Thursday, June 1, 2023

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Stock markets crashing? Tax reform is more urgent

Stock markets crashing? Tax reform is more urgent

The wrong decisions of the ECB and the need for a radical fiscal intervention. The speech by Giuseppe Spadafora, vice president of Unimpresa

The stock exchanges burn billions, the banks lose value on the stock exchanges but for the heads of the ECB and the central banks everything is fine.


Apart from the fact that the situation is more dramatic than they want us to believe and to understand it it is enough to analyze some macro data, the concern remains inflation, which recorded +9.2% in March, with average rates for purchases first home at 3.95%, and average consumer credit rates at 9.79%. But Mrs. Lagarde imagines a rosy future full of wonders.

I think she's the only one who sees it, even if in fact in Italy I don't think there are many who are concerned. If we then add the banking events of recent weeks to this dramatic picture, the attitude of the ECB is even more incomprehensible. And it is precisely the central banks that demonstrate the insecurity of the moment, just look at what happened with Deutsche Bank, a victim of the market for having liquidated in advance a 1.5 billion dollar Tier 2 subordinated bond.

In such a complex economic and financial framework, the reassurances of the central banks seem like those of Neville Chamberlain on his return from Munich at the end of September 1938.


In all of this, what corrective actions do our Economy Minister, our Prime Minister and the Bank of Italy plan to implement?

We know those of the ECB and unfortunately they are usually wrong. The problem here is that what is happening has nothing to do with the inflationary moments of the past. Today's inflation, where real inflation has reached 11.9% and 13.5% for food, does not depend on an increase in consumption which generates greater demand and therefore rising prices. We are dealing with pure financial speculation on energy, raw materials and commodities.

In fact, Istat records negative economic trends in value added in all the main production sectors: -0.7% in agriculture, -0.2% in industry and -0.1% in services”, and confirms the minus sign recorded by the Italian economy at the end of 2022 in all sectors.

Just to be clear, inflation affects savings accumulated over time, reducing their value and purchasing power; this means that in the state of the art, without a tax reform "one that hopefully will see the light in a couple of years", even if wages were to adjust, we would be the target of fiscal drag.

This is a machine translation from Italian language of a post published on Start Magazine at the URL on Mon, 27 Mar 2023 05:52:42 +0000.