In a bid to appeal to the growing anti-euro sentiment in Italy, three of Italy’s biggest political parties seek a dual currency.
Italy’s leading opposition parties are calling for the introduction of a parallel currency to the euro, which they say will boost growth and jobs.
Three of the country’s four largest parties – the Five Star Movement, the Northern League and former prime minister Silvio Berlusconi’s Forza Italia – have proposed introducing a new currency following an election scheduled for next year.
The proposals for a parallel currency have replaced the opposition parties’ previous calls to leave the euro completely.
By settling on a dual currency, analysts say the parties hope to appeal to anti-euro sentiment in the country while avoiding, for now, the upheaval of an outright exit.
A poll by the Winpoll agency in March showed that only around half of Italians back the euro.
As the election nears, and with opinion polls currently pointing to a hung parliament, only the ruling Democratic Party is not proposing changes to the current euro set-up.
Next General Election
The next Italian General Election is due to be held no later than May 20, 2018.
Key Players
- M5S – Five Star Movement – Beppe Grillo, a comedian. The M5S is variously considered populist, anti-establishment, environmentalist, anti-globalist, and Eurosceptic. The “five stars” are a reference to five key issues for the party: public water, sustainable transport, sustainable development, right to Internet access, and environmentalism. In foreign policy, the M5S has disapproved military interventions of the West in the Greater Middle East (Afghanistan, Iraq, Libya) as well as any notion of American intervention in Syria.
- PD – Democratic Party – Matteo Renzi, former prime minister. The PD’s main ideological trends are thus social democracy and the Italian Christian leftist tradition.
- Northern League – Lega Nord – Matteo Salvini. Under Salvini, the party has emphasized Euroscepticism, opposition to immigration, and other “populist” policies, while forming an alliance with nationalist and right-wing populist parties such as France’s National Front, the Netherlands’ Party for Freedom and the Freedom Party of Austria at the European level.
- Forza Italia – Forward Italy – Silvio Berlusconi, a four-time Prime Minister. Under Berlusconi, FI’s long-time coalition partner was Lega Nord.
Silvio Berlusconi is prone to flip-flops and would likely do anything if it brought him back in power. However, PD + FI will likely not come close to 50%.
Early Elections?
On May 30, Bloomberg reported Italy Moves Toward Early Vote as Election Law Deal Nears
Italy’s biggest parties are considering a proportional system similar to the German model with a 5 percent cut-off for smaller parties, and lawmakers are due to discuss a first draft of the new law early next month. An agreement would remove any hindrance to snap elections, eliminating the need to wait for scheduled elections in early 2018.
Ultimately, it’s up to Italian President Sergio Mattarella to make the call on when to dissolve parliament. According to Italian newspapers including Corriere della Sera, Mattarella would prefer to let the government of Prime Minister Paolo Gentiloni, 62, a soft-spoken diplomat and Democratic-Party ally of Renzi’s, stay in power until next year.
While an early vote would put an end to a legislature that already saw three governments in power amid palace coups and constitutional-referendum defeats, a proportional system runs the risk of producing a hung parliament. An election this year would come at a delicate time for Italy, with its banking woes unresolved and the budget law for 2018 still to be approved.
The proposed new law “would likely not facilitate an outright victory by one of the three major political groups” resulting in a hung parliament, said LC Macro Advisers Ltd. founder Lorenzo Codogno who sees the likelihood of early elections at 60 percent.
That deal fell and I can find no other recent references regarding early elections.
Left Crumbles
On June 26, the Guardian reported Italy’s Centre-Right Wins Big in Mayoral Elections as Left Crumbles
An alliance of Silvio Berlusconi’s Forza Italia party and the anti-immigrant Northern League won 55% of the votes in Genoa, the northern port city that was a leftwing stronghold but which the right will now govern for the first time in more than 50 years.
PD leader Matteo Renzi, 42, who has been seeking to make a comeback since stepping down as prime minister in December, was the clear loser in Sunday’s vote.
The centre-left has governed Italy for four years, during which time the economy grew by only half the eurozone average. Three different PD premiers have struggled to shore up a banking system strangled by bad loans, and to manage half a million migrants who came by boat from north Africa.
Sunday’s vote – the second round for cities where no one candidate won more than 50% two weeks ago – is one of the last before a general election due by the end of May 2018, but it may not be a reliable indicator of what will happen then. The first-past-the-post voting system used at the municipal level, which favours coalitions, may not be replicated at a national level, where a proportional system is now in place.
Genoa is the latest of a string of defeats in the PD’s traditional strongholds. Last year it lost Turin, Italy’s fourth-largest city, and the capital Rome, both to the Five Star Movement (M5S), which was founded only eight years ago.
M5S, which opinion polls say is slightly more popular than the PD nationwide, performed very badly in the first round of voting on 11 June and made the run-off in only one of the 25 largest cities. It added eight mayors to its modest tally.
“We now have 45 mayors, up from 37 before, which is an increase of 20%,” M5S founder Beppe Grillo said on his blog. “Every damned election we are growing and that is what counts.”
Two Things
M5S, NL, and FI appear likely top a combined 50%, perhaps easily. That does not necessarily mean a coalition will form.
The two things and possibly the only two things that unite the Five Star Movement, the Northern League, and Forza Italia are a desire to crush Matteo Renzi and a desire to get Italy off the Euro.
And when it comes to Berlusconi’s views on the euro, one has to question his sincerity. He has changed his position many times.
Comments from European readers appreciated.
Mike “Mish” Shedlock
Mish, could you elaborate on the parallel currency? It doesn’t seem to me like a very sustainable idea, unless the new currency has very restricted use.
It will not work IMO but I have have not seen the plans
Today is the first I heard of it and details are non-existent
I do know this
Some want it as a step to going back to the Lira
Sovereign rates might spike and the idea abandoned
economies with multiple currencies work just fine.
it’s a good thing
Please provide some examples where it works just fine or where it worked and didn’t end up in a collapse of one of the currencies.
https://uk.reuters.com/article/us-italy-euro-analysis/italys-dual-currency-schemes-may-be-long-road-to-euro-exit-idUKKCN1BJ20F
Thanks. The relevant part:
It’s logical that they will tie the new currency to taxes. Taxes and threat of violence are the only things backing any modern currency.
However, I can’t see this ending in any other way than the Argentinian crisis of 2001. The mini-BOTs will be fixed to Euro and eventually develop strong imbalances, ending with the abandonment of Euro, rapid depreciation of the new currency and defaulting on Euro debt.
What stands out to me is that Euro tax revenue will shrink, and throw the Euro budget deficit further out of line. It would create a parallel economy, the new currency is not allowed to be legal tender but as government guarantees acceptance for payment it should trade roughly at par with Euros. I wonder if any law exists to enforce taxation on private use of this currency. Exactly what that adds up to I am not sure.. the only Euros really nescessary would be international deficit of payments plus Euro debt servicing. Maybe by reducing expenses (paying in new currency) Euro revenue could be used to pay down debt… doubt it. I think it would lead to a sovereign debt standoff with EU , that then could lead to abandoning the Euro… a softer way out.
It doesn’t matter if the parallel currency works. It does matter that so many Italians want to tell Brussels where to shove it.
Lets assume Italy officially stays with the Euro as their currency (printed domestically, whether the ECB approves or not). But Rome just ignores edicts from Brussels… much like London, Warsaw and Vienna are already doing.
That is the best case scenario for the EU. Then again, Ital-exit might happen.
The EU and Euro are failing. We can argue about whether member countries formally exit like England, or whether member countries simply stop listening to Brussels endless decrees. Either way, Brussels doesn’t matter
“Comments from European readers appreciated.”
No one knows wtf is going on.
Three Italian banks failed recently, dei Paschi, Veneto and Vicenza. There is another 110 banks in a similar situation with huge NPLs. These banks are being kept alive by liquidity from the ECB system (Target 2) to the tune of € 400 bn. The total “help” from the ECB to weak banks is € 1 200 bn, in other words unsustainable.
So how do you fix this problem?
The truth of the matter is that Germany is providing liquidity to the PIIGS outside normal procedures (Target 2). A simple central bank settlement system is being used/corrupted to keep the (bank) wheels turning.
Spain is far from out of the woods too. Expect some news there by Summer 2018, possibly before Christmas, of another bank rescue or consolidation to take out a weak player.
Liber Bank – was the 8th largest in Spain.
+100
Itexit is imminent. There is no point trading sovereignty for Euros !
No, never.
They don’t have the impetus or balls.
READ
https://leavetheeudotcom.files.wordpress.com/2015/09/twitter-leave-the-eu-q.jpg
When, if ever, will some populations begin to panic?
When they realise all control is GONE.
Their kids employments doesn’t matter, GONE.
Their money in the bank doesn’t matter, GONE.
Their individual culture, GONE.
Control of their borders, GONE.
Their identity, GONE.
What happens next?
Today I read latest news that our not-so-loved PM was stating that he has been in talks with Macron and Merkel and after German election in two weeks they will put the high gear on towards financial integration of EU area among with mutual defense system.
So, the plan is towards the United States Of Europe Merkel and Macron in the helm of the whole system. It was also said very clear that the New Order would mean that the other member states would have much less to say what these two Great Socialist decide. I smell a very strong stench of politburo. Merkel and Macron obviously aim their political guns towards member states like Hungary and Poland that are not “behaving”. I suppose they could run the EU tanks in the streets of Budapest and Warsaw in the same style that USSR did back in the 1968 Prague Spring.
“The Prague Spring (Czech: Pražské jaro, Slovak: Pražská jar) was a period of political liberalization in Czechoslovakia during the era of its domination by the Soviet Union after World War II. It began on 5 January 1968, when reformist Alexander Dubček was elected First Secretary of the Communist Party of Czechoslovakia (KSČ), and continued until 21 August 1968 when the Soviet Union and other members of the Warsaw Pact invaded the country to halt the reforms.”
https://en.wikipedia.org/wiki/Prague_Spring
What might go wrong? According this humble Europeans opinion – everything.
The only military aged and motivated males Merkel has left to man tanks, have already been taken. By the Army of The Caliphate. While their French colleagues, true to form, have surrendered.
The current size of the German Army is about 60,000.
https://en.wikipedia.org/wiki/German_Army
Germany has been reported to have over a million recent Muslim refugees and immigrants, a disproportionate number of whom are either young men or adolescent males who will soon be of military age.
If the refugees were organized into paramilitary units, they’d outnumber the German armed forces by a considerable margin.
If an evil genius wanted to subvert Germany with an invasion of Muslims, she’d adopt just about the same policies that Merkel has adopted.
“EU tanks”
No such thing. It’s NATO or nothing. None of the traditional continental powers (FR, DE, IT) would ever roll tanks anywhere but into a museum.
I could foresee some of the betrayed central EU countries rolling their hardware – to seal their borders etc., but at that point the whole experiment would be clearly lost anyways…
I referred to the fact that they are planning some sort of consolidated armed forces. I have no idea what form it takes but fear that it will be used against those that oppose the politburo and orders from Brussels.
I see a civil war looming in the horizon.
Talk about a paper army…
I don’t think it is inconceivable at all that an “EU army” is created or used to deal with “problems” in member states.
The whole integration is to this effect, but exactly under what scenario is hard to imagine at present…here is one:
You have a military coup in one country, the leader and a % of the population and military take refuge in a neighbouring country. EU rallies support, brinkmanship… and you end up with an EU force retaking that country.
Obviously currently the militaries are still relatively nationalist, but I have watched other forces get very diluted and mixed in their loyalties. Also the national leaders.
So not tomorrow, or in a year, but eventually it is possible.
I suppose it would follow the paper “tigre” , that is to say, some kind of mutual defence pact that includes “democratic process” .
(1) What democratic process? No one in Brussels was elected
(2) The only member country with an effective military ***WAS*** England. The French and Italian militaries can barely function within their own borders.
As Europe PROVED beyond any shadow of a doubt, when the going got tough in Bosnia-Serbia, European military “power” was a bad joke. After the US military was brought in to make up for Europe’s ineffictiveness, France never stopped whining that the US military should inexplicably be placed under incompetent French command — which is both illegal under US law, and an insult to the people who were saving Europe’s butt.
If the EU creates an army (with money and people they don’t have) — it won’t be effective.
Remember the Maastricht Treaty? And Schengan-???. Europe considers its own treaties to be a running joke. Why would their comedic military be any different?
That is why I used “”.
The “ineffective” military of one country, faced with the “ineffective” militaries of several countries combined under an EU flag, loses…unless it is one of the largest countries, and/or is nuclear capable.
Guess who “wins”?
Guess which other large country is tied into that country winning?
But the worst/best part is the creation of legitimacy, and so the ability afterwards to simply “remind” any country that even thinks of rebelling.
This direction should lead to peace, but is more likely to lead to war I think.
The rush to increased integration has been on the cards post election for a year or more.
Expect harmonized corporate taxes amongst other things.
Smaller countries will have to go along for the ride.
Those not following the script will have funding cut to teach them to behave and follow.
If the European people cant see where this is going they get all they deserve.
Head of French Military has quit – https://www.theguardian.com/world/2017/jul/19/head-of-french-military-quits-after-row-with-emmanuel-macron
Meanwhile Macron was dropped via Helicopter onto a French Nuclear Sub.
So a Real World military man resigns whilst pretty boy plays James Bond.
Where do that tell you its going?
“If the European people cant see where this is going they get all they deserve.”
Many real Europeans see where we are heading but what to do? Nobody asks the electorate if we want more integration or not.
For example, in my country couple of decades ago we were lied that joining EU would not mean to join euro currency. Then later we were told that the vote meant also that we adapt euro.
Our constitution says very clearly that it requires 5/6 of the votes to change the constitution. When we voted for joining the EU it was in the favor a bit more than 50%. Now the constitution reads that we are part of European Union.
Treason I call it. I voted against since I love Europe been traveling around and living in Italy and Spain but I just can’t see every country under same “management”.
“The EU is the old Soviet Union dressed in Western clothes”
(President Gorbachev)
samijr, I’m with you.
Electorates are given no choice, whichever way they vote the outcome is the same because all main parties are loaded with the same people.
Not EU tanks, you mean NATO tanks, which would touch off unimaginable turmoil…
If cornerstone EU countries like Italy are pursuing new currency, then what is point of the EU itself?
Merkel is the least dirty shirt in the laundry, certainly not popular except relative to the alternatives.
Germany might “officially” exit the EU before Italy — only because Italy might never “officially” leave, they will just start ignoring Brussels.
Interesting that you say that… I’ve been theorizing for years now that it will be DE that initially abandons the EU, and not the ClubMed vassal states.
I think Merkel is a Trojan Horse (of sorts)… as the EU withers, she’ll turn east, not west. DE will eventually align most closely with RU, not the US or western europe.
Virtually all of DE’s & RU’s political posturing for the past decade is actually preparation this inevitable alliance, imo.
German industrial prowess combined with Russian natural resources would set off alarm bells in a few places. Lebensraum too.
the alarm bells have been ringing for years… that’s why the US (CIA) was/is in Ukraine, the Baltics, etc.
the entire Syrian “conflict” is about running pipelines into europe that would compete vs. RU gas/oil. All the Assad stuff is scenery for the tourists.
Ha, Italy’s problem are Italians, not what currency they use. Corrupt and dishonest culture. The Brazil of Europe.
What does that say about the head of the ECB (Draghi) and the head of the EU Foreign Policy (Mogherini, an ex-communist)?
http://www.federicamogherini.net/wp-content/uploads/2015/07/Mogherini-Rouhani-1080×675.jpg
“an ex-communist”
Once a Communist, always a Communist. 🙂
A secondary parallel currency – forget it.
ANYTHING that shows it is possible to prosper outside the Euro, once a member, will be hit with a wall of shit from the EU.
ANYTHING that could make the Euro look more like a DM prematurely will be killed as German exports will suffer.
Its a none starter unless the Eurozone splits into EuroN and EuroS for a 2 speed currency/economies with a single conversion that could float or be managed in a bnad.
EuroS would be Southern Europe (possibly France too) and EuroN be the northern power houses.
Forget it otherwise.
So Brussels is going to go to diplomatic war against UK, Italy, Poland, Austria and Netherlands … all at the same time?
Greece will only “obey” Brussels so long as Brussels keeps paying Athens. Technically, Greece left before England even if it wasn’t official.
Portugal and Spain are bankrupt — even before the Catalonia fiasco throws an extra wrench into the puzzle.
Fish, you seem to think Brussels is still “in control”, and they might be in control “officially”. But in reality, many of the EU’s members already have their heads (if not their hearts) somewhere else.
Bingo.
Brussels’ power/control is a mirage… a fiction.
Brussels has no military force, thus no leverage/threat that could scratch the itchy members.
No leverage, no power. No power, no control. EU/Brussels has been exposed as an elaborate & expensive marketing campaign, nothing more.
A few EU member states are already acting as sovereigns once again – read the speeches/papers at the national level – many EU member states are already governing themselves as if Brussels were a memory…
A prediction, this whole set-up, in time, will be shown to nefarious and ultimately bad for many ordinary Europeans.
They are boiling frogs very slowly so the people don’t realise until it’s too late.
One truism for the Military – IDENTITY MATTERS.
People fight for the homeland not some nebulous idea of the greater EU.
First time they come up against Russians with NATO out of the equation I know where my bets will be placed as the winner.
If NATO is downgraded in this I very much hope the UK pulls out of common EU defence and begins to prepare for its own singular defence in a new NATO of UK/CANADA/US.
The US will need someone to keep an eye on the north west Atlantic (and we can do a very good job of that) so US can concentrate on the Pacific/S. China Sea/Indian Ocean.
Let the EU fight its own land wars.
I can’t see the US getting involved in another European mess. We have way too many problems of our own, and if we want to go meddling abroad the economic future is in Asia. Europe is demographically and economically just a old folks home.
After campaigning about the deadbeats in NATO, Trump (for the next 3-7 years) is not going to babysit Europe.
England just voted to keep their distance, and like the US England needs to focus on economic opportunities in Asia.
Chinese investors / money launderers are buying Canadian real estate. Chinese energy companies are buying oil/gas wells in Canada. Like England and the US, the future of Canada’s foreign interests are in Asia.
And despite media rhetoric, Russia’s focus has been on Asian economic opportunities. Yes, Russia has protected what it views as “buffer zones” between itself and Europe — but Putin clearly has his eyes on prizes in Asia.
Russia already gets economic tribute from the EU, because of Gazprom. Russia didn’t have to fire a shot. Putin doesn’t need to invade the EU, he already gets an annuity from Europe.
Generally agree, but you are dead wrong about Putin–>East.
Crimea, Ukraine, Syria et al. is about RU energy reaching EU (not eastern) customers.
Putin has been laser-focussed on cementing RU’s position as Europe’s gas station.
Sure, he’s keen on Asia, too. But it is leverage over europe, not china, that Putin craves.
For four hundred years, the Russians have viewed eastern Europe and Ukraine as a military buffer zone. They refuse to build good roads or railways, because they don’t want roads/rails to be used by Napoleon or Hitler or Juncker or whomever the next lunatic is.
They are building the north sea pipelines to go around the buffer zones, which tend not to pay bills and often block gas going to paying customers. They don’t need or want to run pipelines thru unreliable buffer countries.
Russia “needs” Ukraine, Estonia, etc to slow down invaders. Its been that way throughout Russian history, its part of their military doctrine. To what extent a modern military could (in theory) go around the buffer states is debatable, but its in the Russian psyche whether it still applies or not.
Given the US reliance on Pakistan to get to Afghanistan, the Russians probably figure the historical importance of barren buffer zones still applies. If the US couldn’t leapfrog Pakistan, its doubtful any other military could.
Putin collects a nice tribute from Europe already. He has zero reason to invade so long as Europe needs natgas — so no reason for many decades.
Putin is focused on Asia, not Europe. Europe is yesterday.
Italy is a conglomerate of city states the likes of West Oakland, South Chicago, East St. Louis, Houston, and Baltimore.
The Italian economy has only grown 1% in the last 17 years. That is the 4th slowest rate in the world.
http://thesoundingline.com/ranking-worlds-economic-growth-21st-century-greece-italy-come-near-last/
Does that statistic cover only the 50% of the Italian economy that reports? How much has the unreported economy reported to have grown?
All of my dutch colleagues (naively) believed that Brussels (n.europe) would simply dispatch their uncorruptable bureaucrats down to Greece, Italy, Portugal etc. and promptly collect those unpaid taxes & obligations… eazy peezy lemon squeezy…
LOL.
They now realize that 1) half of s.europe’s “economy” is off-the-books, and 2) there aren’t enough ‘state assets’ in s.europe to balance the books.
Multiple n.european countries have been internally preparing for devolution since 2014, when their bureaucrats returned from Greece with the overdue realizations that s.europe is hopeless & the EU construct is fatally flawed. Yes, n.europe has been sleepwalking for decades…
Under the old gold standard (1913), 4 Italian lire were equivalent to $1 US. In the late 1950’s, about 600 lire got you $1 US. When the lire was replaced by the Euro in 1999, it took about 1,623 lire to get $1 US. Southern Europe should never have been allowed to join the Euro. Life was a lot easier when Italy and Greece simply devlued their currencies.
All right, so there will be a new fiat currency parallel to the euro. This will enable Italy to inflate at its heart’s content without worries about overspending. Sounds like a great plan.
In fact, this is how I imagine the euro will end in a not-too-distant future. A crisis hits, and several large European nations decide to switch to their own currencies and immediately start up the printers.