Debt, what Giavazzi and Draghi architect
What did Francesco Giavazzi, Prime Minister Draghi's economic advisor, say and what did he make to understand
“Silence, Agnesi speaks”, today becomes “Silence, Giavazzi speaks”. We must refer to this famous advertising slogan of the 80s, to comment on the intervention of Professor Francesco Giavazzi at the Trento Festival of Economics.
He is the most listened to "adviser to the Prince" and, according to reliable sources, at Palazzo Chigi on all the economic dossiers there is nothing that he does not want to move.
It is like the Oracle of Delphi: just ask and the response arrives.
The theme is always the same: the next few years public spending will have to increase due to the huge investments required by the defense, ecological transition and reconstruction of Ukraine. Net of the rhetorical question with which one wonders what the EU and Italy have to do with the reconstruction of another sovereign state outside the EU, Giavazzi's answer is that Italy does not have good clothes to wear, also because it already has the onerous task of reducing the debt accumulated so far.
And, with the air of someone passing by, he has been serving up what has been his dish of the day for a few months now. "We need a credible anchor for debt and to be able to distinguish the good from the bad."
The "maritime" metaphor somewhat sweetens the recipe, but it is always the one that slipped (not by chance) between the in-depth links of the article signed by Mario Draghi and Emanuel Macron just before Christmas 2021.
The anchor is the ESM, as well explained in that document , which Draghi and Macron considered "a proposal worthy of in-depth discussion".
The public debt currently borne by the ECB (approximately 720 billion, considering the purchases made since 2015, of which 350 those purchased after March 2020), will have to be progressively transferred to the ESM, which will finance itself on the market or place its securities on the market. ECB .
In one fell swoop: the ECB will get rid of a cumbersome weight, Italy will be placed under a macroeconomic adjustment program or, in any case, will be subject to the stringent rules of the Mes, and the latter institution will have finally found the reason to exist.
From Giavazzi's point of view, the anchor and a boulder tied to his feet are the same thing.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/debito-che-cosa-architettano-giavazzi-e-draghi/ on Fri, 03 Jun 2022 12:22:49 +0000.