The Corner

Colpo di Stato? (2)

 There are many reasons to pay attention to that Fraser Nelson piece in the Spectator, not the least of which is this section:

Furthermore, Italy is not really bust. Strip out the debt interest, and its national books would not just be in balance but have one of the greatest surpluses in the eurozone. Its prosperous north is one of the richest parts of the Continent, and would be far richer if there were a lira to devalue and help exporters. Its households are savers, with an astonishing €8.6 trillion squirrelled away. Government debt, at 100 per cent of economic output, is high — but stable. Debt comes in many forms, and the average Italian owes half as much as the average Brit.

As Berlusconi (if not his compatriots) understood, it is the currency—the ‘one size fits all’ euro—that is the problem, not the country. To ask Monti, a supporter of the single currency and an EU Commissioner at the time it was put in place, to become prime minister is like asking an arsonist to return to the scene of the crime—and then handing him another can of gasoline.

Note also how Mr. Nelson is careful to refer the prosperous “north” of Italy.  150 years after Italian unification, Italy’s Mezzogiorno—its deep south, if you like—remains something of a burden on the rest of the country, and an important explanation for its dysfunctional politics. And that’s despite a subsidy regime that has endured for generations. That’s something that German voters might like to ponder as Brussels pushes Berlin to underwrite a Eurozone ‘transfer union’ (translation: the zone’s “northern” countries prop up their weaker brethren in the periphery, indefinitely) that is likely to be as expensive as it is ineffective. 

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