Who is Mario Monti?
It’s hard imagining Italy going from bad to worse, but Mario Monti might be a worse choice for Italian president than Sylvio Berlusconi, who resigned over the weekend as Italy’s state finances came close to collapse. Berlusconi presided over a corrupt state, and personified its worst excesses in the form of alleged orgies with underaged prostitutes. In general, though the outgoing Italian prime minister was pro-American.
Mario Monti hates America, viscerally. Over dinner with a friend of mine not long ago, Monti weighed in on the Americans: “They’re idiots. They think Venice is in Las Vegas.” He continued in that vein until my friend shut him up.
In a new Macrostrategy report, I review his sorry record of protectionist hostility to American business:
What do we know about Italy’s new president, Mario Monti? An academic economist and former European Commissioner for Competition, his most notable act in office was to block the proposed merger of GE and Honeywell in 2001. As the Economist reported at the time, “President George Bush and several senators have grumbled publicly at what they see as unwarranted interference in an all-American deal, and have hinted that Mr Monti’s true aim was to protect European companies. That has politicized the whole question of antitrust policy and opened a new front for transatlantic tensions.” Monti made his career, that is, by blocking precisely the sort of corporate opening that today might give Italy a chance for recovery. He is a creature of Europe’s self-insulating political elite.
Monti set forth a utopian vision of a united Europe on the eve of the crisis in a May 2010 report to the European Commission entitled, “A New Strategy for the Single Market.” The report drew on extensive consultations with constituencies, and offers this disturbing comment:
An uncomfortable feature of the single market today emerges prominently from the consultations, although it is seldom brought out explicitly: the single market is less popular than ever, yet it is more needed than ever. Highlighting this contrast will perhaps be considered political incorrect. But only by addressing it openly will it be possible to work for a genuine and sustainable relaunch of the single market.
Prof. Monti, in short, believes in pressing impractical schemes even when no-one wants them. In this, he and Chancellor Merkel are united in a Folie à Deux (mutual delusion, but somehow it seems more appropriate to say it in French). Their chances success range between tiny and nil.
Even on the verge of bankruptcy, the America-haters in Europe can’t control themselves. The only hope for Italy is to shed its kleptocratic model of institutionalized corruption. Nearly 30% of the Italian economy is underground, that is, untaxed — no wonder they have a catastrophic budget problem. The comparable figure for America is 8%. American banks have already offered to take over the viable portions of Italy’s banking system, which is the best thing that could happen to the country — to bring in bankers who run their businesses for profits rather than for political chicanery. And the Chinese have quietly let it be known that they would consider buying Italy’s big state-owned energy companies.
That’s how you solve a liquidity crisis: you give up equity control to outside investors who can run things better. We don’t know what Monti will do, of course, but on the strength of his record, he is likely to continue protecting Europe’s failing elite from global competition. And that will ensure that Italy follows Greece down the road to bankruptcy.
So fasten your seat belts. It’s going to a nasty few months. The point of financial crises is to put assets in the hands of people who deserve to own them, says my friend Neal Soss, the chief economist at Credit Suisse. Ultimately Italy’s productive assets will end up in the hands of people who deserve to own them. The way things are going, not many of them will be Italian.
You have to see this sort of thing close up and in detail to begin to comprehend the scale and the scope of the self-delusion and corruption of European professional elites.
Some years ago my wife attended a medical conference in Paris and I tagged along. We quickly realized that many of the presentations by European researchers were a waste of time, because they were just re-doing work already done in the US, and presenting their results as new ‘European’ research. Basically their entire career structure was predicated on mimicking US research and pretending that the US version either didn’t exist or was somehow not relevant to Europeans. The EU was apparently happy to keep funding this on a large scale.
Then in the South of France I listened to a radio interview, of a plastic surgeon who had returned to practice in Marseille after training in the US. One of the first questions the journalist asked was whether, having returned from the US, the surgeon would of course now begin doing research so as to develop a ‘specifically French’ set of plastic surgery techniques (i.e. scrubbed of any association with the US, and somehow authentically ‘French’). My guess was that the surgeon being interviewed had spent several years here in America, because a ‘dead air’ silence followed, as she appeared to grapple with how to respond to such an absurd suggestion.
People who have built their entire careers constructing these ‘Potemkin’ versions of ‘specifically European’ professional achievement to underpin their income and prestige have no interest in modifying their stance. There is no ‘half way back towards viability’ concession they could make. They have few valuable skills to fall back on, and their economies are in any case riddled with restrictive practices preventing them from putting what skills they do have to good use. This is the number one reason why ‘ancien regimes’ collapse, rather than fading away.
How many hemophiliacs died because the French wanted their own version of the HIV test. Of course, for the EU bureaucrats killing a few Europeans is worth it as long as they can match the US.
I hate admitting that I read The Economist, but if you do pick up that rag of Euro conventional wisdom, you may note that its attitude towards Berlusconi is one of outright disdain. They don’t hate Putin. They don’t hate Chavez. They don’t hate Dictator A-Z from the Middle East, yet they hate Berlusconi. I’ve always believed it was due to his Pro-American, Pro-Israel outlook. He may have been corrupt, but he was the best of the bunch in Europe.
It was the partying, excessive even by European standards. It’s still a political no-brainer to support Israel, because the older generation still holds power in Europe, and no one is crazy enough to drive a little electric car on the autobahn. The Muslim demographic is still far away from significant political power, due to age, and the relevance of oil will eventually fade, but those are issues for future generations.
In part it’s because he cares more for Italy than for the EU, unforgivable. Neither this guy Monti or the EUrocrat who is likely to take the helm in Greece care a fig for the people of Greece or Italy. The EU and the Euro is their master.
What are the odds on Italy breaking up. The north hates the south and resents paying taxes to support them. Further the South is run by the Mafia. A return to the 18th century strikes me as a possibility.
None.
Stranger things have happened.
True, but in case 50 mil. italians get poorer and more frustrated I am more worried about “l’irredentismo”. But that is a long shot too in my opinion.
They’d have to get out of bed early to effect anything really revolutionary. My money’s on Sloth. Italians ain’t changing anytime soon.
Monti is a prime minister, not president
In the euros defense, while they may not develop as many drugs as the U.S., there are a boatload of European drugs developed in Austria, Germany, France and Switzerland that have been safely used for over a decade still not approved by the U.S. agency keep Foreign Drugs Away (FDA). The cartelization of the health care sector is something not often remarked upon, despite ObamaCare being a blatant attempt by one industry to lock in a captive market forever. Ditto for the Embargo against Cuba…the powers that be won’t drop it until they’ve acquired the best real estate on that little island. After all, we musn’t have ordinary Americans from Fargo or Cheyenne retiring there or opening clinics there. That would be a threat to the Health Insurance Complex.
On a more positive subject, here’s a link to something that may be of interest to Spenglerites — tens of thousands of Russians greeting relics from Mt. Athos on a tour of the Russian Federation:
http://www.pravmir.com/svyatynya/
David – not to be pedantic but Silvio admits the orgies – he denies paying for them which is the illegal part!
Frankly Monti is such an obvious puppet of the eurocrats (he might as well have a ‘shock’ bracelet connected to a button that Angela Merkel can press anytime she wants) that I can’t believe that Italians will actually give his governance any credibility. The worse for them if they do.
@DPG
Thank you so much for making your Macrostrategy report, “Flight Forward in Europe”, available to us PJ Spenglerians. It’s by far the best thing I’ve read about the EU debt whirlwind and the delusional folly gripping their leaders (though the image of Chancellor Merkel in Old West gunslinger garb pulling a crack pipe in a Roman Coliseum shoot-out with Berlusconi has had a really bad effect on my REM sleep!).
The financial / economic chateau is burning down around them, yet Merkel / Schäuble / van Rompuy / Barroso / Sarkozy & Co. persist in their quest for the holy grail of fiscal and political union with a sort of maniacal, misplaced religious zeal. Somehow they see this as the magical cure for all their problems (emotional/psychological as well as financial?), reality be damned. But this bright salvation they’re yearning for is just another utopian fantasy. We’ve seen that movie too many times before; it always ends in tears.
There is something chillingly ruthless about their determination to achieve this EU of their dreams, no matter who or what they have to trample in the process. Democracy? For the faint of heart. Chancellor Merkel may sometimes look like a dear dumpling of a woman with her little smile, but I wouldn’t want to get between her and her headlong charge toward cozy EU togetherness. Ditto the EUnuchs who trail along in her wake.
Relentless, ruthless, misguided, they all think they’re running away from what they fear from their collective past, but they are only re-creating the totalitarian horrors of that past anew. This irony seems totally lost on them. We call this karma. (And Mother Nature will keep repeating the lesson until we learn it!). Or is it just another iteration of what Talleyrand said about the Bourbon kings of France, “Ils n’ont rien oublié, ni rien appris.” (They’ve never forgotten anything, but neither have they ever learned anything.) It looks as though M. le comte was also prescient about the current EU when he observed, “Voilà le commencement de la fin.”
Here’s a surreal glimpse of just how far out there Chancellor Merkel ventured in her speech at her CDU party’s conference this week. From Der Spiegel:
http://www.spiegel.de/international/europe/0,1518,797584,00.html
If you think the undergroubd US economy is 8%, I’ve got a bridge to sell you. It goes from Brooklyn to The Lower East Side. Hardly used. In good repair.
One of the great hidden (because noone really wants to see it) problems is that all the money we spend on welfare merely frees up ill-gotten gains to pursue more ill-gotten gains. Welfare fraud is not a Bug, it’s a Feature. Food stamps are, in fact, an alternate currency, used as specie in any and all dealings nefarious. We have subsidised crime and fraud, then wonder why we have more of it. Now we’re supplying drug dealers with discount cellphones called “lifelines”. Orwell ain’t in it.
We live in a world of lies and deceit. Non-profits are run by CEOs and staffed by failed lawyers and politicians making over 6 figures. How is that non-profit? They’re certainly profiting!
Bill Clinton left office in disgrace, pardoning criminals, and millions in debt. Now he gets millions for a boring speech, all his expenses are underwritten by us, and he and Hillary serve, like all the rest, on loads of boards doing nothing and getting paid for it. How is that not graft?
How can Congress, which does so much stuff in secret, make trades on Wall Street, including selling short, make laws against insider trading? No Wall Street executive can actually cause the matrket to shift by their personal actions. Congressmen can, and do. But it’s not illegal.
This is the biggest problem. I’ve tried to play by the rules all my life. Now I see I’ve just been a rube. What’s right no longer has even an illusory allure: it’s every man for himself. All this time, it turns out, noone has been looking out for me, not even the people directly charged with that. No One!
They should all rot in Hell.
When I went to school I lived in one might call challenged communities. There were indeed people selling and using drugs and using food stamps to buy groceries. Also one person happily told me about a scam involving governemnt loans to take a welding course he never attended. No doubt the technical school also profited.
I have always liked the idea of a consumption tax in lieu of an income tax so people selling crystal or whatever it is they sell nowdays also pay taxes. Its only fair. Cant see why the sales tax rate cant be higher for luxury items than it is for food – much as the standard deductions now allow for the minimum a person needs to live.
“Even on the verge of bankruptcy, the America-haters in Europe can’t control themselves.”
They are the overwhelming majority of both EUropeans and EUropean intellectuals, and always have been. It seems unfair to complain that the EU officials accurately represent its society.
I am not gonna defend deluded Eurocrats, but I would have stopped the GE/Honeywell merger too.
Welfare fraud may be a problem, but not more consequential than corporate welfare and crony capitalism. The US prides itself for being an efficient, competitive free market. That’s propaganda for the gullible. It is actually a kleptocratic corporate welfare state. None of those 3 qualities can be ascribed to it when every so many years the government bails out the economy with increasingly stratospheric amounts of taxpayer funds. I still recall from Economics 101 that efficient free competition is lots of firms, none of which can affect the market, not corporate behemoth that can bring it down, that spend more resources on lobbying, suing and buying each other out than producing anything. You can’t live off mainly entertainment and social networks and search engines software and financial speculation and innovation.
Europe has committed suicide but America is going there too. It’s been wealthier and, therefore, it takes more time.
Just a small example:
“The Obama administration urged officers of the struggling solar company Solyndra to postpone announcing planned layoffs until after the November 2010 midterm elections, newly released e-mails show.
But in an Oct. 30, 2010, e-mail, advisers to Solyndra’s primary investor, Argonaut Equity, explain that the Energy Department had strongly urged the company to put off the layoff announcement until Nov. 3. The midterm elections were held Nov. 2, and led to Republicans taking control of the U.S. House of Representatives.
In any event, Solyndra made the announcement as asked, on Nov. 3, 2010 that would lay off 40 workers and 150 contractors and shut down its Fab 1 factory. Just as a coincidence, *****the Obama Department of Energy agreed to continue giving Solyndra the installments of its federal loan even though the company was in default of the terms, and restructured the loan in February to give the investors a chance to recover the $75 million in new money they put into the company before taxpayers would be repaid.********
“Europe has committed suicide but America is going there too. It’s been wealthier and, therefore, it takes more time.”
This bears repeating whenever possible. Before engaging in Schadenfreude at the mess across The Pond realize that they are merely a few years further down the same road we are currently cruising along. They are already cooked but we may still have time to pull back…possibly…
The very processes and forces that have brought us here are working against us
pulling back. This is the classical path of dominant power decline and I don’t know one example in history that managed to reverse it.
I just read that the US government has subsidized China’s — China, mind you! — environmental industry to the tune of $4 millions. They loan us money so that we can give them grants to compete against us.
If it has reached this level of stupidity, it’s over.
“The point of financial crises is to put assets in the hands of people who deserve to own them, says my friend Neal Soss, the chief economist at Credit Suisse.”
So says a financial industry servant. Please!
You mean to tell me that if Wall Street speculates and brings the economy down and most US asset prices go down then Chinese state enterprises or rich Arabs *deserve* them? (I know, I know, but let’s assume they were better at exploiting them, would you be comfortable with the consequences?
Give the world to financiers and that’s what you end up with, plus such enormous inequities that they will trigger riots.
And then people wonder why the West is collapsing.