When Is A Promise Not A Promise?

Mario Draghi is proving to be a man of his word. He said he would do whatever he needed to do to hold the Euro together, and – so far so good – he has. Up to now of course some would say his will has not been truly tested, since all he has had to is sit there and twiddle his thumbs, and that has worked. It seems to have been the subliminal symbol the markets were waiting for. Continue reading

The Great Portuguese Hollowing Out

With every passing day Portugal has less and less economy left, while fewer and fewer people remain to try to pay down the debt.

As Portuguese President Aníbal Cavaco Silva once put it, “A country without children is a nation without a future.” He was, of course, referring to his country’s ultra-low birth rate, which is just over 1.3 (Tfr) and has been below replacement level (2.1Tfr) since the early 1980s. In 2012 only just over 90,000 children were born in the country, the lowest number in more than a century – you need to go back to the nineteenth century to find numbers like the ones we have been seeing since the crisis really took hold. Continue reading

Pedant’s Corner

IMF Managing Director Christine Lagarde in a speech at Dublin Castle —

The Irish have always been visionaries. They have never been afraid to dream big. It was William Butler Yeats who said: “I have spread my dreams beneath your feet; tread softly because you tread on my dreams.” Over the past few decades, the dream of a dynamic, prosperous, confident nation became reality. And today, despite grave setbacks, this dream is still very much alive. 

But Yeats also said “in dreams begin responsibilities”. And those responsibilities are the co-responsibilities of Ireland and Europe.

Yeats didn’t say “in dreams begin responsibilities”. He wrote “in dreams begins responsibility” as an epigraph in his Responsibilities collection, a line which he attributed to an old play. The commonly cited quote that Lagarde uses is a Delmore Schwartz book title.

The Tories’ Augustinian Populism

David Cameron’s big EU speech setting out the policy of an in/out referendum on EU membership after the next election contained a key claim: that a Britain more detached from the EU would be both more business friendly and closer to the people than those statist bureaucrats way off in Brussels. As if on cue, Switzerland came forward this weekend with a test case of what popularly-rooted policies on business conduct in a non-EU European country with a large financial sector might look like: a strong impulse to curb executive pay and bonuses, by all accounts driven by resentment at large bailouts given to — or at least brokered with some urgency for — the banking sector since 2008. Now you could say that this is not really representative of the UK, since it’s driven by the referendum system. Yet accountability was one of the rationales cited in Cameron’s speech for his policy and indeed for his decision to have a referendum. Five years from now.

Of course, the Eastleigh by-election result shows that insulation from populism doesn’t come that easily. And as Martin Wolf points out, it leaves the rest of the EU with one clear entry point to make life difficult for the Tories, by coming forward with policies like those on bankers’ bonuses that are actually popular.  At the very least, it seems that the Tories will have to work to make “business” mean something other than “bankers” over the next few years, before they lose the filter of infrequent parliamentary elections between policies and the people.

Calling Italy’s Tune: I Pagliacci? La Forza del Destino?

It’s been less than a week since the cataclysmic vote counts came in, but somehow it feels as though we’ve lived through an entire season of some new psychodrama. Or, recalling how the sequence began with Monti’s technocratic government falling to the tune of Lohengrin, are we perhaps trapped in a little-known Verdi opera? Allow me to offer a synopsis:

Scene 1: A chorus of Italian voters, overtaxed and underemployed, their retirement benefits  sent off as tribute to the Prussian Baroness, bewail their fate. The honorable but impotent Pierluigi tries to rally their spirits by singing to them about Justice, but he is driven from the stage by the irascible buffoon Beppino, who hurls insults at him and demands that he be “sent home.” The Italians rally round their new champion, who leads them in a March on Rome–or rather, they converge on Rome, with plans to blow up the houses of parliament.

Scene 2: The evil Don Silvio comes onstage surrounded by his harem of underage prostitutes in hot pants, neo-Fascists with hunting rifles, and salesman carrying suitcases stuffed with kickbacks. He sings nostalgically of his many seductions over 20 years, but his good humor turns to wrath as a messenger appears, telling him that Don Gregorio, his old partner in subversion, has turned state’s witness. Don Silvio storms off, singing “They’ll never repeal the amnesty so long as they need my votes in the Senate.”

Scene 3: In a chariot pulled by Republican steeds, the wizard Napolitano traverses Europe in a quest for probity. Accosted by the sneering Lord Steinbrück, the wizard brandishes his Republican scepter and drives him away. The despondent Monti, hiding behind a pillar, sings to him of the perfidy of the Italians, and predicts catastrophe. Monti shrinks back as Pierluigi appears and throws himself at the wizard’s feet. They sing a duet in which Pierluigi promises to bring an agenda of reforms to the Camera, while Napolitano recalls to him the ungovernable state of the Senate. They are just reaching a defiant crescendo, with Pierluigi singing “I will govern with an 8-point program” while the wizard sings”You must govern with a voting majority.” Suddenly both men stop, as the voice of Beppino comes to them from offstage, denouncing their “politics of prostitution,” but then reprising the chorus of their duet, with the new lyrics “We will govern by our program, law by law.”

Scene 4: Pierluigi’s faithful steward Nichi, driven out of Puglia and wandering aimlessly in the direction of Rome, crosses paths with Pierluigi’s apparently loyal seneschal Matteo, and the two tenors sing of their contrasting fates. “I so wanted to be in the government,” sings Nichi, “to help the poor and free the prisoners, to bring pure water to the people and drive away the toxic fumes.” Matteo answers, “Soon the party will be mine, and then the government, and then the nation. All will be mine.”  As their intertwined arias conclude they are overtaken by Pierluigi, who commissions Nichi as ambassador to Beppino, and sends Matteo to tell Don Silvio that he will never corrupt the government again. The two go off in opposite directions, while Pierluigi sings of his ill fortunes, his rejection by the Italian people and the insults he must bear from the corrosive Beppino. He vows to continue his quest to form a government founded on justice and equity, as the curtain falls on Act 1.

So now it’s intermission at La Scala, and the audience is wondering what might happen in the second act–which is frantically being written in the wings. Here are some possible scenarios:

  • Might the ‘grand coalition,’ which no one but Massimo D’Alema among the Democrats seem to have any interest in, come back into play after all? Napolitano’s insistence that no sort of minority or provisional government is constitutionally possible seems to raise it as a necessity. Berlusconi’s new legal troubles, which carry political fraud to new heights, push it back into impossibility. But outside Italy the EU autarchs haven’t entirely abandoned its promise of ‘stability.’
  •  Might the Democrats and the Grillini find enough common ground to install a government after all? There’s an interesting program to be moved through parliament: conflict of interest laws, reductions in publicly-funded political slush funds, parliamentary term limits and most definitely a new electoral law (interesting that the French model is being actively proposed). Some of Grillo’s economic populism–guananteed minimum income, tax reduction–would make for lively debate, though it’s hard to see how the Democrats could spring for massive deficits.
  • But let’s face it: Grillo’s intractable hostility to Bersani, to Vendola, to constitutional niceties like organizing the chambers of parliament–it all feels less like a bargaining position and more like his core persona. And furthermore, the M5S has every reason to think, as Casaleggio and Grillo have both suggested, that by precipitating new elections they stand a chance to win the whole thing.
  • But then there is the massively unknown variable of the new M5S legislators, now 24 hours into their new roles. Might these, both the elected ones and their many supporters, put enough pressure on Grillo and Casaleggio so that they give in and authorize a limited-term vote of confidence around a strictly delineated program of reforms? As Bersani and Vendola have been insisting, the working majority that exists for that program is the electorate’s gift to the nation, and it would be a shame to squander it. With a more equitable electoral law, the M5S could compete some months from now, and might indeed win a legitimate majority. But along the way they might also confer legitimacy on the Democrats, and thus undermine not just Grillo’s political advantage but–apparently–his entire world view. If taking that chance represents Italy’s only way out of its intractable stalemate–and it may well–will the M5S go ahead and take it? And if not, what?