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Monday 10 May 2021

Recommended No default, the solution is another

No default, the solution is another

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I received many comments in reaction to my article "The Donkey of Buridano”On MOONDO on April 19th. Some contested my alleged opinion in favor of a "default piloted ”by Italy, I believe with reason: it would be a trauma of cosmic dimensions. My thinking is different, and I try to formulate it in clearer terms. I apologize for some repetitions and self-quotes that I transfer from that article.

  • If nothing new is done and one proceeds by inertia, the will be inevitable default of Italy in relation to its public debt (together with those, very heavy, of the other numerous Italian public bodies), as soon as a trigger sufficiently violent outside (world crisis, war, consequences of the pandemic ...). If then, following the pandemic, Italy will start up new loans, it will postpone the moment of default, but it will make it even more inevitable and traumatic. For whatever reason they are turned on, the debts are then to be repaid.
  • Italy between 2000 and 2020 lost between a third and a quarter of its production capacity, compared to Germany and the United States, and much more than all the other countries ... and the pandemic was not there. Capacities built in the previous fifty years. If you do the math, that lost percentage is roughly 10 million jobs: today's unemployed. And this trends that must be reversed, but to do so we need to change our mentality and take new and courageous initiatives (the list of which would require a long discussion), also to face the new debts that came to us from the pandemic.
  • Un default Italian would immediately produce very serious miseries within our country, far greater than there already are. The state could not turn on new debts, and should fire with the wood it has, that is, pay wages, supplies and donations to an extent that collects the money from taxes, therefore only partially. Ditto for public bodies: they would all become forcibly "virtuous". That is, they should all save on the bone. So, better to avoid, right?!.
  • No country, especially if it is a democracy, has ever done and will never do selfless charity towards another. Each country houses within it a heap of problems such that public opinion, and the opposition - it is democracy - will never agree to free transfer internal resources to third countries, which, however, could be competitors on the markets, and, as foreigners, they are unpleasant. You can not ask, let alone expect, from any country for help without compensation. The British say: “There is not such thing as a free lunch". A successful counterpart had, for example, the Marshall Plan, which helped save Italy (and part of Europe) from the consequences of the war but tied it (forever?) To the orbit of the United States, removing the intervention of the Soviet Union, moreover also that which is not selfless.
  • I do not like the frequent calls that Italian politicians and journalists make to "solidarity" by other nations. Indeed, I consider them pernicious, because they presume and underline the charitable aspect, making people imagine (to foreigners but also to Italians) an Italy more run-down and degenerate and incapable of salvation than it actually is, and therefore do not ask the positive participation of Italy in a united Europe that has become a "great world power", but they hypothesize a beneficial macro-entity, a kind of continental "Society of San Vincenzo de Paoli" dedicated to the poor people of Southern Europe. Italy must stop crying and move on to a solid constructive attitude even on the ideal level.
  • The message that must be carried forward by Italy is the one that I tried to outline in my previous article: we find ourselves having to choose in an alternative of historical significance. Mostly Germany must try not to let Europe end Buridano's donkey, who starves to death with two haystacks in front of him, so as not to know which one to choose. On the positive side of the dilemma - is the vision of a united Europe, led by Germany, which, however, would derive the greatest benefits. In fact, one of the main objectives of the Union is to reach the "critical mass" in money spent and people employed in research, defense, economy, in order to compete with others: 450 million inhabitants of the Union (not counting England anymore) they have to face China (1,400 million), India (1,300 million), the USA (330 million), Russia (150 million). And it is obvious that Germany would play the lion's share, having the money, organization, credibility, cohesion, industry ... and even geography on its side. On the negative plane of the horn the inevitable default of Italy would drag terrible chain consequences for everyone else, certainly also for Germany, perhaps for the whole world, with far worse results than the "modest" crack Lehman. Highlighting this second alternative should not appear blackmail - "die Samson with all the Philistines!" - but like the rational prediction of the consequence of a non-choice and therefore of an inevitable infra-European economic belligerence, perhaps riding the coronavirus - for those who can.
world population
World population
  • Italy will never be able to repay its debts, but the same applies to all other countries, including China, the United States, the United Kingdom, Japan and Germany itself. But nothing happens to them, because investors "trust" at every expiration. So, the burden of effective debt for each country consists in paying interest on debt every year, and in this Italy is penalized despite the low market rates, due to the spread, which does not follow anything concrete but the "mistrust" of the investors, fueled by the news on internal political conflict and by the stereotypes on which the officials of the rating (stereotypes invigorated by reading newspapers). A European debt that would complement all national debts would be reliable, so for all a spread zero. It is not true that the hardworking German workers would be called to pay for the Italian slackers. Nor that we should sell the Colosseum. A Community guarantee for integrated debt would never be enforced because the overall debt of the united Europe would be lower (compared to GDP) than that of the USA, China, the UK, Japan.
  • With all the presumptuous national pride of "the most beautiful country in the world", Italy should concede that a united Europe is largely guided by foreign entities and mentalities, and pour cause. In particular, repeating myself, “the Germans would have everything…. money, organization, credibility, cohesion, industry ... even geography and should not do like the Piedmontese who to "do" Italy sacrificed Piedmont, from autonomous kingdom to peripheral province. " It would be an economic-political-cultural guide that comes from outside out of necessity, as the South of Italy experimented with the "Piedmontese" after 1861. But for Italy it would not be a re-edition of the motto "France or Spain, as long as ", because I am convinced that the younger generations of Italians would be able to conquer many positions in the new Europe, just as the generation of the "economic miracle" did around the world.
  • True unity is certainly a perspective abhorred by the current great European capitals, whose bureaucratic structure would become useless. The Union would manage foreign policy, macro-finance, defense ... The remaining policies, closer to citizens (education, health, public order, culture, industry ...) would be done at the regional level. For the lander Germans would change little; for the (hypothetical) macro-regions that would arise within a united Europe (for example Northern Italy) there would be undoubted advantages. But it would be tough for the main ex-capitals. Think of Paris when Brittany and Provence were autonomous, or Madrid with Catalonia who did it themselves, nor would it be better for Berlin. Indeed the current capitals (with partly parasitic bureaucracies) are an obstacle to the unity of Europe even more relevant than the Italian debt. It would inevitably raise heartfelt historical-patriotic references to the "homelands", that is, in essence, to the past pan-European wars, won or lost, within a small sub-continent. I do not know the calculation of the Europeans killed killed under each other under national flags, from Napoleon onwards, but it was enough for me to live sad episodes of the last war as a child, to have had enough.
  • In the past, divisions in the area have been overcome only by force. The great unifications of peoples were made on the tip of the swords: from the Qin and Han dynasties that brought together China two millennia ago, to the Roman Empire, to the Franco-Lombards of Charlemagne, to the conquest of the West by American settlers , to India of the Mughal empire and the British crown, to the Incas on the Titicaca plateau, to the Piedmontese helped by Napoleon III and Garibaldi for the disputed unity of Italy, to the spread of Islam after Muhammad's death. The prospect of a "spontaneous" European unity that is born out of the people is certainly a naivete. The idea of ​​a new unification war was rejected (failed the recent ones of Napoleon and Hitler), violence could be replaced by the threat of default collective and the attraction of an economic pre-eminence worldwide, perhaps enriched by the memory of a cultural unity that has lasted since the time of the expansion of the Indo-Europeans, perhaps ten thousand years ago. If the coronavirus pandemic had to contribute to this process, the many deaths that it caused would not have been useless for posterity.

So: Europa great really, to use one slogan dear to Trump; great maybe already from the next Olympic games - these are the gold medals in 2018: Europe 64, United States 46, Great Britain 27, China 26, Russia 19.

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