The Full Monti
Rumors suggest that Italy is so desperate for money that it will try the full Monti*.
Mario Monti is about to be asked to try to form a government. Of course the actual negotiations have begun, except it doesn’t seem that Prof. Monti is inclined to negotiate. His position seems to be that Italian politicians totally blew it (correct) so they will let him try to fix things (good luck with that).
The rumored position of the Berlusconi has moved from the prime minister should be one of his guys, to he should name half of the cabinet to he should name at least someone (who would be Gianni Letta his Rove) to OK just don’t take away my TV (spoiled kids are that way).
Monti has already semi-officially announced that the new economics minister with be Guido Tabellini who is widely considered to be the most eminent Italian economist in Italy**. He is known for his work on how politicians do not serve the public interest (kids this was an original approach when he started — really).
The justice minister is likely to be a judge***. Monti is alleged to have specifically refused to negotiate with Berlusconi about any reforms to the Justice system (which has been repeatedly reformed in ways which keep Berlusconi out of jail).
The bit about TV is, sadly, not a joke. Monti is rumored to have agreed that he won’t change the regulation of TV. He also is rumored to have agreed not to change the horrible electoral law. I am summarizing Italian newspapers which report rumors.
I don’t know how it will turn out, but it seems to be a rather radical shift. The logic seems to be that members of parliament who know they will never be re-elected will do anything to avoid early elections (their salary is actually fairly high by Italian standards and Berlusconi supporters come cheap).
Both Monti and Tabellini are definitely right of center. The aim seems to be to reassure investors.
*Yes I wrote the post for the joke in the title. Have a problem with that ?
** There are many eminent Italian born economists who have escaped all over the world. Also there are eminent English economists and one Canadian economist who live in Italy. Finally I am reporting the general view and not making any personal evaluation.
*** the one sour note is “La quarta alternativa è quella di Carlo Nordio, magistrato inquirente a Venezia,” that is “the fourth alternative (for justice minister) is Carlo Nordio an investigating magistrate in Venice.” Nordio is a total hack. There is an interception of one of Craxi’s lawyers noting that he and Nordio (then as now a magistrate) were working together. Then he investigated cooperatives vaguely related to the Italian Communist Party over scandals which make Solyndra look scandalous (including was the tombola (bingo) money in a communist club kept separate from party money — really). If Nordio is justice minister than Berlusconi will have achieved his final aim of having one of his guys in the cabinet and continuing to use politicians to obstruct justice.
what’s going around:
Monti is a Praesidium member of Friends of Europe, a leading European think tank, was the first chairman of Bruegel, a European think tank founded in 2005, and he is European Chairman of the Trilateral Commission, a think tank founded in 1973 by David Rockefeller. He is also a leading member of the Bilderberg Group.
http://en.wikipedia.org/wiki/Lucas_Papademos He has served as Senior Economist at the Federal Reserve Bank of Boston in 1980. He joined the Bank of Greece in 1985 as Chief Economist, rising to Deputy Governor in 1993 and Governor in 1994. During his time as Governor of the national bank, Papademos was involved in Greece’s transition from the drachma to the euro as its national currency. After leaving the Bank of Greece in 2002, Papademos became the Vice President to Jean-Claude Trichet at the European Central Bank from 2002 to 2010. In 2010 he left that position to serve as an advisor to Prime Minister George Papandreou. He has been a member of the Trilateral Commission since 1998.
When Berlusconi was elected prime minister back in, what was it, 2001?, the NYT ran an opinion piece titled “Italy Is Not a Normal Country.” That seems to have been an understatement. But while I fully expected Silvio to screw the pooch one way or another, I had no inkling of the scope and depth of the screwing the pooch that he was capable of. He has perhaps outperformed even George W. Bush in this category. The fact that he has clung to power for a full decade is a powerful indictment of Italian politics.
Also, do we have any empirical cases of great economists serving as finance ministers and doing a good job? The case of Schumpeter in Austria suggests that it doesn’t always play out that way.
It’s a tough call, but I think Bush screwed the pooch even more than Berlusconi. I mean he is an absurd criminal, but he never invaded the wrong country by mistake.
I don’t think that Schumpeter was the greatest economist who was a finance minister. Jacob Marschack was finance minister in the Menshevic government of the transcaucasian republic just before it was annexed by the USSR. Frankly, I think that Tabellini will perform above average. I mean he’s not a really really great economists. My guess that the worst thing he will do is convince Napolitano to sign a commodity futures modernization act.
Monti has been on the edge between economics and politics for pretty much forever. Prodi too was an economist. All very serious Italians thought he was a very good prime minister, because he managed to get Italy into the Euro block. I did too as this caused a very low BTP/bund spread … for a while.
(the President of the Republic has a veto but he is only supposed to use it if the law is unconstitutional and it can be over ridden by a simple majority)