“Mario Draghi has once again proved to be an extraordinary tactician: the ECB's decisions are certainly a step forward but the dangers remain, because the risk of a bailout from Spain and the unknown post-Monti Italy are not on file”. Stefano Micossi, general manager of Assonime and refined economist with a boundless passion for Europe, appreciates the effects of the ECB's wing blow but does not have excessive illusions. In his opinion, the eurozone emergency is not over yet. Here is the interview he granted to FIRSTonline.
FIRST online – Dr. Micossi, in the light of the euphoric reactions of the markets, can Mario Draghi's anti-spread move by the ECB be considered as the real beginning of the end of the financial emergency in the eurozone?
MICOSSI – The decisions of the ECB are certainly an important step but we cannot yet consider ourselves completely out of danger. And this for at least two reasons.
FIRST online – What would they be?
MICOSSI – The first concerns Spain, which remains a risk factor: it is true that the destructive game of financial speculation stopped after the ECB's move but the danger of a bailout from Spain still stands. It must be recognized that the Spanish government is making significant efforts to get out of the crisis but the fall in the economy, employment and home sales in Spain is impressive and makes Madrid's request for aid to Europe probable.
FIRST online – Why do you believe that Spain's request for aid could disturb the markets instead of representing an element of clarity for the whole eurozone?
MICOSSI – Because I think a Madrid bailout would rekindle the financial instability of the markets with the risk of cascading effects on Italy as well. Let's not forget that we are not talking about an emergency involving Spanish banks but the entire Spanish economy, i.e. the economy of a large and important European country. Even after the ECB's move, the risk of Spain dominates the European scene and if Madrid were to unfortunately lose the possibility of accessing the markets, the bailout would be around the corner, without the state-saving funds having sufficient resources to deal with the emergency before and beyond the intervention of the ECB.
FIRST online – Earlier you mentioned a second reason for risk: what is it?
MICOSSI – The second unknown factor unfortunately concerns Italy. Today the picture is stable with us and the Monti government enjoys strong credibility and authority, but how long will it last? Let's be clear: Italy's anchor is called Mario Monti but the policies of the three parties (PDL, Pd and UDC) that support the government are not those of the prime minister and this casts a shadow on Italy's future.
FIRST online – As the political elections are imminent and barring results that make the country ungovernable, it is difficult to imagine a Monti-bis government if the incumbent premier does not decide to run as a candidate: don't you think?
MICOSSI – In reality it is not the only option: a clear commitment of the three major parties is needed to continue and strengthen the Monti agenda, but this oath must be taken before the vote and in no uncertain terms. Does it seem realistic to you?
FIRST online – In truth, there are those who also think of another solution, not necessarily an alternative to the one you indicated, namely the replication of the Ciampi model with the offer by the future prime minister of the Treasury seat to Mario Monti: why exclude it a priori?
MICOSSI – Political engineering is not my job but it seems unlikely to me that Monti would agree to be imprisoned in a government coalition which, according to the announced plans, will be unlikely to govern successfully in a situation of international crisis and persistent emergency. The truth is that Italy continues to have a big prospective problem because none of the three parties that support the current government can guarantee to take on and strengthen the projects of change, reform and modernization of the country contained in the Monti agenda. This is what frightens the markets that wonder about the post-Monti period.
FIRST online – Sometimes the after vote is better than the day before.
MICOSSI – I don't know, but before our eyes there is the unseemly spectacle of the lack of electoral reform. It doesn't seem to me that any serious will to actually change politics emerges but only the indecent determination to maintain the occupation of power.
FIRST online – Dr. Micossi, let's go back to Draghi: apart from the Bundesbank, everyone applauds but someone points out that in order to pass his anti-spread decision, the president of the ECB was forced to put stress on the European institutional arrangements: what is your opinion?
MICOSSI – Once again Draghi has proved to be extraordinarily adept at moving towards the objectives chosen within the constraints of the ECB, thereby making anti-spread intervention possible but without the risk of replicating the so-called Berlusconi trick, i.e. without making the ECB run the risk of support countries that then evade the commitments. However, Draghi's move has revealed the reality of a truncated central bank that does not have full autonomy from governments because it does not have a state behind it, unlike other central banks. In practice, Draghi codifies the existence of an ECB that is not completely autonomous from governments and states and therefore from politics.
FIRST online – Is this enough to justify the Bundesbank's opposition to Draghi's ECB strategy?
MICOSSI – The Bundesbank is wrong in stubbornly failing to recognize that an important cause of financial market instability is the ECB's limited ability to act, due to the political and institutional constraints that hold it back, but the danger that someone will take advantage of the spread to return to divergent policies remains. The markets have a long memory and Italy's about-face under the previous government when the ECB intervened last summer to support our securities is very much alive throughout Europe.
FIRST online – Draghi has responded to this risk with an exit strategy: if a country betrays its commitments, the ECB immediately suspends bond purchases: what do you think?
MICOSSI – It's not the ideal world of central banking, but it was a necessary compromise.
