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Italy: The Dragon and the Cricket
The difficulty in making sense of the results of the Italian election has produced the common imagery of a clown to capture the comic Grillo, who appears to be the most unlikely politician since Lech Walesa, the unemployed electrician that led Solidarity in Poland, helping to bring fatal crisis upon the Soviet Union, and the general disdain for Berlusconi, whose political career appears driven as much by the need to avoid prison as anything else. While understandable, it confuses name calling for analysis.
Moreover, it does not do justice to the two key forces in Italy, the dragon, Draghi, the president of the ECB, and Grillo, which means "cricket" in Italian, the head of what has emerged as the largest single political party, his 5-Star Movement (M5S). The near-term political future appears to be in Grillo's hands and there will be much speculation ahead of the end of the week when the Italian parliament will formally gather, for the first time since the election, to select a president of each chamber.
When Fitch cut Italy's credit rating to BBB+ from A before the weekend it cited the inconclusive election that is not conducive to structural reforms. It also weakens Italy's ability to respond to shocks, such deeper domestic contraction or a broader crisis within the euro area. Pshaw. It was simply a timely excuse to align its rating. It was the outlier. It matches what S&P had done a year ago and is still above Moody's Baa2 (equivalent to BBB). Fitch's move contains no new information. Earlier in the week, the DBRS cut its rating of Italy to A (low).
One of the important implications of additional downgrades--and as it is on negative watch by all these agencies, it is a realistic possibility-- is that it will increase the haircut applied to Italian bonds as collateral with the ECB. Italian banks appear to have a sufficient cash cushion to absorb the hit initially, but the degrees of freedom can be exhausted quickly. In turn, this suggests why Italian banks do not appear to have returned much of their LTRO borrowings and why they won't until the situation is clarified, which could take the better part of the remainder of the year.
Cricket, not clown may be a more apropos image of the 5-Star Movement. There are a several characteristics of a cricket that are revealing. Crickets are easily and often confused with something they are not (grasshoppers). The males of both do making a chirping sound, but the cricket is more noise than action. Grasshoppers are pests and plague farmers. Crickets are considerably less harmful; perhaps because they live for a few weeks, while a grasshopper can live for a year. What also may prove prescient, crickets are known to eat their own dead. Aside from the America's experience, revolutions are often known to eat their children.
Grillo heads up a movement and is probably as surprised as anyone with the electoral outcome. Just like nature abhors a vacuum so do politics and as a movement the M5S moved into the vacuum created by four separate, even if related developments. First, on the European level, there appears to be a lack of leadership from those, like French President Hollande to articulate a practical vision of EMU that is not dominated by the interests of the creditors. Second, within Italy, the center-left coalition (PD) failed to offer an alternative to Monti's austerity program. Third, no group speaks for the high unemployment among college educated young people. Fourth, there was no local expression of the Occupy Movement, the Pirate Party in Germany, or a non-marxist ecological movement.
The key issue is whether Grillo can form a party out of the movement. Despite early successes, the Pirate Party in Germany appears to be imploded as members save their most vile recriminations for each other rather than their opponents. The Occupy Movement has not crystallized into a party. The Tea Party has been among the most successful, perhaps because it is essentially a faction within a party, and its story still seems to be unfolding, though by some reckoning it has passed its peak in terms of influencing the agenda.
Berlusconi seemed to campaign against Germany and Merkel, whom he implies forced him out of the office back in late 2011. Grillo, on the other hand, seemed to campaign more against Europe. While the two may seem similar, Grillo's line broader and more profound. Grillo's rhetoric gave expression to a powerful antagonism to the political elite. Although Berlusconi is not liked by the Italian elites, he is one of them. They are the target of Grillito's scorn.
The M5S program blurs the political spectrum. Although Grillo is 64, successfully articulates the angst of the well-educated, but under-employed and unemployed, young people. One study of the Gillitos found 46% come from the left and 39% from the right. They are inheriting an economy that posts meager growth even in the best of times, a high public sector debt burden, and a political culture of corruption, even after the Clean Hands drive and the expunging of a previous political elite.
We can recognize Abenomics as monetary and fiscal stimulus on steroids, but Grillonomics is a kaleidoscope of ideas that more like a movement's slogans than planks of a party platform. Indeed, as the M5S become more programmatic and specific the less cohesive it will become. Much to their surprise, the M5S may also find that politics make strange bedfellows.
In the name of anti-bureaucracy and to reduce the arena of public corruption, Grillo has called for extreme deregulation and privatization and large-scale reduction in the number of civil servant. He wants to end the state-monopoly on the railways. This gives him much in common with the right. The xenophobic and anti-immigration strain that is evident also appeals to some on the right.
In other ways, Grillo is more to the left than the PD. He wants the state to give 1000 euros a month to every one. Grillo has advocated tying managers' salaries to average worker pay and break up (and/or nationalize) the banks and industrial monopolies. The M5S speaks more to those one the make than those who have been made.
Grillo's proposals, including tying the universities more to business and raising health care charges, suggest a desire to re-write the social contract. The danger is that the changes he seeks may weaken the very constituency he represents. For example, renegotiating Italy's debt sounds like a swell idea, lighten the burden for the generation coming of age or came of age recently. Yet 60% of Italy's debt is owned domestically. A debt restructuring would hurt Italian pensioners, hit household savings, and trigger a financial crisis, not just in Italy, but all of Europe. The economic consequences would be severe.
It is unclear how the M5S and its constituents would benefit from leaving the monetary union, that Grillo has threatened. The result would make the current recession look desirable in comparison. Any competitive gain by a new and devalued lira would be offset what would likely be a sharp increase in interest rates and a financial crisis. Moreover, and very importantly, outside the EMU, the need for structural reforms becomes even more urgency.
Indeed, the latest ISOP poll found 74% of Italians favor retaining the euro, with only 16% wanting to go back to the lira. More than two-thirds of Italians are not in favor of an EMU referendum, leaving slightly less than a third wanting one.
The World Bank ranks Italy near the middle of the world in terms of its Doing Business evaluations, which is rather poor for a high income country. Of note, Italy, ranks 160th in enforcing contracts, 131 in paying taxes, 107 in getting electricity and 103 in dealing with construction permits.
At the recent ECB meeting, Draghi showed no urgency to take additional measures to help ease the economic contraction or blunt the tightening of financial conditions, seen in the contraction in loans to the private sector and weak money supply growth. While willing to counter threats against the EMU itself, the ECB quite tolerant of market forces pressuring governments to do the "right thing".
The ECB's Outright Market Transaction scheme is not relevant in the current circumstances for Italy. Recall that the pre-conditions require a programmatic agreement with the EU. Italy is far from that. By some reckoning, Spain is still closer, though Spanish bonds have benefited from the political uncertainty in Italy.
Italian bonds and stocks have recouped much of the initial losses seen in the immediate aftermath of the election. Italy has among the smallest budget deficits in Europe and is the only one with a primary surplus. To service its debt, however, Italy does have to sell about 30 bln euros of bills and bonds a month. It trying to extend maturities, where the average is already at the upper end of the euro area ( a little more than 7-years).
There has been reports that the ECB was contemplating leaving the Troika (EU, IMF and ECB), but there is not formal group as such and the reports were denied. Nevertheless, the kernel of truth is that the ECB is increasing isolated within the group that has acted as the financial judge and jury of the euro area sovereigns.
The EU is considering giving several countries extra time to reach their fiscal targets. The IMF has, a bit belatedly, recognized that the fiscal multiplier (the impact of a cut in government spending on the overall economy) is greater than it previously assumed. It is more sympathetic to an official sector participation in debt restructuring, such as in Greece, although it insists that is is excluded. IMF's Lagarde has also called on the ECB to cut rates and reiterated her call over in recent days.
Lagarde recognizes that lower inflation and wage restraint in the periphery requires somewhat higher inflation and wages in countries like Germany, which the ECB is reluctant to see. Yet, almost on cue, the 765k state government workers (represented by Verdi) in Germany reached a 2-year agreement on March 9, for a wage increase, which at 5.6%, is above the inflation rate. It includes a 2.65% this year, retroactive to Jan 1 and a 2.95% hike next Jan. The agreement effects 15 German states. Only Hesse which is not part of the collective agreement, is not formally taking part.
German inflation is stood at 1.5% in Feb, the lowest since December 2010. Recall last March the federal and municipal workers received a 6.3% wage increase over two years. Even if the cynics are right and electoral considerations (election in Sept) are playing a role, the fact is that the increase in German labor costs may help the re-balancing of euro area growth more than the harsh austerity alone in the periphery.
A dragon he may be, but Draghi is does not breathe fire any more. The high bar to triggering OMT means that if cannot be implemented quickly or as part of a crisis response program. With the zero deposit rate the real anchor for short-term rates, even a 25 bp cut in the 75 bp refi rate will only have minimal impact. Easing collateral rules remains possible, but there is a reluctance, especially by the creditor nations, to risk weakening the ECB's balance sheet any more.
Meanwhile, the ball is in the crickets' court. Grillo and the M5S movement is hardly a political party, though it is clearly a force to be reckoned with. Some of its program will likely be assimilated by the right and left. More than a little late, Monti himself softened his austerity push in the last days of the campaign. The election may prove cathartic, an expression of frustration and dissatisfaction with the political elite in Italy, but the Italian body politic is not about to decapitate itself.
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For sure, you could still win, but you are kind of late to the game for this free Platinum, you can enter up to March 23, and closest to spot price on March 29 wins the Platinum coin.
But ONLY the first correct guess wins
http://oahutrading.blogspot.com/2013/03/free-precious-metals.html
I am a globalist (NWO) kind of person and was never racist, but during these years of central banking and wealth transfer I am leaning to consider that jewish bankers and media are EXACTLY who to blame!
Nice try. But it doesn't fly.....
How 'smart' really do you think you are?
They're not Jews. They're criminals. Do you think Moses would approve?
Gangs. Thugs. Criminals. Thieves.
A thief is a thief is a thief. It doesn't matter what religion or affiliation they pretend to be associated with.
:D
P.S. Long Cable from 1.491 to 1.5317.
When things get as bad as they already are, any "solutions" precipitate the collapse into chaos. While anything that postpones that, by "kicking the can on down the road," enables the overall problems to grow bigger and worse, so that the eventual collapse into chaos will become even worse.
The foundations of Neolithic civilization are rotten. There is no possible set of reforms which can work, after those foundations become so rotten ... The globalized, privatized, fiat money, made out of nothing as debt, system IS TRIUMPHANT FORCE BACKED FRAUDS.
That is the established system of organized lies, operating organized robberies, within which everyone today lives, and needs to continue for them to continue living. The only genuine solutions are new systems of organized lies, operating organized robberies. However, since the established systems are already almost inconceivably crazy and corrupt, mostly due to their covert privatization of public powers to rob, backed by the public power to murder (as was gradually implemented in history through some use of the covert, private power to murder), our problems have become ASTRONOMICALLY AMPLIFIED!!!
As I already commented regarding the video embedded in this earlier article on Zero Hedge:
http://www.zerohedge.com/news/2013-03-10/why-central-planners-are-so-scared-italys-beppe-grillo
Bebbe Grillo appears to me to be another classic reactionary revolutionary. His solutions are too superficial, and so, bullshit which appeals to many mainstream morons, who are being forced to wake up to the fact that their systems ARE integrated into the globalized, privatized, fiat money, made out of nothing as debt, system.
The perpetual paradox of our politics is that it is already run by Wolves in Sheep's clothing, and so, the entire political debate is stuck inside of that retrogressive context, which is the almost total triumph of bullshit from professional liars and immaculate hypocrites being the basis of all public debates about public policies.
The REALITIES are organized systems of lies, operating organized robberies, which need to be replaced by new systems of organized lies, operating organized robberies. However, those REALITIES are not allowed within our public debates, because neither the Sheep, nor the Wolves, want to face those deeper truths.
Beppe Grillo is emerging as a leader of awakening Sheeple, after enough of those people are being forced to face the fact that their leaders were Wolves in Sheep's Clothing. The absurd bullshit debates that we then have are the Wolves continuing to pretend they are better, while the leaders of the Sheeple pretending that they are better. The basics are that money is backed by murder, and the only good solutions are to do that better. Since those basic social facts are still barely present in public debates, our currently established systems continue to be built on rotten foundations.
Therefore, the collapse to chaos and social storms IS coming ... and one of the signs of those times will be when things get bad enough to provoke experimental solutions, which will precipitate that collapse ... I hope, from my personal view, that that will be postponed as long as possible. However, it nevertheless must happen, because too much "success" from too much triumphant deceit eventually must go mad and destroy itself.
What exists now is a system of organized lies, operating organized robberies, that everyone lives inside, and needs to continue, in order that they can continue to live. Since that system is based on everyone lying to themselves as much as they can about that, and since being controlled by such huge lies, so much, for so long, drives that whole system to go mad, and become self-destructive, things are getting worse, faster ... However, there is practically zero chance of those established systems being able to admit more radical truth about themselves, in order to transform into new systems of organized lies, operating organized robberies. In that context, Beppe Grillo is a sign of the times, of nearing the point where an almost completely crazy and corrupt political economy system could collapse into chaos, and cause social storms.
I think Beppe fuck'em where they breath
Simple, sell the domestic debt at a discount to foreign buyers then give the new buyers a "haircut".
Repeat as often as needed.
Ben should own a fistfull of this shit already.
Easier than that; just do a selective default. Domestic individual bond holders and pensions are paid in full. Everyone else gets a real short haircut.
I get that Grillo proffers no ways to work within the system to placate creditors, meet austerity goals and put italy back on the road to productive euro debt servitude.
Have you considered he has no desire to do so?
My guess is he's got more of a large scale Iceland plan in mind, but knows he must first assume total control.
Could beinteresting.
"...he must first assume total control."
Italy and Germany tried that once, remember? Didn't work out.
:/
Again Orly, you have your (presumably) American colored glasses on. Italians are nowhere near as ashamed of their mid 20th century history as Americans are ashamed of Italy's mid 20th century history.
What a ridiculos analogy.
Oh yeh ;-) ;-)
Albrecht macht frei!!
Albrecht? Is this an implementation of ALDI, the usual poorer consumers choice and leads to the E. Fromm description of a society where consume is forced as replacement of freedom? Or did you just mean 'Arbeit'?
Hmm, possibly.
Sieg heil, anyway!
Grillo is the spearhead of a movement in the West to regain control of politicians and governments, to stop them from being nothing more than lackey's for banks and bankers.
Awareness is growing, and as placid and quiescent as the U.S. populace seem many millions are wise to the Ponzi scheme of the FED and Wall Street.
The more they bleed the middle class the more people there will be who will join movements like Grillo's.
It will happen quietly and slowly, with attempts by TPTB to use the media to propagandize the populace, but the reality facing families will eventually rise to the surface and it won't be pretty.
Can't happen soon enough.
I might suggest that in today's parlance name calling is analysis... that aside, I suspect the peak Tea Party influence has not been felt... rather, after the last election, there is substantially less hope that issues may be resolved at the ballot box. You economist like cycles... This nation was birthed in blood... a hundred years later saw a civil war whose combined casualties exceeded all other wars this nation has fought.
On the other hand, I find your analysis of the Grillo movement spot on. Campaign slogans and comedy are one thing (and don't get me wrong, I found much of Grillo's rhetoric inspiring)... translation into real world pragmatism is quite another.
And here is a thought. Revolution, peaceful or otherwise, if successful, leads to a temporary power vacuum which, as you have suggested, needs be filled. What fills it will largely come from context... Our own revolution in 1776 occurred during the so called 'Age of Reason'... the Russian revolution took place during the rise of a variety of collectivists movements. What may be given birth in this current age leaves much to the imagination...
Idiotocracy?
Outstanding analysis. Thanks so much for that, Marc.
"...but Grillonomics is a kaleidoscope of ideas that more like a movement's slogans than planks of a party platform. "
I have seen the videos of Beppe Grillo on YouTube, as I was curious as to who this "clown" trying to lead Italy may be. The propaganda machines came out in full force after the election, with name-calling and derision, which only spurred more people to find out who this guy is. That may or may not have been a mistake on TPTB part but an honest viewing of Grillos's speeches does give a clearer insight into the man himself.
He is a fantastic orator, keeping audiences rapt with his rhythm and timing, much in the way Richard Pryor, the great American comedian did. And what is great comedy but pointed social commentary, after all?
Digging deeper, you find that his agenda does indeed have more to do with slogans and blame-placing than it has to do with true political reform. One of the main themes of his comes acoss as what could easily be described (by the propaganda machine...) as anti-Semitic. It would be more accurate to describe his rants as "anti-Jewish banker," though. Being anti-banker may be a good thing but I believe the references have been spoiled by insinuating "Jews" into the mix.
A mere generation and a half after the Continent was awash in blood, with the most blaming, sordid, anti-ethnic and anti-religious propaganda the order of the day, Grillo's message may fall into the category of watching a train wreck. We don't want to see it but we can't really take our eyes away from it. As an example, when the "comedian" said of Daniel Day-Lewis at the Oscars that, "no one knew an actor could get into Lincoln's head...except maybe John Wilkes Booth," it was at once shocking and revolting. "Cringe-worthy," is the word that comes to mind.
Grillo has had some cringe-worthy rants and the Italians may be re-thinking the "protest vote." To express one's dissatisfaction with the status quo is one thing but to try to change those programs by moving a step closer to the hideous past may give them pause in the coming summer elections.
My guess is that Grillo's popularity has peaked and Draghi is correct in patiently waiting for them to formulate Plan B.
:D
Looks like you made the list troll boy. Nice goin.
What an amazing imagination you have, black and white pictures lol.
Not that it makes much difference but the video was back in 1999.
His popularity has peaked ? The other parties are backtracking or in a tailspin about their solutions and ideas about getting the economy on the right track. If anything at least he has opened a debate about the way forward.
All to no avail in the forseeable future unless he gets the other countries in the eurozone to QUESTION what is best for them.
The ones pulling the strings are in brussels and the DRAGON. When asked in last weeks press conference after ecb meeting if Italian election uncertainty was problematic for him and ecb he explained with disdain that their is the OMT to take care of it all. IE; DOES'NT MATTER who the government is, brussels is in full control.
Meanwhile brussels is working in the background making things all the better for EUROPE, the latest news is that bridgstone tyres are closing a factory in southern Italy ( one of the most productive worldwide ) and moving it to Poland, wonder what goodies they have been promised. Welcome to the union comrades.
Don't forget that you are in charge while you have got someone to rule over, don't get to greedy or their won't be anyone left to control.
OU T TT
I don't agree on everything you wrote, and it's nice that noone forces me to do so otherwise.
I personally don't think M5S has peaked yet, the media were quite silent on Grilko before the elections and I also think that some voters simply didn't vote thid time because they didn't see the chance to make the difference.
So not to be impertinent Orly, but what I first consider after reading your very well written post is that you fear an open and unabashedly evil outcome could manifest were clown Grillo and or his basic platform to become dominate?
VS clown Draghi and his more sterilized and stealth means of achieving victimization?
I'd go with Grillo. Only because it seems as if Grillo might disrupt the overall 'final solution' if only for a short time.
What we really need right now is some serious damn chaos.
Well, I do appreciate your sentiment, ISEEIT, but I am not Italian but an outsider looking in. So, about all I can do is offer a point of "handicap in the race," so to speak. It is an American thing, I guess, to vote for whom you think will win as opposed to which candidate most shares your views.
My point was that Grillo has said some caustic things, including rants about Illuminati and the like, which I neither agree nor disagree with as a matter of principle. But there is always a hint of "anti-Jew" laced in those types of diatribes.
In his show, Grillo shows bankers in photos that are very reminiscent of the old Nazi posters showing Jews through their nostrils and sagging, old eyes. What you see when he presents his anti-banker material, in black-and-white graphics to make them look even more guilty, is finger-pointing and blame. Just like out of The Crucible and the Salem Witch Trials, there always has to be a bogeyman.
Grillo may be correct about that but that is not my point. The slides just smack of something in the sinister past that I think most Europeans would not like to revisit. As the summer elections near, I wouldn't be surprised to see his popularity wane because of the associative factors of Mussolini staring back at the Italian people.
:D
Addo: I forgot to comment on the choice of your own words: the 'final solution.'
How near it all is yet how quickly we are willing to forget? I would say when it comes down to pulling the trigger at the ballot box, your very words will haunt voters and they will turn the other way.
Orly, I like your commentary but I think you're wrong on this one. You forget that Italy is not quite so ashamed of it's own mid 20th century history as Americans are ashamed of Italy's mid 20th century history.
Italy continues to have an active fascist movement, although they don't call themselves that. Il Duce's grand-daughter, Alessandra Mussolini was elected to their parliament some years back. The memory of Il Duce is not villified in Italy as it is in the U.S. or Britain.
Also, Italians in my experience are nowhere near as reflexively PC as we are in the U.S. (ZH being an obvious exception to the rule.)
So while I don't think that Beppo Grillo fits any sort of fascist model, his use of imagery that we would identify as being remarkably reminiscent of that period in history is not going to hurt him.
I did not know that.
Thanks, 101.
I will say that, from what I've seen on TV (Bourdain and others...), it seems Italians, particularly in the countryside, simply want to be left alone. Won't a prominent figure like Grillo attract unwanted attention for them? Isn't that a concern of theirs?
:D
Well, the thing to recall about Italy is that until about 1865, there was no such thing as "Italy". It was a bunch of city-states that were consolidated into a nation by Garibaldi. Frequently at gunpoint And a lot of Italians still wonder if it was all that bright of a move to have one "unified" Italy. If you think the culture of New England is different from that of the deep south, that's nothing compared to the factional and regional differences in Italy.
That's a long way of saying it's real tough to pigeonhole Italian culture and viewpoints, because it is highly debatable as to whether they even have one common culture.
In answer to your question, I will say that for most Italians, my observation is that they're far more interested in eating, drinking, screwing, and soccer. Politics is more a form of entertainment than anything, although some are quite passionate about it. So long as it doesn't interfere with the aforementioned eating, drinking, screwing and soccer. Priorities dontchaknow.
Okay then. It's pragmatism time then? How has that really worked for ya' so far? At some point that becomes cowardice. Not accusing YOU, and I do 'imagine' that when I state such a consideration that I also challenge your interpretation of reality VS mine. I maintain (subject to your elucidation of wrongness) that the 'system' is so utterly and completely a lie and even past that..A fraud and a Ponzi, a diabolical plot.
Am I just 'maturing' and being subjected to a 'normalization'? Or is it actually that I see what so many others don't?
Answer me that Orly? Right? The falsity is clear. I know that these pretenders are acting. Anyone with a real heart and soul knows this.
I also have the anchor of functioning day to day in the midst of this fictional crap. I work full time. I do not get 'my benefits'. I understand the sickeningly absurd paradigm of a bunch of crazed and deluded leftist running around sustaining themselves upon the notion of promoting "sustainability" as a meme while their dear leader runs us and them FORWARD toward collapse.
I do get that. So how might you suggest we 'cope'?
Huh?
I understand your frustration and I am not about throwing up one's hands and giving up.
As far as I am concerned, Mediocritas put the hammer on the head when he responded to Bruce's article earlier. 3315226 That is what should have happened to fix the financial system. It didn't but that doesn't mean we should give up hope.
All I am saying now is that it is a matter of optics for Grillo. Millions of dead neighbours from the Second World War will leave a bad taste in the mouth of most Italians and going around deriding "Jewish bankers" is just too close to destruction and I don't think it will fly come the summer elections, that's all.
Grillo's group is against the endless political corruption in Italy and Europe. The continent "awash in blood" - you do realize that wars are investments by banksters? You are not even a good troll Orly.
You use the typical attacks that the elites and left use against people fighting against political bankster corruption. Go F off.
And stop pretending that the right will somehow make things better. It's tribal bullshit and is intellectually bankrupt.
Just rude freddie. Orly is actually a very intelligent and thoughtful person. Quite well informed as well. I really don't think she deserves such abusive bullshit. Just share with us all a different opinion and leave your wifebeater shit at home?
Leave Fast Freddie alone. He has his right to be rude, Nursery Lady