"Europe was made, now we need to make Europeans". Nouriel Roubini lands in Cernobbio at the usual annual appointment of the elite of the world economy organized by The European House – Ambrosetti and takes on the role of the continental Garibaldi. Immediately warning the large audience: "Yesterday's ECB operation goes in the right direction, but it is not said that it will be enough".
Yes, because second the New York University economist, despite the positive responses to Draghi's action from the markets and spreads, it's not yet the time to claim victory. “I'm not a pessimist, but a realist: in recent months, the European heads of state have finally figured out the way forward, which is that of an effective financial and banking union, but the real problem is the lack of a political leadership that legitimizes everything and get everyone to agree. Suffice it to say that within the government coalitions of individual countries, there are still strong disagreements on how to proceed. This happens in Greece, in Italy, but also in Germany”.
Here, then, is Garibaldi's intuition: “The question is therefore above all political and before that cultural: there is unity, but there is no European spirit. A change of mentality is needed as soon as possible, which effectively leads the individual countries, which are already understanding it very slowly, a gradually relinquish their sovereignty to give breath to a true political union, and consequently a financial and banking one".
However, the European Central Bank has resolutely and constructively inserted itself into this political void: “It is one of the positive aspects, its role is increasingly decisive but there is not only Mario Draghi in the ECB: there is also the Bundesbank and other forces that are still skeptical”. In the meantime, however, the anti-spread shield has been approved: "Good, but who can guarantee us that the European bank will be able in the long term to buy government bonds from countries with disastrous economic fundamentals?".
Roubini's thoughts go to Italy, but above all to Spain: “It is necessary to make a distinction between the two cases: Spain is definitely worse off, Italy is doing a great job and I don't think it will need European aid anytime soon. When the markets finally understand this, everything will be easier for Mario Monti”. Yes, because the analyst born in Istanbul 54 years ago from a family of Iranian Jews, recognizes all the merits of the case to the work of the current government. “As usual when I talk about Italy I always have to point out lights and shadows. With the current executive, however, the lights prevail: Monti has a strong leadership and his ministers are experienced and competent. The government knows exactly what to do, let's say that he could have done more, but in the context of political instability in which he operates it was not easy". Political instability that risks increasing in view of the next elections, which could send a different executive to the government and unable to carry on the reforms initiated by Monti.
“Actually I don't see this danger – confesses Roubini -, in Italy at the moment there is no great alternative to Montismo: I predict one grand coalition to carry forward the austerity line and structural reforms of the current executive or a centre-left government, which is certainly the most suitable for a solution of continuity, perhaps by bringing some technicians already working with Monti into the government team ". Roubini therefore rejects Berlusconi, whose return to the field according to the economist will not change the balance: “Berlusconi is back to save the PDL, not to win. I don't think there is room for a new centre-right government, which in any case would not be desirable because historically it is the centre-left majorities who carry out reforms".
However, there are lurking dangers: “As I said, there are also some shadows: the crisis in Italy is still very deep, and although the direction taken is the right one, the recovery is currently far off. This involves the risk of the proliferation of Eurosceptic forces, such as the Northern League or the 5 Star Movement, or even some areas of the center-right itself, which could blow everything up”.
But the real storm, the "perfect" one according to Roubini, Grillo or Maroni would certainly not blow it up, but five factors on a global scale which, if all of them emerged forcefully together (“improbable but not impossible event”) would cause the collapse of the global economy in 2013. The first is obviously the crisis of Europe, clinging to Draghi for now but even more to a political process to be closed as soon as possible; then the Use, "whose growth is too weak due to the tax burden, which must be reduced by more than 1 percentage point to avoid economic contraction"; there China, which has "an unsustainable growth model: if it doesn't quickly stimulate domestic consumption, reducing savings and increasing household incomes, everything will fall apart"; the others emerging countries who are experiencing a phase of slowdown "which is cyclical but also structural: their economies have erroneously oriented themselves towards excessive state capitalism, especially in Russia and Brazil"; and finally the looming risk of a conflict in the Middle East, which would have obvious and serious consequences on the oil and raw materials market.
There won't be a perfect storm yet, but as Roubini himself points out, the five elements, even if in still acceptable doses and for now unrelated to each other, are already all there.
