused notoriously of having had a difficult relationship with the world of information in general?
A: Frankly, at that time there were not all the media today, the reality was mainly on paper and on television, while now the web prevails.
Having said that, It seemed very wrong to me in institutional terms., create such a commission at the Palazzo Chigi. If you really have to do it with a third authority, among other things, our authorities are administered by the House and the Senate. Frankly it’s a “Albanian operation“
This is in addition to manipulated press conferences, non-existent debates, etc.
Q: So, in your opinion, behind the management method of the last government press conferences and, in particular, the perennial delays with respect to the announced times, is there an accurate communication option?
A: I only notice that the elections are also constantly delayed. Now maybe we are exaggerating a bit.
Furthermore, democracy is suspended in the event of war. And this against the virus is somehow a war. However, there is a limit to everything.
Q: Professor, in recent weeks several parallels have been made (or attempted) between the terrible crisis of 2008 and that of today. In your opinion, what should we expect from the macroeconomic point of view until the recovery, although partial, of normality?
A: They were both cases of two strong blows to globalization.
East it is much more serious than that of 2008.
2008 started as a financial crisis and then became economic and then social. Today we find it partially as political crisis.
Two proposals were compared in the 2011 G20.
From us in the Italian government came the proposal for which we wanted to consider 2008 behind us, but aware that the crisis was not over, in fact it would return.
That is why we wanted to create new rules for the economy. Assuming that the free trade but it served the fair TradeIn other words, it was necessary to advance in the production chain and establish valid rules for the entire system.
Given this logic, we have established a draft treaty for the rules of the global economy, voted unanimously by the OECD. In point 4) of that draft there was a rule about obligations to comply with environmental regulationsDo you say something
And it was not only paying attention to natural phenomena, but it was preventing production from generating environmental disasters.
Against that idea, which was called Global legal standarddevelops the Financial Stability Board, what did he say “no rules are needed for the economy, it is enough to introduce some rules on finance“
The second prevailed, which has regulated another ten years of rampant globalization and we are now reaping the poisoned fruits.
In any case, this second crisis is inevitably worse than the first, the consequences produced will be felt for many years before us (just think about the future fear and insecurity that you will have when traveling).
Q: Professor, in light of all that we have said, what future do you see for the euro? Can the single currency project continue, or is it in danger of finally wavering in light of this health crisis that risks becoming an economic crisis?
A: The single currency project was born with German unification, although it was already “in the laboratory”.
The exchange at that time was: Germany united but without the brand with a single currency. And somehow it worked for a first period.
Now, many speak about the end of the euro, I am just saying this: it can be anything, a lot depends on us, when I spoke about the eurobonds I wanted to achieve a more political than economic unity of the European Union.
At this moment I know that it is not possible to unilaterally leave the euro for individual states, or rather I would not know how much it can really work, so perhaps it will happen that everything will shrink and that individual states will be forced to abandon it to save themselves from the rubble.
That said, when I listen “let’s go back to the lyre or something“I think the problem is that the first coin was printed and signed by a country, a political class and a truly united people to give confidence to those who printed and signed the coin.
There was a cultural, political, economic and social blockade that guaranteed trust, a fundamental element.
Now honestly I don’t see all this We are a country that has enormous problems of internal division. After the war, however, we were united and there were the Einaudi and De Gasperi.
