Italy, A Parallel Currency, And Immigration – Merkel's Worst Nightmare

Authored by Tom Luongo,

Here comes the flood.  My worst fears of The League’s leader Matteo Salvini’s ego getting in the way of seizing the political moment by the horns were overblown. It feels good to be wrong every once in a while.

It looks like coalition talks between The League and Five Star Movement (MS5) have been productive.  A new post from Mike “Mish” Shedlock reveals the likely structure of a new parliamentary deal which has neither Salvini nor M5S’s Luigi Di Maio taking the role of Prime Minister.

From Mish the Platform contains:

  • The end of the pension reforms under Mario Monti; Five Star is softer on this point than Lega, but together the two parties can be expected to agree fundamental changes.

  • A flat tax on companies and people – in other words a massive tax reduction.

  • A study on the so-called minibot. This is a parallel currency based on future tax receipts, similar to the plans proposed by Yanis Varoufakis in Greece. The minibot was in the Lega’s election manifesto. Five Star is far less radical on the eurozone, having dropped the idea of a referendum, but also seeks changes that are incompatible with the the EU fiscal rules. A parallel currency stands a much greater chance of success in Italy, and it would go some way to solving the government’s fiscal dilemmas. The open question is whether it would constitute a slippery slope towards euro exit.

  • And a citizens’ income, which is Five Star’s big idea, to be implemented next year.

Because M5S and The League are so fundamentally different this platform is going to be schizophrenic.  Basic Income is idiotic, especially with a radical tax reduction.  But, it’s the price to getting the deal done.

The most important part of this deal is the realization on both sides that leaving the euro is not politically viable in the near term.

Believe me, I wish it were otherwise.  M5S was smart to soften its stance to get the votes.

That is going to have to be a conversation with Italians over time.

First, the outsiders have to prove they can work together.  Then they have to lead and gain real and visceral support from the people.  Trust first, rebellion later, as it were.

Where they gain immense political capital is in standing up for Italy against Brussels on Immigration.

Immigrant Song

Immigration and economic opportunity are two sides of the same coin, politically.  This link gets stronger the worse the economic conditions are.  When you have a sclerotic democratic socialist system like in most of Europe and then add a technocratic bureaucracy on top of it you have a powder keg of political revolt.

When the foreign bureaucracy demands enforced immigration to lower labor costs and destroy your culture on the altar of Marxism and globalism, it creates the perfect vehicle for the newly-elected rebel parties to gain tremendous political capital with its people by saying no more.

Just look at places like Hungary, Austria, the Czech Republic and Russia.  Viktor Orban and Vladimir Putin have provided the blueprint for how to consolidate power in response to irresponsible immigration policy.

Now look at Italy.  The League and M5S can form a lasting partnership if they present a fully-united front to Brussels on this issue.  And by being opposed on certain issues it presents an honest face to the people that Italy comes first and from there we can sort out the other problems.

Parallel Goals

Salvini knows the euro is killing Italy slowly.  So did M5S’s former leader Beppe Grillo.  Both parties want out of the euro but for different reasons.  The Jury is out on Di Maio.

And in the long-run, absent a shift in political philosophy, this coalition will be, at best, difficult to hold together.  But a study on a parallel currency is the Goldilocks path on the other pressing issue to Make Italy Great Again.

Creating an internal domestic currency to run the country on while settling cross-border payments in euros is the means by which to prove to the people what the euro has done to them.  And, any opposition to this plan from Brussels will be seen as yet another way to subjugate Italians a la immigration.

Build the opposition to the euro over time while capitalizing on the anger at the EU now.

Two birds, one stone.

By having this in their back pocket Salvini and Di Maio can present a stronger front to the EU over debt relief and gaining some much-needed fiscal wiggle room. The flat income tax proposal is a brilliant move.  If done right will lower taxes, cut bureaucracy and introduce new efficiencies to the Italian economy currently stifled by what I like to call “German Austerity.”

Austerity is what we Austrian economists preach: lower taxes, less government spending, fewer regulations.  Also, hold monetary policy as neutral as possible and let the currency do what it’s going to do to balance the government’s books.

German Austerity is higher taxes to balance the budget, lowered spending and a strong euro. The latter benefits Germany, under-pricing German labor and over-pricing the vassal state’s.  This keeps that country trapped through high debt servicing costs, never paying off its bills.

Eventually, it sells to Germany its tangible assets at stink bid prices and while rolling the debt out farther in time, c.f. Greece.

Enter a caption

Merkel will push this hard-line stance.  That’s her democratic mandate.  Italians aren’t ready to give up the euro, which damned Greece in 2015.  Salvini and Di Maio need room to negotiate.

But, they have to be united on this issue.  Brussels will try to drive a wedge between them.  Look for Berlusconi to re-emerge as a “voice of reason” during Italian debt talks.

The parallel currency offers a way around this stalemate while they remind Italians what Germany did to Greece.  If they were really smart they would link Merkel’s immigration policy to the damage she did to her image in the Greek debt negotiations.

She used a unilateral open borders mandate to re-frame herself as Mother Theresa after Europeans were outraged at how Greece was thrown to the wolves.

This Rocky Road

I don’t envy the task ahead of Salvini and Di Maio.  But, they have the tools to push for a great deal on debt relief from Merkel and the EU.  But, they have to have their ducks in a row.

Things are accelerating quickly.  And if I’m right and Donald Trump just touched off the next big dollar rally, a plunging euro will help them in this initial stage of their coalition.

Because with this coalition and this proposed platform the markets will react negatively to lower taxes and universal basic income at the same time.  This will push up Italian bond yields and CDS spreads.  It will make it harder for the ECB to maintain its negative interest rate policy if the euro begins crashing.

But, at some point this false equilibrium has to be tested by the markets.  The euro at $1.19 is a fiction.  Italian 10 year debt trading at 1.85%, more than a full point below the U.S. 10 year note, is a fiction.

3 month EURIBOR rates at -0.33% is a fiction.

That the ECB is ever going to stop buying Italian debt is the biggest fiction of all.

And once the bond vigilantes call Mario Draghi’s bluff, which could be as soon as Monday, many, if not all, of these fictions will be revealed overnight.  At that point Salvini and Di Maio better be ready to move quickly from studying their parallel currency to printing it.

Because if they don’t this new alliance will be broken up before it even begins.


DownWithYogaPants eforce Sun, 05/13/2018 - 09:36 Permalink

Tom you should not worry about being wrong.  You appear to be quite often.  

The open question is whether it would constitute a slippery slope towards euro exit. would sincerely hope so!  Basic income will be the method by which to sabotage the parallel currency. Particularly if said currency is not Western Private Central Banking Cartel issued.  Look for all stops to be pulled out if it is not issued by the cartel.

Under Merkel's photo: ENTER CAPTION? Mine would be == My pussy smells like snitzel. 

In reply to by eforce

Teja El Oregonian Sun, 05/13/2018 - 13:45 Permalink

What I do not understand is why "Euro Exit" is deemed good by ZH readership and "Gold based currency" also. De facto a Gold based currency is Euro on steroids, for countries like Italy.

Also, a strong and stable Euro is the best thing to finally break the US $. And as far as I understand, the ZH'ers do hate the Fed and are looking forward to the end of the Dollar.

Well... maybe logic is not that important any more on this planet.

In reply to by El Oregonian

rmopf2010 Teja Sun, 05/13/2018 - 14:06 Permalink

We might be seeing the experiment that will shift the western countries policies for the future.

The "pensionists/retirees" are every western country finances nightmare, because it was promised to them, pensions and benefits that nowadays are totally irrealistic, because they live 20~30years after retirement.

When social security was made people lived 5~10years after retirement.

Let's focus on Italy:

0-14 years: 13.5% (men 4,056,156/women 3,814,070)
15-64 years: 66.3% (men 19,530,696/women 18,981,084)
65 years and over: 20.2% (men 4,903,762/women 6,840,444) (2010 est.)

Pension expenditure as a percentage of GDP in Italy from 2009 to 2015: 17%…


Public spending on pensions will continue to increase in the coming years. According to the Ministry of Economy, in 2016 social security benefits will cost €261.65 billion and will continue to increase to €264.92 billion in 2017 and €279.37 billion in 2019.…

  1. In 2016 global "social expenditure" in Italy was €535 billion.
    1. Here we can see that 20% of the population gets half the social expenditures
  2. M5S is promissing basic income of 780€/month per citizen which will cost €560 billion per year


The solution will give every pensioner basic income, so it's leveled, the old man have an income so they don't starve to death, and the young unemployed will get some income to get started their lives and the economy.




In reply to by Teja

BigCumulusClouds BandGap Sun, 05/13/2018 - 09:47 Permalink

The authors of the book Grey Wolf say that they had two daughters, the younger being born in the 50s. They divorced in ‘56; Adolf passed in ‘63. The younger could be Angela, brought back to east Germany in ‘56 and later brought to power by the Jesuits. The Vatican after all was a major force behind Hitler’s rise to power and to the migration of Nazis to Argentina. 

In reply to by BandGap

I Am Jack's Ma… BigCumulusClouds Sun, 05/13/2018 - 13:27 Permalink

Amazing.  there’s under 10,000 Jesuits in the world and dont seem to own the banks or news and entertainment media or hollywood or thinktanks or our politicians, but I’m assures that the (((people))) who do, open and honestly, but whom were are forbidden to discuss... why, they are just fronts for these clever old men.


See, Id put Catholics in charge of all those things were I the Jesuit Puppetmasters...  make sure they kept the money going up the pyramid, influence news and movies, make abortion harder, etc.


Anyway, we all agree that at the very top are the Annunaki.

In reply to by BigCumulusClouds

Endgame Napoleon BigCumulusClouds Sun, 05/13/2018 - 14:08 Permalink

No, but Mutter Markel does have a Mother Theresa complex, hence the aptness of the illustration. 

She needs a Mr Hyde suit or an Indian-giver suit to change into when contradicting her saintly altruism with a cynical policy on mass immigration that undercuts her own country’s citizens in the labor market, bringing in hordes of welfare-buttressed migrant workers to drive down wages. 

She could share that costume with all of the world’s neoliberal-globalist politicians. 

In reply to by BigCumulusClouds

William Dorritt BigCumulusClouds Sun, 05/13/2018 - 10:31 Permalink

Hard to say what happened in Germany at the end.

If the NAZI leaders and officers had decided to, they could have formed terrorist cells along the lines of the IRA and still be bombing, assassinating, and infiltrating the govt.

If escaping to Argentina, was the price for a quite post war Germany facing off against 200 Soviet Communist Divisions, perhaps it was worth it.

Germany remained the front line, and leading supplier of troops facing the Bolsheviks for almost 70 years......after  the defeat of the Bolsheviks, Merkel decided to Islamify Germany and destroy the country.

In reply to by BigCumulusClouds

el buitre BigCumulusClouds Sun, 05/13/2018 - 10:34 Permalink

The Third Reich cut a deal with the FDR/Truman administration allowing Hitler and Martin Bormann (at that point the functional leader), to escape to Argentina and Chile.  I lived in Argentina a few years ago and it was common knowledge there, particularly in Córdoba Province where I lived and which was the center of the ratline final destination.  His death in Berlin was totally faked.  The Russians recently did a DNA analysis of his purported skull from the bunker and found it to be that of a woman.  He purportedly lost a testicle in WWI, but that would be pushing it.  In return for the deal, the Nazis sent the US a submarine full of enriched, weapons grade U235, thus throwing their beloved Japanese allies under the bus.

In reply to by BigCumulusClouds

Hope Copy el buitre Sun, 05/13/2018 - 12:16 Permalink

There was a story that the Nazis set off a 'reactor bomb' south of the Kursk salient and killed up to 40,000 Russian troops, but that wasn't much of a deterrent and that Kursk had a major shipment of yellow cake due to depart to the USA, thus the fight to the rail yard and the quick retreat.  Sorry I don't have my sources, archives on some mumbo-jumbo disk of collected stuff from the internet.

In reply to by el buitre

gearjammers1 Sun, 05/13/2018 - 09:32 Permalink

Tom Luongo, whoever he is, is one of the few ZH authors who dared to mention Israel in connection with the Syria conflict. All of the other ZH authors were too afraid to talk about Jews, they were all pussies afraid of being defunded by JewGoogle. But not our hero Tom Luongo. I salute you Tom Luongo.

el buitre gearjammers1 Sun, 05/13/2018 - 10:42 Permalink

I salute Tom Luongo also, but you are being a little hard on ZH.  The Tylers have done a lot of reporting on the Israeli connection both on  the Syrian proxy, headchopper invasion and the Zionist control of the Golden Golem's foreign policy.  What they haven't had the balls to do is to republish analyses proving that the 9/11 "attack" was a Mossad/Neocon military operation to start the endless wars in the Middle East which are bankrupting (have bankrupted) the USA, allowing Israel to fight to the last American soldier.

In reply to by gearjammers1

Richard640 el buitre Sun, 05/13/2018 - 11:08 Permalink









In reply to by el buitre

BandGap Sun, 05/13/2018 - 09:34 Permalink

Just like everywhere, governments cutting "deals" while people get screwed.

Push it into the light, Italy. Make a fucking move out in the open. Go back to the Lire and take your chances on your own, or else just resign to the fact that you are owned. Grow a set.

Italy used to have a thriving economy. Now their biggest business is processing refugees.

William Dorritt BandGap Mon, 05/14/2018 - 08:42 Permalink

Exactly, exit the Euro to the Lira day One.

Use the awesome power of the Italian State to round up and deport the migrants to Libya, who can sort them out if they don't voluntarily self deport to their homelands, all 3 million of them.

In a matter of a few hours, the Italian State has the ability to put the entire country under the strict supervision of the various police forces backed by the military.

Purchases from Libya, and payments to the Generals in Libya, would allow for rapid deportation of the 3 million and send them fleeing for the ships and airports to self deport to their homelands.

Italian Socialist Globalist Fanatics in the Italian Govt and Judiciary can be placed under house arrest with ankle bracelets and zero communications services. If they violate the terms, throw them and their families into the detention centers with the migrants who are rounded up.

In reply to by BandGap

any_mouse DownWithYogaPants Sun, 05/13/2018 - 13:45 Permalink

Globalism, formerly known as the Comintern, the Communist International. "The Internationale" was the anthem.

The Proles have become the migrant "refugees", with human rights to economic opportunity in any nation other than their own birth nation.

Thus the low to middle class native citizens are pitted against the new proles, with the masters benefiting from the struggle.

In reply to by DownWithYogaPants