Sunday, November 20, 2011

Good News... Bad News...

So, is a change of Government a good or a bad thing for countries like Spain, Italy or Greece?

Let me answer as a Latin American politician once did: "Ni lo uno, ni lo otro, sino todo lo contrario" (my translation: neither the former nor the latter, just the opposite).

More precisely and cautiously, if not so colourfully: it would not improve things for the majority. Let me reason this considering Mario Monti and Italy. The cases of Spain and Greece largely follow from analogy.

Mario Monti [1]
Mario Monti, current Italian Prime Minister replacing Silvio Berlusconi, had a distinguished education and successful career, in academe, the bureaucracy and the private sector. That is undeniable.

His career in the private sector included a senior advisory role for Goldman Sachs. In this, his experience is shared by a remarkable number of prominent economists currently (or at least until quite recently) in position of authority throughout Europe:

  1. Karel van Miert (Belgium): former EU Competition Commissioner and ex international advisor to Goldman Sachs.
  2. Otmar Issing (Germany): former board member of the Bundesbank and ECB, advisor to Goldman Sachs.
  3. Mario Draghi (Italy): ECB head, former managing director of Goldman Sachs International.
  4. Peter Sutherland (Ireland): former Attorney General of Ireland, non-executive director of Goldman Sachs International.
  5. Antonio Borges (Portugal): former head of European Department (IMF), former vice chairman of Goldman Sachs International.
  6. Lucas Papademos (Greece): Greek current PM, former head of Greece's central bank at the time of derivative deals with Goldman Sachs, enabling Greece to "cook" its books on public debt.
  7. Petros Christodoufou (Greece): head of the Greek debt management office and former Goldman Sachs. (See here)

One of Monti's positive characteristics, it has been argued, is that he is a technocrat, without links to partisan policy.

I will not argue here why this is not necessarily a good thing: it could make this post too long. Instead I will simply remark that Monti, to be appointed Prime Minister, had also to be previously appointed Senator for Life, by president Giorgio Napolitano. (See here. In Italian)

This may be a perfectly constitutional process, I will not argue otherwise. However, in my mind, to be "elected" Senator when one single vote was "cast" (Napolitano's) cannot be reconciled with the notion of democracy.

If I had to speculate, I'd say it means Monti does not owe his position to popular decision, but to whatever group supported him. And I might be unduly suspicious, but this is where Goldman Sachs comes into play.

It would also mean that Monti has little in the way of legitimacy and eventually the Italian electorate is bound to find that, particularly if the new government attempts to impose severe austerity measures.

Further, it could mean Monti has little political support from the parties, if his tenure as Prime Minister becomes too unpopular.

Is the Spanish case different? It remains to be seen.

Photo Credits:
[1] Mario Monti. Wikipedia.

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