NEW YORK – The Italian referendum is “more important than Brexit”. I been supporting the Wall Street Journal in the edition of August. It puts Italy at the heart of the European crisis: for reasons of economic stagnation, and more. The concern of the newspaper analysis Use is part of a growing focus on the autumn deadline: even the New York Times and Financial Times have launched similar signals, pointing in Italy in the weak link of European growth (Friday’s data).
But also the possible epicenter of a new political shock that would weaken the already shaky Union. The alarm is not reserved for the Anglo-Saxon media: the Spanish El País has called Italy “the new sick of Europe that could drag the continent into a relapse into crisis.” Several emissaries of the global finance and industry, the men of George Soros in top executives of Silicon Valley, have confided similar concerns on the occasion of their visits in Italy. There is widespread draws an immediate consequence: the Renzi government must obtain from Brussels a wider margin for tolerance, to launch a robust budget plan for growth.
To turn the spotlight on the case Italy are were the bad data that closed last week: the eurozone as a whole is growing, albeit weakly, because it is driven by a performance of better than expected Germany, but Italy has stopped and that its braking slows everyone. The analysis of the Wall Street Journal points out that we are dealing with an ancient evil, prior to the great global crisis of 2008, given that “from 1996 to 2011 Italian growth has averaged 0.9 % per year against 1.4% in Germany, 1.8% in France, 2.6% in Spain. ” The consequences of the long stagnation of the Italian pay first of all young people. Youth unemployment we reached 36.5% against a European average of 20.8%.
The Italian question is not burst suddenly on August Bank Holiday foreign press. An antecedent there had been a month earlier, the anxiety-inducing cover of ‘ The Economist : the image of a dilapidated bus, precariously teetering on the edge of a precipice, about to fall into the ravine below. The bus side was painted with our flag. In that case, the complaint started by Italian banks in distress. But The Economist inserted the analysis in the context of a more general alarm-country, describing Italy with these dramatic traits: “Fourth economy of Europe, one of the most fragile with the public debt to 135% of GDP, with the employment rate for adult lower after Greece, an economy in agony for years, stifled by regulatory excesses and weak productivity. “
the Wall Street Journal in ‘edition of August 15 has added to this bleak political variable: “it is this scenario that makes the vital referendum, probably most important of Brexit”. The American newspaper reports that “the markets have focused on the political stakes of the referendum”, ie the risk that a failure of voters overwhelm Renzi, “but the real cost to Italy would be that the economy would remain mired in stagnation of its long-term “, making it more difficult to many problems: the debt to the bank loans.
the other major American newspaper, the New York Times , also in August resumes the agency detailed analysis Reuters on “at risk stability in Italy”. Four scenarios for the outcome of the autumn referendum, three are negative. First: “The referendum is rejected. Renzi resigns and the Senate survives. The electoral system is converted into a proportional which makes it even more difficult to understand who is boss. New elections, with the House and Senate potentially in the hands of different majorities.” Result: ungovernability as the eye. The second scenario New York Times-Reuters see Renzi defeated but capable of surviving in alliance with Forza Italy “to gain time and to reform the electoral law before the parliamentary election in 2018″. Such a government “neglect the economy, will grow while the consensus for 5 stars who want a referendum on membership to the euro.” Third scenario, the only positive: “Renzi wins and manages to push through the reform of justice, public administration, banking sufferings.” But there is room for one last scenario in which the victory of yes in the referendum is not at all positive: “If Renzi is unable to restore the economy, the M5S wins in 2018, and the weakness of the new Senate has not seen her limitations “.
the New York Times ends with an exhortation identical to the one which concludes the article in the Wall Street Journal : the need to a powerful fiscal stimulus. And it is the same lesson that the Financial Times devotes an entire editorial. Entitled: “Renzi should launch an offensive for the stimulus.” This pressure has as final recipients Brussels and Berlin. The Financial Times regards as “a mistake Renzi personalized having a referendum” and provides that “many Italians take the opportunity to vote against an increasingly unpopular government”. But the mistake was made, and at this point Renzi “must obtain freedom of maneuver by the European Union.” In terms of austerity, the rules are not applied with the severity of the past. Many observers point out that Brussels has already shown tolerance towards France, Spain and Portugal when they failed to meet budget constraints. One might add that after Brexit the nightmare of other defections has reduced to historic lows internal discipline and the ability to put pressure on their partners in Germany. In terms of European laxity, they are happening much more serious things in non-economic field: the Union helplessness in the face of abuses against the rule of law in Poland and Hungary. A bit ‘of elasticity on supporting growth public maneuvers, would be a sobering signal to stop in extremis the anti-European wave of so many public opinions.
The exhortations to Renzi because before the referendum junctions from subjection to Brussels, they are also explained by the disappointment with the action of the European central Bank. The Friday data on eurozone growth, always weak when compared to the American one (or more so when compared to the golden years, from the sixties to the nineties), have triggered new broadsides of negative judgments about the “quantitative easing” in version ECB. Those purchases of securities, while maintaining historically low interest rates, they are reviving growth as had happened in the first version (made in USA) of the “quantitative easing” applied by the Federal Reserve between 2009 and 2015. It is It confirms what economists have long argued the Keynesian left, from Paul Krugman to Joseph Stiglitz: monetary policy alone is not enough, we also need a budget package to revive an economy so sick. Less taxes, more government investment. Renzi to set an example if it does not lose the autumn referendum and unleash a Brexit effect to the square: the message is choral, by foreign observers.
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