The spread returned above 400 points, thus bringing the yield on BTPs to over 5,60%. Merkel has once again said no to Eurobonds. The ECB says that the employment situation is serious but that the only way to get back on the path of growth is to keep the public finances in order and carry out structural reforms. In Italy, after the results of the administrative elections, the parties entered into fibrillation and the Pdl began to criticize Monti's rigour, threatening to soon pull the plug on the government to bring it down or at least to contest in Parliament the most indigestible measures to their own voters. The left-wing parties and the trade unions have been suspicious of fiscal rigor for some time, so much so that Fassina, the economic manager of the Democratic Party, has repeatedly asked to renegotiate the fiscal compat to have the possibility of increasing public spending. The trade unions then do nothing but ask for new public money, refusing in many cases to seriously discuss what to do to increase labor productivity. Vendola and Di Pietro, now joined by Grillo, have long been against the restructuring and are calling for a new growth policy. A real mess. And Monti's desperation, who has begun to respond angrily to the most demagogic and false statements, certainly cannot come as a surprise!
No one in the PDL remembers, apart from Letta who however appears increasingly isolated, that last year the wave of distrust of the markets started just when, after the local elections, which saw the loss of the mayor of Milan for the PDL, from 'inside Berlusconi's party increasingly louder voices began to rise to require Tremonti to widen the purse strings, attributing the responsibility for the electoral defeat to the little bit of austerity that the minister was implementing. From that moment on, investors from all over the world began to fear that Italy would take the road of Greece and therefore they sold our government bonds with both hands. Berlusconi and Alfano and their impatient colonels, do they want to repeat that experience which cost the citizens so dearly?
But apart from the little quarrels at home, we must acknowledge that we are in a truly critical situation, also due to the malfunctioning of the European institutions. And that we should make an effort to analyze the tangle of problems well so as to be able to identify a thread that can show us a viable path, instead of continuing with this confusing shouting that only leads to tangling the problems even further by pushing the solutions away. And the priority of priorities for Italy is only one: that of lowering interest rates, i.e. bringing the spread with the Germans back below 100 points and therefore the rate of return on our ten-year bonds to 2,5 - 3%. At this point many of our problems would be solved: the state budget would immediately save 10-15 billion in interest, the banks would restore balance with their capital ratios and could reopen credit to businesses and mortgages to households at convenient rates , the Stock Exchange would catch its breath, in short, the economy would begin to turn again. After all, this is what Monti had clearly said since his first inaugural speech. But this is also what is not happening for now, or at least not happening as quickly as everyone would like. For what reason?
To have rates fall, a solemn and credible commitment was needed to aim for a balanced budget in the short term. And this could only be done with a tax increase and pension reform, which indeed has been done. But that's not enough. To induce a lasting return of confidence in Italy's long-term prospects (because an investor who lends you money in 10 years wants to have some certainty about the prospects) all those structural reforms capable of making a recovery of competitiveness permanent are needed. And here things went less smoothly both with regards to liberalization and the reform of the labor market. The third pillar should have been that of state reform in order to reduce expenses and make the functioning of public apparatuses more efficient, from justice to administration, so as to be able to start a gradual reduction of the tax burden. And here, together with the sale of public assets, we are still at zero. On the contrary, the recent agreement between the Government and the trade unions on PA personnel takes a few steps back to the albeit timid attempts at reform that had been made by the previous Government.
Surely the conservatism of parties and trade unions has exalted the inevitable discomfort of citizens called to pay more taxes and to make sacrifices in the workplace, imposing major brakes on government action and giving the markets the impression of a country which, as soon as he feels out of the danger of crack, he tends to revert to old habits. In this, politicians have been helped by anxiety-provoking information which often made it clear that there were other, much less severe and painful ways out of the crisis. But the Government must not let itself be suffocated by emergencies. It is not with some small patch that trust in the Italian system is rebuilt!
Europe doesn't help. The ECB should be able to buy the government bonds of those countries such as Italy that have set up a serious plan to restore their public finances, thus favoring the fall in interest rates. Furthermore, while the euro is undervalued for Germans, it is overvalued for Italians and probably for almost all other European countries, including France. These dossiers must also be reopened, if only to give greater strength to Monti's requests not to consider investments in the balanced budget account and to recognize trade payables to businesses as a one-off step to be deducted from the year's expenses.
But to fight in a Europe with some probability of success, Monti should be able to count on a country that is sufficiently united in pursuing its own financial and structural recovery, and capable of rejecting the sirens of those who suggest easy shortcuts or impossible safeguards for this or that corporation. In reality, public opinion, however bewildered, seems more inclined to believe in the Government than in the parties which are responsible for the collapse into which we have plunged and which, moreover, are unable to reform themselves or to lend a hand to streamlining the institutions. As underlined by both the amb. Roman and Giuliano Ferrara, last Sunday's vote shows the utmost distrust towards the traditional parties and in this sense it can be an encouragement to Monti to carry on and complete his work which surely, apart from the Greek and Spanish turmoil, will be crowned by a significant drop in our interest rates.
