Tuesday, March 06, 2018

Thoughts from Galicia: 6.3.18

Spanish life is not always likeable but it is compellingly loveable.
- Christopher Howse: A Pilgrim in Spain. 

If you've arrived here because of an interest in Galicia or Pontevedra, see my web page here.

  • Fun in Cataluña.
  • As the Spanish phrase has it: Hecha la ley, hecha la trampa. 'Every law has a loophole'. Finding them is not a uniquely Spanish pasttime but it's certainly very popular here. Think Spain reports here on plans to crack down on fraudulent bread makers. A good start.
  • The lastest - albeit topical - list from The Local. 'Amazing' ski resorts.
Life in Spain
  • I'm comprising a list headed: How I know I'm Invisible. This will contain all the 2018 examples of folk acting as if I don't exist. But I won't be including the even-more-irritating examples of the deliberate ignoring of my presence. Such as the woman driver who yesterday morning drove between me and the guy 2 metres in front of me, for whom she'd actually stopped. At times like this, I really can understand why foreigners label Spaniards rude.
The EU and Italy
  • In the wake of Emmanuel Macron’s victory in France, many argued that anti-establishment parties in Europe were on a downward trajectory. Italy's election has shattered that illusion. Over 50% of Italians voted for parties that challenge the domestic and European status quo. Italy used to be one of the most pro-European member-states. After this election, it is amongst the least. The vote will not lead to Italy’s exit from the European Union or the euro anytime soon. But both of these scenarios have now become easier to imagine.
  • Ambrose Evans Pritchard comments on the Italian earthquake below. It has, he says, shaken the old European hegemony to its foundation.
  • A rather more pro-EU Guardian columnist opines: Unless mainstream parties can regain voters’ trust by responding to their real concerns - immigration, identity, economic inequality, unemployment, out-of-touch elites - the joint European project they built faces an increasingly rough ride. Very true. And there will be differing opinions on how successfully Brussels will superintend this. And on the longevity of The Project.
  • Jonathan Marshall argues here that: Americans should be very concerned about Russian President Vladimir Putin’s announcement on Russia’s breakthroughs in weapons technology – not necessarily because they pose a threat, but because it will mean vast fortunes spent in the U.S. on an arms race. Armchair Cold Warriors in the United States will shamelessly exploit Putin’s speech to justify trillions of dollars in needless spending on a pointless nuclear arms race.
The UK and Brexit
  • The surge of populist and Eurosceptic parties in Italy's general election hands a bloody nose to Brussels and the EU. But it would be wrong to think that this 'victory' for anti-establishment, anti-euro sentiment will help the current Brexit negotiations. On the contrary. The reality is that it is likely to make the Brexit process harder, not easier, as the EU establishment digs in against a populist rebellion in one of its founding member states. Brexit was always going to be a blow to Europe, but the election of Donald Trump, the rise of autocracy in eastern Europe and the fragmentation of centrist democracies all across the EU has framed the UK vote to leave as an existential threat. This election result will deepen that sense of EU insecurity. . . . Theresa May is pleading for a more pragmatic approach from Europe, but the clear risk now is that this result - posing as it does a fresh threat to the European project - will drive Brussels, Paris and Berlin deeper into their destructive defensive crouch.
  • The CIA has said that our drug dealers are 'the most active in the world', being involved in the smuggling into Europe of both hash and cocaine. Funny, but - in a local press that obsesses about Galicia's achievements - I don't see much mention of this.
  • The hair of the adoring wife in this ad seems to go from grey to honey-blonde in just a few seconds. It's amazing what equity-release can do for the fairer sex.
Today's Cartoon


Italy's political earthquake will shake the old European hegemony to its foundations: Ambrose Evans Pritchard

Italian voters have swept away their country's pro-European establishment after seventy years of unbroken rule, marking a revolutionary turn in Europe’s post-war history.

Populist parties of Left and Right command the political landscape of a major eurozone state for the first time, vowing openly to defy EU fiscal rules, banking codes, and migrant policies.

Both wings have pledged to roll back reforms forced on Italy by the European Commission and the European Central Bank.

Both are committed to manifestos that put them on an unstoppable collision course with the Franco-German hegemony.

Economic recovery has come too late to reverse the political legacy of economic depression and austerity overkill.

Youth unemployment above 50 per cent across the southern Mezzogiorno - a level once thought morally unthinkable in a modern democracy - was tolerated by Europe’s policy class for too long and too lightly.

Even today, Italy's GDP is still 6% below its pre-Lehman peak in 2007. Benito Mussolini did better in the 1930s.

“The euro is and remains a failure,” was the opening salvo of Matteo Salvini, triumphant leader of populist Lega. “It is clear in our minds that the system of monetary union is destined to end, and therefore we wish to prepare for that moment.”

He warned the global "bond vigilantes" and Europe’s political leaders that a newly sovereign Italy will not again be cowed into submission. “We couldn’t give a damn about bond spreads. It is ‘No’ to Berlin, ‘No’ to Paris, and ‘No’ to Brussels: Italians are going to decide for Italy from now on,” he said.

Mr Salvini claimed first right to form a government as top vote-winner of the centre-right coalition bloc, lifting his party’s tally from 4% to 18% by reinventing the northern separatist movement as the scourge of “delinquents and parasites” and the voice of pan-Italian identity.

If the Right takes power, it will almost certainly push for an end to EU sanctions against Vladimir Putin’s Russia, and has vowed a change in the Italian Constitution stipulating that Italian law must have primacy over EU law.

This "Karlsruhe clause" would de-fang the European Court and emasculate the EU’s judicial order.

We may not know for weeks whether the new order will be built on a Salvini-led Right with 37% of the vote, or built on the neo-anarchist Five Star Movement that vaulted to 32% and swept the South - the forgotten "Trumpian Ohio" of Italy.

It could of course be both: the “nightmare scenario” a Lega-Five Star unholy alliance most feared by markets.

Whatever happens, it is clear that the new "Rosatellum" electoral law intended to stop these radical movements taking power has backfired disastrously, reducing the pro-EU centre to a smoking wreck with just a third of the vote.

The ruling Democrats of Matteo Renzi collapsed to 19%, yet another Centre-Left party sacrificed on the altar of the European project.

It is infinitely harder now for the country’s president to stitch-up yet another "safe" coalition under technocrat control.

The Five Star movement is an enigma. Founding father Beppe Grillo has stepped back, leaving day-to-day leadership to the manicured and telegenic Luigi Di Maio, the 31-year-old “Macron” of the Italian political scene. Mr Di Maio has shuffled off his past as a university drop-out and techno-utopian, presenting himself as a safe pair of hands. He has steered the party away from its hardline stance on Europe and from its war on banks and creditors. “We understand the responsibility of forming our country’s government, and we say this above all to investors,” he said.

His choice for finance minister is Andrea Roventini, a Keynesian follower of US Nobel laureate Joe Stiglitz, who was quick to pledge that Five Star will “go to the European table only with credible proposals”.

Yet these voices of moderation sit on a political volcano. A movement that began as a guerrilla campaign with millenarian visions cannot be disciplined so easily.

Markets reacted with remarkable calm to what was described by Corriere Della Sera as a “political earthquake”. Yields on Italian 10-year bonds ticked up seven basis points to 2.11 per cent, but there was no real concern. The FTSE-MIB index of equities in Milan slipped just 0.4%, notable only for a 7% fall in the share price of Silvio Berlusconi’s Mediaset empire.

Mr Berlusconi's Forza Italia party slid to junior status with just 14%, looking ever more like a spent force. “We still count,” he pleaded.

The Lega has dropped its call for a euro referendum, deeming it technically treacherous. “It is not a step that one country can take alone,” said Mr Salvini. The intention is to subvert the system from within instead by refusing to play the euro game by German rules, and this might prove even more dangerous for Berlin and Brussels.

The party plans to issue short-term Treasury notes as a de facto "parallel currency" to generate liquidity within the Italian economy, accompanied by a flat tax of 15% that would make a mockery of EU spending caps.

Both of Mr Salvini’s key economic advisers - Claudio Borghi and Alberto Bagnai (from the Left) - are convinced that Italy has been trapped in a ‘bad equilibrium’ that has led mechanically to two ‘Lost Decades’ and hollowed out the country’s industrial core.

They argue that this cannot be rectified within the constraints of a German-run monetary union. For them it is a core conviction.

The question is whether Mr Salvini really shares this is view, and how far he willing to push the fight.

Two years ago he told this reporter that the euro is a “crime against humanity”. Europe’s leaders will find out soon what he meant.

1 comment:

Perry said...

Cognitive dissonance rear ends the mid-west.