According to Christine Lagarde we have three months to save the euro. For Mario Baldassarri, president of the Senate Finance Commission, there is only one left to save Italy.
With a drastic disposal of public assets aimed at bringing the debt/GDP ratio below 100%. A courageous operation that requires a "pride of pride" on the part of Italian politics, noted Vincenzo Scotti during this morning's meeting at Palazzo Marini entitled "The future of Europe is decided in Rome".
A provocation? Perhaps. But for those present it is time to sum up and roll up their sleeves. Note Guido Salerno Aletta: “Italy is not in a recession, it is in a depression. If nominal GDP falls by 2% in 2012, inflation at 3% implies a real contraction of 5%. We also have an industrial sector down by 14%, car sales at -14%, a real estate sector in collapse (-19%), and property sales, according to the latest Istat data, at -42%. The economy is in paralysis".
What does this have to do with the disposal of public assets? It is easy to say: selling shares of real estate and movable properties of public administrations would make it possible to repurchase outstanding securities and cancel them, reducing the stock of debt, which is currently hovering at 124,7%.
Debt weighs on the country's growth: it drains 80 billion of interest expense from the pockets of Italians. Suffice it to say that the National Health System costs the exchequer approximately 130 billion a year. While the revenue from VAT is just enough to cover the interest expense.
Selling a significant stake (approx 380-400 billion) of the assets would make it possible to reduce interest by around twenty billion. To be returned to the Italians in the form of tax reductions or to be used to reduce the tax wedge.
The proposal has already been formulated and advertised by the duo Savona-Rinaldi, but today Baldassarri's endorsement opens up new scenarios in the political rooms. According to the exponent of the Third Pole, the idea of the two economists is a "brilliant egg of Columbus“. An egg that someone, however, must put on the table, since the Government, for now, has launched a completely insufficient micro-plan, worth just 10 billion, with the sale of Fintecna, Sace, Simest to the CDP.
For Baldassarri the issue of bonds guaranteed by state assets, complete with option on the deferred purchase of the assets, assigned to an ad-hoc vehicle, presents elements that give hope for a successful outcome of the operation.
However, it must still be accompanied by a healthy one spending rigor to avoid that in a few years, once the assets are sold, we end up again with a public debt of 120%.
In this sense, budgetary discipline has a fundamental stabilizing role. But as interpreted by the Fiscal Compact and the Maastricht parameters, it sets a cycle in motion perverse. Baldassarri note: “At the time of Maastricht, two assumptions were made on which the treaty was based: assignment to the ECB of 2% as an inflation target, long-term average structural growth of 3%, or an increase in nominal GDP of 5% , and since 5% of the 60% debt amounts to 3%, this explains the limit on the public deficit imposed by Maastricht to maintain the stability of the public debt.”
It's a real one madness from an economic point of view, because it photographs the situation in such a way static: what matters is not the level of the debt stock but the tendency to increase (or decrease) of the same, and the speed of change. It is no coincidence that Spain embarked on an upward trajectory of spreads after the financial crisis, with a public debt of just over 60%.
This does not mean that the interest rate cost is unsustainable for the country's finances. And there is also a credibility effect on the markets. A caustic reminds him Paul Savona, which he notices as, second the “Z” index, elaborated by prof. Altman, the probability of a public sector default in Italy has increased from 17% to 50%.
Useless and counterproductive, according to Baldassarri, to continue claiming the emission of Eurobonds and hope for a European resolution of the crisis: “Who signs the Eurobonds? Merkel certainly not. So since there is not yet a European finance minister, we have to pretend that he exists: the ECB must guarantee them and act as debtor of last resort". And it must do so immediately, since the structural reforms of the European institutional apparatus will take years. A luxury we cannot afford. And in the meantime, Italy must continue with its homework, reducing its debt stock.
Baldassarri's support, as mentioned, bodes well. The technicians signing the project, born in the studies of the Link Campus University of Rome, will be consulted by Parliament to move to the proposal phase as soon as possible, provided that the proposal is not exploited - as has already happened in the past - for pure political convenience.
