Maroni Hits Back

Roberto Maroni is back in the Italian press again today, and with another interview. This interview is in ilResto del Carlino. (Interestingly enough they are running an online poll, and the result was running at 51.7% euro to 48.3% lira). Unfortunately the interview is in Italian. I have translated a few extracts under the fold. The big issue that he draws attention to (and I was flagging this in an earlier post) is the apparent desire of Berlusconi not to commit himself if he can help it.

Essentially Berlusconi has remained silent. No ‘the euro is a unique success story’ here. I imagine he just couldn’t say this in Italy with the electoral base he has (I may of course have to eat my words). To date the only response has come – on his behalf one has to imagine – from Gianfranco Fini, Italy’s Prime Minister and foreign minister, who said Maroni’s proposal was made ‘in a personal capacity’ and did not reflect the opinion of the government. Fini said he did not share Maroni’s opinion, ‘but above all it is certainly not shared by Prime Minister Silvio Berlusconi’.

Maroni’s response: that Fini is not a credible ‘spokesperson’ for Berlusconi. According to Maroni the only opinion that Berlusconi has expressed is that a return to the lira is not possible, not that he wouldn’t consider it desireable. The main opinion Berlusconi seems to be expressing is a defence of Italian president Ciampi, who has been attacked by Maroni.

Maroni: Berlusconi ha preso posizione su un presunto attacco a Ciampi che non ha nulla a che vedere con l’euro
Berlusconi has taken a position against a supposed attack on Ciampi, a matter which has nothing to do with the euro.

Interviewer: E stato Fini a dire che il premier ? contrario all ipotesi-lira.
Fini has said that the premier is contrary to the lira hypothesis.

Maroni: Non mi risulta che Fini faccia il portavoce di Berlusconi. E comunque non ? vero. Non ho bisogno degli interpreti per sapere cosa pensi. L’ho sentito questa mattina.
I don’t believe that Fini is acting as a spokesperson for Berlusconi. So I don’t think it’s true. It isn’t necessary to go to an interpreter to find out what he is thinking. I heard it (from Berlusconi himself) this morning.

Interviewer: Che cosa le ha detto?
What did he say?

Maroni: Era preoccupato per le reazioni sulla vicenda Ciampi, non per l?euro. Ha detto che secondo lui il ritorno alla lira non si pu? fare, ma non ? che ha aggiunto: perch? lo fate, state sbagliando.
He was worried about the reactions over Ciampi, not about the euro. He said that in his opinion a return to the lira wasn’t possible, but he didn’t add, if we did it, it would be a mistake.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

13 thoughts on “Maroni Hits Back

  1. Well, the paradox is that Italy should be one of those countries that really benefit from the Euro. Their fiscal situation is so shaky (3% budget deficit in 2004, and getting bigger), enormous debt to GDP ratio, (106%) and Berlusconi with so little credibility – that withdrawing from the Euro would probably send their long bond rates into the stratosphere.

  2. “send their long bond rates into the stratosphere”.

    Yes, well I am assuming they would build in a sovereign debt default. I don’t think they have much alternative, and it may be better to do it sooner rather than later. Blame the euro for it all. Nice clean haircut, and lets start all over again.

    Incidentally, Brad Setser has some interesting stuff about how in sovereign defaults you deploy a strategy of differentiating domestic from foreign lenders. Interesting.

    “With the advent of globalization, domestic and foreign investors can and do buy the same debt instruments. But this does not mean that their political and economic interests have converged, or that they have the same political and economic leverage with the government. It should come as no surprise then that the two groups rarely get equal treatment at the hands of a government that has run out of money.”

    So it will really be a question of “which do you prefer sir, the scissors or the shears”

  3. Simple puzzle for the perplexed: what’s the difference between Argentina and Chile, then ask yourself what’s the difference between Italy and Spain. When you’ve worked that out, you should be able to see what happens next.

  4. I don’t see why a debt of 104% of GDP is that big of a deal when it is locally owned and with a low real interestrate. The real problem with Italy is their lack of growth but that is IMHO more a goverment issue than a debt issue.

  5. “I don’t see why a debt of 104% of GDP is that big of a deal”

    I’m afraid c it is. In particular since Italy is, after Japan, the fastest ageing society in the world. This means the deficits are basically about to rise and rise. I don’t know whether you are willing to be convinced, but I am puting a post up on ageing and saving in Italy tomorrow.

  6. Just some observations. Related to Italy, the Euro and the treaty-referendum. I do not make a point here I think but maybe it can be helpful to analyse this issues even better.

    Today Dutch eight o clock news (NOS-Journaal) was in Italy. On the issue of the (giant) Dutch Bank ABN-AMRO who tries to include Italian bank Banca Antonveneta. They face strong opposition from the Italian finance world but the program found a lot of “common people” much in favor of the Dutch take-over. (because of mistrust towards the Italian banks).

    This post refers to an explanation of the Liga Nord’s statements on dropping the Euro in favor of the Lira as preparations for approaching elections.

    And this: “Margherita party head of economic policies, Enrico Letta, made a joke about minister Maroni’ s proposal to come back to lira: “Euro makes the state save 44 billion euro. Maroni must explain how he will find this money with lira”. Speaking about labour minister’s proposal to collect signatures to promote a referendum to exit from the single currency, Letta commented that this hypothesis was devoid of sense. According to Letta it was a provocation that had exceeded the limits of decency. ” is from here

    Well, of course economy and politics are so much interrelated. I am having more and more of a problem with just analysing economical and political trends from a distance.
    It’s fine with me to openly discuss the fall of the € or the end of the “European project” as we know it but I miss a program. At least some pieces of it.
    Why are so many people not engaging in politics?
    Edward convinced me that the Eurozone was a bad idea. But we can not leave it there. It’s a completely different issue if it is wise (for any €-country) to even consider dropping the € again.
    Are we not in great need for good economical and monetary advice towards politics?
    I know part of the answer: what politics? Regional, National, European or Global?

  7. I see Maroni has been talking about pegging his hypothetical currency to the dollar. Which would make a nonsense of his policy, because if Italy is suffering through not controlling its own monetary policy now, it’s not going to be any better with US monetary policy in charge. Perhaps he hopes the dollar will tank sufficiently to devalue the lira nicely – but, of course, a break-up of the euro would push up the dollar…

    He hasn’t thought this through at all, has he? But then again, as I’ve pointed out before, he’s a crank.

  8. “But then again, as I’ve pointed out before, he’s a crank.”

    I think we can agree on this Alex, the worrying thing is that he isn’t the only crank running the Italian govt these days. The lira dollar peg is a no-no. He doesn’t understand currencies, but maybe he does understand populist politics, and how to get a referendum. Remember, Berlusconi has still to pronounce, and Maroni is going the rounds insinuating that ‘Silvio’ agrees with him. (Which he probably doesn’t, but B is hedging his bets).

  9. Ecofin yesterday commented on the Maroni’s remark – “stupid” was the word being whispered around. Well – not really whispered. The economics of this is absurd of course. Whatever one’s view of the ?, this is not the major cause of Italy’s problems. The Italian political class needs a scapegoat though, and the ? is very handy. Particularly since at the time of introduction Italy had problems , which created some lingering resentment.

    Berlusconi has also been in “bash brussels” mode for a few weeks, with a lot of disparaging comments about meddling Brussels bureaucrats. Not entirely coincidentally, Eurostat recently told the Italians they are counting their budget deficit incorrectly, and the Commission is on the point of launching an excessive deficit procedure under the stability pact.

  10. Italy’s debt is not all locally owned. According to CIA World Factbook, their external debt is 57% of GDP.

  11. The lira dollar peg is a no-no. He doesn’t understand currencies, but maybe he does understand populist politics, and how to get a referendum.

    That he takes about making that peg doesn’t mean he means what he’s saying. He may well wish to muddy the waters a bit more.

  12. The whole Euro/Lira debate was just a rouse by Berlusconi to make money on the currency market. Get a Minister to make a statement that Italy wants to leave the Euro zone, watch the currency dip in value; buy lots of euros. Put out a statement saying that Italy has no intention of leaving the eurozone, see the euro increase; sell the euro.

  13. “The whole Euro/Lira debate was just a rouse by Berlusconi to make money on the currency market.”

    Funnily enough you may be nearer to the point than you imagine. I don’t know whether he was playing it in this case, but he might have been. Certainly he and Maroni are ‘communicating’.

    I think the big issue is who runds Italy. This is another reason for mentioning Argentina continually, since it is the most ‘Italian’ of the LA cultures.

    Basically this forms another reason why the arguments that Italy would be economically worse off out of the euro essentially miss the point. This isn’t personal, it is only business. “Italy” as an entity would be, but an important class of political and economic interests could make a hell of a lot of money. It would be the business of the century.

    Really now that Eurostat is chasing the numbers, the game is begining to be up for them. Now if you exit the Euro and do a sovereign default, you put a hell of a lot of money into play.

    What I am saying is that Berlusconi is the Italian Menem, and Prodi will probably serve as the whipping boy in the way Carvallo did in Argentina.

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