THE MES BOXES DISASSEMBLED ONE BY ONE. WITH THE REFORM, ITALY HANDS AND FEET HANDS HANDED (by @musso from Atlantico Quotidiano)
On AtlanticoQuotidiano he publishes an interesting response from Musso to Marattin's Thread with which the deputy, with his usual kind and respectful tone of democratic discussion, tries to explain the excellent qualities of the MES, naturally saying nice … er … "Personal Interpretations ". The worrying thing is not that he writes to you, basically he is paid for it, nor that he does it with an arrogant tone much more suited to other twenty-year-olds in Italian history, but that he is a professor of Economics in Bologna. Students should ask for tuition reimbursement.
However, we advise Musso to… go to a boxing gym!
Enjoy the reading.
Today the vote in Parliament on the New Mes. With the reform, the ESM acquires a central role in crises, but also outside of crises, pre-eminent over the European Commission. By approving it, Italy hands over tied hands and feet: debt restructuring easier, first and last word to the bankers of the Mes. A thread on Marattin's Twitter, in which he gives a "scoundrel" to those who oppose it, gives us the opportunity to go back to dismantle the lies about the new treaty one by one. And the reader will judge who is telling lies and who is the scoundrel … It is time to stop sporting those who say Yes to anything that has to do with the EU, however contrary to our national interest
The theme of the day is the New Mes Treaty. Quagliariello says that "a reform is being made that does not ask for money and does not impose conditions", adds Brunetta who "is certainly better than the original version of 2012, still in force", writes Domani that the opposition is "rebellious and anti-political", for La Repubblica those who oppose "ideologically fight against an acronym" and raise "a symbolic flag of the original battles, born in another era, and today incongruous in the years of the Recovery Fund … a battle of sovereignty and ideologism … the banner of a permanent obsession… immediately evocative totem-word, rather than a political concept ”. For the president of the Finance Commission of the Chamber of Deputies, Luigi Marattin, whoever opposes it is simply a "scoundrel": a vague expression, like all insults, but fortunately provided by ours with a comment , on Twitter , in eight points, which will be better to follow.
(1) The president of the Finance Committee of the Chamber of Deputies begins by comparing the ESM to "a defibrillator" : "it does not make a heart attack more likely, but only more likely an effective rescue if we ever have a heart attack". It will be enough to answer that a defibrillator restores the normal electrical activity of a patient's heart … it does not become his privileged creditor as the ESM does. We appreciate, however, the effort applied by ours to avoid the comparison (popular among his associates) with "an insurance": an insurance pays the insured a capital or an annuity, or rather the rival of a damage … it does not take away the bank account as the Mes. The teacher often repeated: “the pupil applies himself, but he is not intelligent”.
(2) He goes on to talk about the CACs (collective action clauses), those particular clauses contained in the BTP issue prospectuses, which allow a qualified majority of creditors to impose debt restructuring on all creditors. With the New ESM Treaty, the countries undertake to insert them, no longer with a double majority (the contrary vote of the holders of a single series of debt among the many issued, blocks the restructuring of all the debt), but with a single majority (they vote together all series of debt issued, without the need to vote for each single series issued). Well, according to Marattin, the transition from double majority CAC to single majority CAC "does not make default easier, but only compensation for small savers, if things go wrong".
Well, since these clauses would be activated only in the event of a restructuring of public debt, that is, in the event that for every 100 euros invested in BTP the State makes 60 and with payment deferred to the year two thousand and thirteen: well, according to Marattin, such restructuring would be ' compensation for small savers'. The scoundrels are the ones who oppose the Mes, of course …
Wishing to limit ourselves to the first part of the statement of ours ("it does not make default easier"), we note that it contradicts the opinion of a prince of Eurism like Marcello Messori ("recommendation to Italy: no single majority CAC "), That of the Research Offices of the Chamber (" they would simplify the procedure for restructuring the debt of a country ") and of the Senate (" they could allow a simplification of debt restructuring procedures "), that of the head of a legal office of the Mes even (“the double majority CACs… would make it more difficult to approve a voluntary restructuring”), sinanco Boeri and Perotti (“The Mes will make it easier to restructure the debt. True… the reform makes it easier for them”).
(3) He notes that “the involvement of the private sector in the event of default… is already in the Treaty in force since 2013”. This is true ("in line with IMF practice, in exceptional cases an adequate and proportionate form of private sector participation is taken into consideration"), but ours forgets to add that a new power is attributed to the ESM: " at the request of one of its members … it can encourage dialogue between that member and its private investors ". Power which, together with the aforementioned reform of the CAC, seemed sufficient to Marcello Messori to conclude that, with the New Treaty, the MES could itself cause the restructuring of the BTP; moreover 'ex-ante', that is, prior to the granting of any credit. What the professor called, I quote: a Trojan horse, a dramatic change, a perverse incentive scheme, which would have caused macroeconomic instability.
(4) He admits that one of the two ESM credit lines to the States, the precautionary credit line (PCCL) "becomes more precautionary", ie the conditions for access are made more stringent. Rather …
(5) … indeed it also admits that these conditions repeat the “old European fiscal parameters”. From the Treaty we will mention a few: "public deficit not exceeding 3 per cent of GDP … public debt / GDP ratio of less than 60 per cent or a reduction in the differential compared to 60 per cent in the two previous years at an average rate of one twentieth l 'year … absence of excessive imbalances … absence of serious vulnerabilities in the financial sector ”. The reader will not escape the fact that these conditions are so impossible that they make the credit line inaccessible to Italy; nor is there any hope of changing them, except with an impossible unanimous consent of the member countries. All this is relevant since, once excluded from the precautionary credit line (PCCL), Italy can request access only to the enhanced credit line (ECCL): that is, to the Troika , possibly after restructuring the BTP. Nor is it surprising, given that this was the intention of Berlin, declared in the press and implemented with the New Mes Treaty, in fact… but reading German is obviously the stuff of scoundrels.
Once here, Marattin could surrender and join the scoundrels. Instead he insists: “everything happens as a rule , which in the community legislative language – as everyone knows – means in a general way. It is practically ours too, which in Italian law is put when one wants to say no ". He forgets to add that the exception to the rule ("as a rule, the members of the MES must respect the quantitative parameters and the qualitative conditions") must be approved unanimously (ie by 85 percent of the votes if in "voting procedure urgency "). Which means that, to obtain leniency, Italy should also have the support of the Netherlands-Estonia & Co. This is the phase in which Italy would be asked for the prior restructuring of the public debt and it is the lawyers of the Mes themselves who present the situation : "a member state in difficulty has an incentive to consider debt restructuring when necessary to persuade other states members to approve the request for financial assistance "and it will be the case" that, even if the debt of the Member State in difficulty is perhaps sustainable, at least one other Member State is simply unable to approve the loan, in the absence of a certain level of debt restructuring ”.
(6) Marattin himself must have noticed this because, two points further on, he invokes a supporting argument: “Decisions on financial assistance are made either by unanimity or by an 85 percent majority. Italy has 17 percent, so nothing can happen without us ”. But it does not explain how this would help Italy. In fact, let's assume that Italy has broken it down and obtained a PCCL without prior restructuring. In any case (art. 14.6) "periodically at least every six months", the director general of the ESM presents a report, which "verifies continued compliance with the aforementioned eligibility criteria" and, "if the report … concludes that the member of the ESM no longer meets the eligibility criteria … access to the credit line is suspended ", ie Italy may no longer receive a penny," unless the board of directors decides by mutual agreement to maintain the credit line ": 'by mutual agreement', that is, unanimously. This is a case of 'reverse majority': in other words, it is sufficient for the director general and Estonia to agree to end support for Italy.
At that point, the ESM could easily impose "another form of financial assistance, the granting of which is subject to the rules applicable under this treaty" and which could easily include the restructuring of public debt. Rome could oppose its veto, of course, but remaining without credit and getting nothing in return. The scoundrel is who points it out, of course.
(7) Once he returns to the clemency of the Court, he goes on to embellish it, rhetorically asking himself : “Is it true that the Mes acquires a central role – which it does not now have – in crises? No". Ours must have forgotten to even take a look at the written opinion of the ESM lawyers, who serenely admit the opposite. Even if he had not done so due to possible difficulties with the English language, ours could always take a look at the new procedure for granting credit (art.13): while before the EU Commission (in concert with the ECB) the "sustainability of the public debt", with the New Treaty the EU Commission (in agreement with the ECB) and the ESM evaluate both the "sustainability of the public debt" and the "repayment capacity" of the loan.
Not only that, if ever the EU Commission and the ESM do not agree, then "the European Commission carries out an overall assessment of the sustainability of the public debt, while the ESM evaluates the repayment capacity of its member towards it". Otherwise said, the MES not only acquires the power to evaluate, but also to reject the Commission's evaluation.
This happens both before the loan and during the loan. That report (art. 14.6) that we have mentioned and that the director general of the ESM presents for the "verification of continued compliance with the eligibility criteria": previously it was sent on a free date and drawn up by the Commission with the mere help of the ESM ; now it is sent "periodically at least every six months" and is drafted "together" by the Commission (with the concert of the ECB) and Mes. Furthermore, according to a "cooperation protocol" , which goes back to saying: in the event of disagreement, "the Commission will carry out the overall assessment of the sustainability of the public debt, while the ESM will assess the ability of the Member State concerned to repay the ESM loans" . Otherwise said, the MES sings it and plays it.
But that's not all. Even without the states having applied for credit, "the ESM can monitor and assess the macroeconomic and financial situation of its members, including the sustainability of public debt, and analyze relevant information and data". In other words, at any time and regardless of the fact that Italy has not made any request for credit, the ESM can declare the Italian debt unsustainable. Then, an indiscretion to Reuters here, a tip to Handelsblatt there, the BTP collapses and that's it. Let's repeat it: without Italy having even opened its mouth.
In short, Marattin is right to say that 'the Mes does not acquire a central role in the crisis'. Yes, you are right, because, in fact, the ESM acquires a central role in crises and outside crises. By approving the New Treaty, Italy hands over, tied hands and feet, to the bankers of the Mes.
(8) Finally, it must say something positive. First he tries with “we have 850 billion of common debt issues ( Sure plus Next Generation Eu )”… as if the Recovery Fund were not under the crossfire of Polish-Hungarians and Dutch.
Then he comes up with the usual 'backstop' : "we have the Fiscal backstop : in the event of serious banking crises (on which the small capacity – and financed by banks – Single Resolution Fund – is not enough) the Mes intervenes with common resources to avoid bankruptcies" . Ours is careful not to specify that, even with the intervention of the Mes, such 'common sums': in the present, they are postponed until after an upcoming general cleaning up of the banks and, in the future, they would intervene exclusively after a bail-in (i.e. only in the impossible case that the complete expropriation of shareholders, creditors and those holding a current account was not enough to 'save' the banks). In short, Marattin, when he writes “avoid failures”, intends to avoid them in the manner of Renzi with Monte dei Paschi . Result that seems dramatic only to us scoundrels, obviously.
Indeed radiant, in the eyes of Marattin, who glosses: the backstop is "on closer inspection, much more" than the Edis. Ludibrio. Much more bloody, much more cruel, much more ferocious we think we are scoundrels: in fact, in the absence of Edis to guarantee the bulk of the current accounts there is the Italian Republic … so well administered by the Marattins … which, to find the money , you can always contact the Mes. Appalled.
Dismay which turns into anger, at the thought that, in the context of the approval of the New Mes Treaty, Italy also undertakes to vote a " resolution of the Council of Governors for the cancellation of the DRI", that is the instrument of direct recapitalization of banks, ( as we have explained here ): an instrument still in force today and, for Italy, much more favorable than the 'backstop' that replaces it. To the immense joy of the Germans .
(9) He concludes with an invective . First by asserting that "none of those who are declaring their opposition to the ESM reform in these days is really able to use a serious and verified argument" … but will not the exact opposite be true? Then adding that "simply, saying No to something that has to do with Europe has a political market that you intend to exploit for mere reasons of immediate consent or political interdiction" … he, on the contrary, has specialized in the political market of those who say Yes to anything that has to do with Europe, no matter how fetid, infected and purulent, a political market that he intends to exploit for mere reasons of his own political survival. Finally, to put it in a nutshell, “it is basically a sport that everyone has practiced in the past. But that perhaps now is no longer the time to practice, what do you say? " … and yes, it is a sport that all the Piddinis have practiced in the past … and yes, it is time for you to stop. Here we say we scoundrels, dear president of the Finance Commission of the Chamber of Deputies.
* * *
The considerations expressed also apply to the so-called 'pandemic credit line' of the Mes, or Mes-Sanitario. As the guidelines of the latter also clarify to the blind: "the only requirement for accessing the credit line will be that requesting States undertake to use the support … to support the internal financing of direct and indirect health care, care and prevention of related costs due to the Covid-19 crisis ", but then the monitoring and eventual termination faithfully obeys the pro tempore Treaty in force, as is normal and very well described, among others, by Ortona . In this regard, Marattin had published a video , entitled “10 responses on the Mes. Anti-scoundrel therapy " . The text stated that "the only conditionality is that these 35 billion and 750 million at most are spent on direct and indirect costs related to the health emergency" and concluded with a peremptory: "all the reasons that are adduced to reject the Mes that's all lies ”. The reader is now in a position, by himself, to judge if and who ever is a scoundrel, if and who ever tells lies.
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The article THE ROLLS OF THE MONTH DISASSEMBLED ONE BY ONE. WITH THE REFORM, ITALY HANDS ITS HAND AND FEET LINKED (by @musso from Atlantico Quotidiano) comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/le-frottole-del-mes-smontate-ad-una-ad-una-con-la-riforma-litalia-si-consegna-legata-mani-e-piedi-di-musso-da-atlantico-quotidiano/ on Wed, 09 Dec 2020 13:21:19 +0000.