November 10, 2011 · 0 Comments
NYT eXaminer asked Salvatore Engel-Di Mauro to comment on claims made in the New York Times article “Italy Pushed Closer to Financial Brink” by Graham Bowley, Nelson D. Schwartz and Louise Story, and which was published on November 9th. Salvatore is editor of the book The European’s Burden: Global Imperialism in EU Expansion. He is also associate professor of geography at SUNY New Paltz and editor of the journal Capitalism Nature Socialism. For more, see part 2, where we asked Antonio Tricarico to respond to the same claims.
Times Claim# 1: “…European leaders could more clearly formulate the terms of a proposed, much-vaunted bailout fund and put it to work, or the E.C.B. [European Central Bank] could step in more vigorously to buy Italian debt.”
This misses the point entirely, since Argentina already proved that rebuffing investors is a much better option if one is serious about bringing about some sort of economic stability. The problem is that Italy, like all Euroland, is tied largely to the dictates of German and French capital, and this is one reason the UK never wanted to join, since their business class would have lost out (and in any case they are mostly involved in North America and other regions). So, the actual issue is whether there is enough profitability for large businesses in Italy to continue being pegged to the Franco-German economy. The terms of the “European leaders” could not anyway be clearer. They were already stipulated through the E.C.B demands back in July with a top-secret letter whose contents have only now been divulged, and the demands are to privatize, liberalize, etc., i.e., to suck the poorer folks even more dry so as to maintain competitiveness and wealth for the large business owners. If the E.C.B buys Italian debt, that just means that mostly German and other large Eurozone investors and banks will own that debt and have even more of a say in Italian government spending priorities than they have now.
Times Claim# 2: “Italy is not nearly in as bad of a situation as some observers may suspect,” said Marc Chandler, an economist at Brown Brothers Harriman.
Sure, with a debt that is among the highest in the world relative to GDP (and an increasing amount owned by foreign entities, even if the bulk is still owned by nationals, but of large corporate nationals at that) and without the possibility of mitigating its effect through huge export revenues, like Japan… Perhaps Chandler means that the situation is not so bad for Italian capitalists, since they are quite adept at dumping their problems on the rest of the society in which they live, thanks to very willing politicians in all the major parties.
Times Claim# 3: “The only way to save Italy and stop the contagion, many economists believe, is for the E.C.B. to buy Italian bonds on a much more aggressive scale than it has so far been prepared to do.”
Because the effect is essentially of wresting budget control even further away from parliament and for the benefit of large investors (including from abroad), this is a codeword for destroying what the working class fought bitterly to achieve in terms of social spending and basic provisions. Investors owning E.C.B bonds will pressure the E.C.B to pressure the Italian government to cut spending and privatize assets so that they can profit from such actions through transfers of public funds directly into their pockets.
Times Claim#4: “But while the E.C.B. will not let the euro fail, analysts said it would avoid bailing out Italy as long as possible, to keep the pressure on Mr. Berlusconi and other Italian leaders to make reforms by cutting spending and removing impediments to growth.”
The result is virtually the same for the working class in Italy, whether the E.C.B bails out large capitalists through buying Italian government bonds or whether the E.C.B pressures the Berlusconi government to cut the budget and privatize what is left of state assets (except, of course, for the coercive organs like police, military, judiciary, e.g.). I hope these answers help make sense of what is going on and what is at stake. Right now, there is a movement brewing from below that is vying for the right to insolvency (since the slogan “we will not pay for your crisis” has resulted in most people actually paying for it anyway) and the logic is that if it takes off and gets any legal legitimacy, it will force financial firms to cede the money they have stolen over the past decades from the working class through state policies like partial privatization of health care services, privatization of television, radio, and railways, etc. I personally doubt that it will happen, but if the effort is well coordinated and diffuse, there is the hope of a political shift of major consequence. Regardless, please note that I am not expert in finance or political economy.
For more, see part 2, where we asked Antonio Tricarico to respond to the same claims.
Salvatore Engel-Di Mauro is editor of the book The European’s Burden: Global Imperialism in EU Expansion. He is also associate professor of geography at SUNY New Paltz and editor of the journal Capitalism Nature Socialism.