What if the Toto-ministri was a useless exercise?

In these days there are, at the same time, two facts of a political nature, the first affecting the entire Italian press, the second treating with less evidence and only by the most interested and prepared analysts. Let's talk about:

• the full ministers and the game of names, especially for the most relevant ministries, such as internal, MEF, foreign, etc;
• the process of reviewing the budget stability rules which will be discussed next October 26 at the meeting of finance ministers.

Let's start from the second point: it is useless to expect that there will be a profound revision of the treaties involving the two limits, now anachronistic, of the debt (60% of GDP) and of the Deficit (3%), established in 1992 and now senseless in the post covid. As Giuseppe Liturri underlines on the truth there is no time for their variation and, above all, there is no political agreement to be able to do it. Germany does not want them to be touched, they are part of its European domination and also have a psychological value, because they make the weight of the "Chain" felt around the neck of the various countries. Therefore we will limit ourselves to some methodological revisions, however relevant, which, according to Liturri, will consist of:

• in the variation of the time horizon in which to run the debt reduction, no longer annual, but five years and corresponding to the political cycle. In this way governments and their actions will be better controlled;
• in the variation of the deficit parameter of 3% which would become “Structural” and not “Conjunctural”, ie linked to the economic situation. it is not a big step forward, on the contrary a big factor of subjectivity takes over in the evaluations, because the various games of NAWRU, NAIRU and capacity for growth, introduced by the econometrists of Brussels and extremely questionable, return. Eventually you will be in the throes of personal evaluation of a variable in an equation, and this is by no means a step forward.

To these problems are added others: next week the ECB will almost certainly raise interest rates again. The purpose he declares is to fight inflation, which will not happen, at least in the short term, because inflation is external, linked to energy prices, not to the excess of monetary supply. If inflation falls this will be due, as we have already written, almost exclusively to the economic recession that this restrictive move will introduce in an economy already in difficulty due to the energy crisis.

The rates on 10-year Italian bonds are already 4.6% on secondary markets, a value four times higher than a year ago

The restrictive policy of the ECB, combined with the “Tapering” that is the decrease in the purchase of government bonds of the euro area countries, already underway, will have the effect of further increasing interest rates. A phenomenon seen in the UK following the Truss economic policy announcements, where the BoE responded by resuming buying stocks. In the Euro Area, the ECB will hardly follow suit, both due to budgetary constraints and because it does not believe in it. At this point, to stop a crack in the Italian securities, all that remains is the ICC tool, which is however limited in terms of volumes and highly conditional. The ECB will ask for the pursuit of the objectives set by the Commission, probably the famous “Reforms” linked to the PNRR.

At this point, let's move on to the first topic of the current newspapers: the toto-ministers. With an economic policy, and not only, defined by Brussels, what is the Minister of Economy for? It may be technical, political, or taken on the street and it will be perfectly useless, because real politics will be done elsewhere. In this way, however, even the basis of democracy will be devastated, with the cancellation of the fundamental principle of “No tax without representation”, since taxes will be decided by those who have not been voted, the Brussels technocracy.

This is the real challenge of the new government, difficult and surmountable only with a careful balance of international, European and extra-European relations, and of internal politics that nevertheless follows internal democratic pressures. Otherwise the new government risks being exclusively the unpopular executor of orders written elsewhere.

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The article What if the Toto-ministri was a useless exercise? comes from ScenariEconomici.it .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/e-se-il-toto-ministri-fosse-un-esercizio-inutile/ on Sun, 09 Oct 2022 10:00:53 +0000.