Sweep away the illusions cultivated by so many politicians and by some fiercely Keynesian professors, of being able to get out of the crisis by leveraging the increase in the budget deficit, the Governor of the Bank of Italy has provided a recipe based on two pillars: reforms to contain the rents that lurk in many public and private sectors of our society, and strengthening of the banks to reopen the channels of credit by increasing its quantity and reducing its cost. It is true that many reforms may require a long time before giving concrete results, but their launch within a program with precise aims and with clear and credible paths would have positive effects on the expectations of businesses and individual citizens, thus stimulating investments and consumption in the part today held back by fear due to the extreme uncertainty about the future.
Ignazio Visco did not hesitate in his Final Considerations to address political issues even if he never descended into direct polemic with this or that party or with the Government as a whole. First he tried to focus the origins and responsibilities of the current long crisis. These are to be found in the delays with which governments, but also Italian citizens, have taken note of the profound changes that have taken place in the international scenario over the last 25 years, refusing to adapt our system, from institutions to welfare, from the labor market to education , to the need to seize the opportunities that globalization could offer us. And the sacrifices we had to bear were all the stronger the greater the delays accumulated. The balance finally achieved in the public accounts is a basis that we must preserve and which can be a good point of leverage to resume a path of sustainable development. Moreover Visco wanted to mention two figures which alone are enough to illustrate our mistakes and our delays: between 1997 and 2007 (before the outbreak of the crisis) our public spending net of interest rose from 41% to 43% of GDP while in the same period in Germany the same ratio fell by four points to just under 41%. Secondly, the Governor wanted to clarify that, based on estimates by their study office, last year's fiscal tightening, which was of considerable intensity, caused a loss of about one point of GDP, while a good two points were lost due to the strong credit crunch due to loss of confidence in our public debt.
If the deficit cannot be increased, also to avoid nullifying the first glimmer of confidence that the markets are granting us, this does not mean that many actions cannot be taken to recompose public spending in favor of the more productive one, to initiate a reduction of taxes starting from those on labor and production, to improve the conditions of businesses through an expansion of payments by public administrations of current expenses that do not affect the deficit (although strict rules must be put in place to prevent the reform of new debts of the same species), to make full use of the already existing tools and facilities for entry and permanence in the world of work. About the latter the Governor does not seem particularly in favor of the hypothesis of a "relay" between old and young in current jobs, since in his opinion what our economy really needs is a reallocation of capital and labor resources towards new businesses and not so much keeping alive processes that are leaving the market. As for the tax reduction measures, Visco punctually replied to those in the PDL who support the ludicrous thesis that the reduction of the IMU would boost internal demand. "The certainty of fiscal measures (even if they will be taken gradually), can affect expectations, and therefore demand, more and better than immediate relief, but of uncertain sustainability."
A large space was allocated by the Governor's Report to banks and the need to normalize the flow of credit to businesses. Italian banks are not at the origin of the current crisis but they have suffered the repercussions first of the difficulties of sovereign debts, then of the crisis of many companies, especially small ones which have increased non-performing and substandard loans. The situation has also improved thanks to the interventions of the ECB, but the difficulties have not yet been completely overcome. To improve the situation of companies, in addition to the payments of invoices by the PA, the central guarantee fund can be immediately expanded, as well as favoring direct access by companies to the capital market. But banks and their shareholders will still have to work hard to restore an adequate income flow, cutting costs and meeting any needs for new capital, while companies must open up more to the capital market and entrepreneurs cannot limit themselves to relying on public support but must also invest their own resources if necessary.
But in Visco's Considerations some themes are missing: the use of the European Stability Mechanism for the direct recapitalization of banks which is only mentioned in passing, and above all there is never talk of privatizations and more generally of the problem of accelerating the decline in public debt which by now is considered, together with imbalances in public spending, the real brake on the Italian economy. Of course, these are thorny issues, but considering the importance that the Governor has given to the credibility and positive effects that a change in expectations can immediately have on the real economy, a well-structured and credible program of privatizations and property sales public, would have a very positive effect in consolidating the improvement in the climate of opinion on the part of investors from all over the world towards our country.
In conclusion, Visco addresses the politicians. On the one hand it seems to understand their troubles given that they are unable to reconcile the particular interests of groups of their constituents with the general interests of the entire community, but on the other it stimulates them to make this synthesis, trying to explain to everyone that it builds nothing on the defense of position annuities or on the protection of particular interests. ” Well-designed interventions and stimuli, even if they aim to transform the country over a long period of time, will produce the confidence that citizens need to decide that it is already worth committing, working and investing today.” The question then is: will our grand coalition government be able to implement, in the short term, those fundamental reforms that the country badly needs, or will it limit itself to seeking downward compromises between the electoral needs of the parties that make it up?
