Looks Like Italian Default is Back on the Menu
Italian Deputy Prime Minister Matteo Salvini was right to call out the EU over the failure of the bridge in Genoa this week. It was an act of cheap political grandstanding but one that ultimately rings very true.
It’s a perfect moment to shake people out of their complacency as to the real costs of giving up one’s financial sovereignty to someone else, in this case the Troika — European Commission, ECB and IMF.
Italy is slowly strangling to death thanks to the euro. There is no other way to describe what is happening. It’s populist coalition government understands the fundamental problems but, politically, is hamstrung to address them head on.
The political will simply isn’t there to make the break needed to put Italy truly back on the right path, i.e. leave the euro. But, as the government is set to clash with Brussels over their proposed budget the issues with the euro may come into sharper focus.
Looking at the budget it is two or three steps in the right direction — lower, flat income tax rate, not raising the VAT — but also a step or two in the wrong direction — universal income.
Opening up Italy’s markets and lowering taxpayers’ burdens is the path to sustainable, organic growth, but that is not the purpose of IMF-style austerity. It’s purpose is to do exactly what it is doing, strangling Italy to death and extracting the wealth and spirit out of the local population, c.f. Greece and before that Russia in the 1990’s.
So, looking at the situation today as the spat between Turkey and the U.S. escalates, it is obvious that Italy is in the crosshairs of any contagion effects into Europe’s banking system.
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