Salvini Bait & Switch: Italy's New Finance Minister Is Also An Outspoken Euroskeptic

For Europe's establishment, it's out of the frying pan and into the fire.

Just when Brussels thought it had avoided a potential firestorm by forcing President Mattarella to veto the prior finmin appointee, preventing prominent euroskeptic Paolo Savona from becoming Italy's next finance minister, and instead in the latest proposed government, the finance minister would be the relatively unknown Giovanni Tria - alongside 5-Star's Di Maio who will be Industry Minister, Salvini as Interior Minister and Conte as Prime Minister - it appears that Tria himself is a rather outspoken eurosketpic.

As we reported earlier, Tria, 69, is currently the head of the economy faculty at Rome’s Tor Vergata University.

Italy's designated finance minister, Giovanni Tria

However, investors are far more focused and concerned not with his present, but past and especially his views on the economy, the euro and the Eurozone, to determine if he, too, is a dark horse.

And what has spooked the establishmentarians in the early rounds of due diligence is the following article from December 2016 published in the Formiche, titled "Vi spiego la competizione truccata in Europa che favorisce la Germania" or translated "I'll explain the rigged competition in Europe that favors Germany" in which Tria, like other run-off-the-mill euroskeptics, criticizes the European monetary union and its fixed exchange rate for allowing countries - such as Germany - to run high external surpluses and says fiscal policy should compensate for that lack of flexibility.

Meanwhile, as Bloomberg's Lorenzo Totaro and John Follain report, Tria publicly called for a debate on the euro in both Italy and in the rest of Europe, saying that "the biggest danger is implosion, not exit," in an article co-written with Renato Brunetta, a senior lawmaker of ex-premier Silvio Berlusconi’s Forza Italia party.

In the article published in March 2017 in In Sole, looking at the outlook for the euro-region, Tria said that the "German economy’s growing surplus shows that monetary expansion, without a policy that aids economic convergence between the various countries, merely fuels an imbalance that puts us in conflict with the rest of the world." Some notable excerpts from the article, google translated:

The German surplus is the sign of the failure of the euro

The growing surplus of the German economy shows that monetary expansion, without a policy that aids economic convergence between the various countries, merely fuels an imbalance that puts us in conflict with the rest of the world. The German-driven Europe has not deliberately grasped, wrongly, that excess of virtue (surplus of "ants") produces more damage than excess deficit (of the "cicada" countries). And the measures to cope with the resulting crisis have only worsened the situation, rather than resolving it. To think that the convergence of economies should go through internal deflation to the so-called weak countries (the "cicadas"), and imposed through fiscal consolidation even in periods of recession, has produced generalized deflation and no fiscal consolidation.

We must be able to print money

All this implies tackling the real issue that has blocked European economic policy in recent years: how to reconcile the necessary fiscal stimulus with the danger, or almost certainty, that the further growth of public debts creates further distrust in their sustainability. The only strategy that under the described conditions seems possible, as well as necessary, is therefore that of a fiscal stimulus financed through the creation of money. In other words, what is proposed is the monetization of a part of the public deficits, destined to finance, without creating additional debt, a broad and generalized program of public investments, with the constraint of maintaining a primary surplus net of this financing, obtained through the control of current expenditure,

The objective is to reduce the debt / GDP ratio by working on the two terms of the relationship: to stimulate real GDP growth and at the same time determine the decrease in nominal debt by stabilizing the primary surplus, net of monetary financing. This is a European public investment program, which could be led by the Bei, financed by money for an annual amount of at least 2-3 per cent of the Eurozone GDP, thanks to which the entire eurozone would enter into a decrease in the debt / GDP ratio, stabilizing the expectations of the international financial markets. We hope that the objections to this policy are not reduced to the observation that current rules do not allow it, because it is now established that the current rules.

We open a debate in Italy and in Europe

On the other hand, a political cycle that will upset Europe, starting from the elections in Holland on March 15, until the presidential elections in France on April 23rd, the German elections on September 24th and finally the elections in Italy. At this point what is needed, not only in Italy but throughout Europe, is a broad debate, without the demonization of any of the proposals in the field. It is not right who invokes the exit from the euro without ifs and buts as a panacea of ​​all ills, but the president of the European Central Bank, Mario Draghi, is also right when he says that "the euro is irreversible", if it does not clarify the conditions and the times for the necessary reforms for its survival. Also because the greatest danger is implosion, not exit.

Changing together, as a positive plus strategic game, is possible and convenient. Going out on your own means paying only for costs without benefits.

In other words, it appears that Salvini managed to replace one Euroskeptic with another, and instead of Savona, it will be Tria who will push for exploding the Italian budget, i.e.using fiscal stimulus, to offset Germany's unfair advantage, i.e., back to the square one we were over the weekend.

In short: everyone who rushed to buy Italian bonds and bank stocks on the assumption that all is fixed, may be urgently reassessing this decision now.

Comments

Ghost of PartysOver Bill of Rights Thu, 05/31/2018 - 13:42 Permalink

With Spain's new socialist Pres and now this.  Brussels is screwed.  But even better is that Merkel is going to get slapped around by a gaggle of peni.  And to finish off the Brussels Cluster F^&* is the breaking DB news.  And don't forget that Trump wants in on the action with the PrickMobile tariffs.  It is going to take a heck of a lot of collusion to keep the EU from imploding. 

 

EDIT:  For those that like to game out possible scenarios;  EU economy tanks, China exports to the EU Tank, Trump ramps up Chinese tariffs thereby reducing exports to the US.  Ole XI or whatever his name is could be in for a world hurt.  Just thinking here, but......  And the least odoriferous rag in the world - The good ole US Dollar.  - Stocks new All Time High compliments of world demand.

In reply to by Bill of Rights

TheGardener LordWillingly Thu, 05/31/2018 - 14:02 Permalink

All the while keeping German workers pretty much employed while many being outsourced to outside the labour force by ever higher minimum wages. Germany reaping ephemeral benefits only, those jobs of the eighties, earning you a VW Golf in two or three months worth of night shifts , eternally gone.

Germany the most impoverished Nation within the Euro and in the preceding 25 years :

Riches never coming back, and soon no more foreign travel in the EU that has come to be at twice the cost as back home and no longer being worth travelling to.

In reply to by LordWillingly

PontifexMaximus Bunga Bunga Thu, 05/31/2018 - 13:52 Permalink

no, keep in mind, that only superMario counts, whether the the guy is called conte, tria, giorgetti, pinkopallo or ........., no importance, only draghi counts. all this blablabla is for the plebs. you remember, that 2 days ago the auctions of btp passed perfectly, so, tell me, who the hell cares about an italian government, it’s only noise, and: holiday season is ahead, that’s what italos care about.

In reply to by Bunga Bunga

Arnold JBLight Thu, 05/31/2018 - 13:40 Permalink

Europe’s biggest debt collector, Intrum AB, says it doesn’t see the political turmoil in Italy hurting its business

https://www.bloomberg.com/profiles/companies/INTRUM:SS-intrum-ab

Hoist Finance AB, another Swedish debt collector, says the panic hitting Italian markets is unlikely to last.

Bergstrom at Intrum said that with Italy’s non-performing loan market representing one of the biggest of its kind in Europe, it’s important to be exposed to the country if “you want to be one of the leading players in Europe.”

https://www.bloomberg.com/news/articles/2018-05-30/our-italian-debt-por

The Repo guys locally are very busy, too.
Mainly Chrysler / Fiat products

(repost)

In reply to by JBLight

GreatUncle Thu, 05/31/2018 - 13:35 Permalink

Bust on, bust off, bust on, bust off ...

The schroedinger cat economy where the dead cat bounce is because the cat knows you are watching and fucking with your mind.

ross81 Thu, 05/31/2018 - 13:37 Permalink

the League & M5S have blinked first by accepting the original Presidential veto on Savona and toning down rhetoric on leaving the Euro. Sadly the "markets" trump democracy in Europe yet again.

Rubicon727 Righttoarmbears Thu, 05/31/2018 - 16:19 Permalink

With Germany being the central export powerhouse (perpetrated against other EU nations), the question is, can Germany remain as such given the matrix of changes between Trump's sanctions/tariffs, the rising power of China/others and the One Belt/One Road intricacies criss-crossing Asia/parts of Russia, Iran, etc. etc; who really knows. 

The educated/informed class in Italy KNOW they have been heavily ostracized by German dictates and Brussels ogres. Now, the common Italian is beginning to wake up to how they've been treated for more than a deccade. At least they haven't reached the zombification of an entire nation, such as in America.

In reply to by Righttoarmbears

BankSurfyMan Thu, 05/31/2018 - 13:53 Permalink

Rome’s Tor Vergata University. "EUA Network (European University Association): the University of Rome Tor Vergata is part of EUA Network, i.e. a network representing higher education institutions and the Rectors’ Conferences of 46 European Countries. It is a reference point for and supports the development of cooperation and constant update for its members regarding political views about higher education and research." https://web.uniroma2.it/module/name/Content/newlang/english/navpath/IGU… ~

'Italy's New Finance Minister Is Also An Outspoken Euroskeptic' ?  Yeah, Me Too!

oncemore1 Thu, 05/31/2018 - 13:55 Permalink

Germans are better in technical hadgets, than Italians.

Italoansarewaaaaay better in politics.

Lee watch it and enjoy, hpw Italy will fuck Öttinger, aka Germans.

KrazyUncle Thu, 05/31/2018 - 14:07 Permalink

It is not right who invokes the exit from the euro without ifs and buts as a panacea of ​​all ills, but the president of the European Central Bank, Mario Draghi, is also right when he says that "the euro is irreversible", if it does not clarify the conditions and the times for the necessary reforms for its survival. Also because the greatest danger is implosion, not exit.

When taking the whole paragraph into consideration I get the distinct impression his call for debate is a discussion which should look for a way to save the Euro. While that may be sceptical of the life span of the Euro/European Union, it does not indicate he would abandon it as Paolo Savona has suggested.

 

Easyp Thu, 05/31/2018 - 14:18 Permalink

Who in their right mind would want to join a currency system that included the economies of Greece, Italy and Portugal? 

A quick, clean Brexit is necessary because when the Euro Project sinks we do not want to be sucked down with it. 

 

Yen Cross Thu, 05/31/2018 - 14:35 Permalink

    There's definitely issues in Europe, but I think June is going to be hard on the $usd. There an inverted pattern happening that could move eur/usd back up into the low 1.18's over the next week.

surfing anothe… Thu, 05/31/2018 - 14:54 Permalink

Cool quote!:  "We hope that the objections to this policy are not reduced to the observation that current rules do not allow it, because it is now established that the current rules. "

Rubicon727 Thu, 05/31/2018 - 17:42 Permalink

Word just in from well informed sources in Italy regarding:

Germany's Exporting Dictatorship:

"A growing concensus amongst No-EURO populations sense Trump has become 'the midwife' in destroying the huge German export market, allowing a much fairer system for ALL European nations. 

Moreover, the more Trump diminishes German export power, the less trade will continue with its friend in China.......(Kill two birds with one stone, another words.)

Ah-Hah!!!