It would be a mistake for us to want to do it ourselves

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What Italy needs more liquidity today. As much as needed to close the hole opened by a drop in income which, at the end of the year, will be worth over 150 billion euros, according to the forecasts of the International Monetary Fund. We need liquidity so that those who cannot work do not lose their income and therefore can continue to consume: if this did not happen, the effects of the lockdown on production would add an extraordinary contraction in demand. And liquidity is needed to prevent companies from going bankrupt; to cope with the extraordinary pressure on the health system, which has proven to have heroic doctors and nurses, but serious structural deficiencies. We compare the consequences of the virus in Lombardy and neighboring Germany. Yet our total public spending 4 points of GDP higher than the German one: we spent for decades for everything and more, accumulating a huge debt even in periods of normal GDP growth, but in health we spend two and a half points of GDP less of Germany. It takes liquidity for doctors and virologists to make the decision on when to leave, perhaps with the help of some economist, but not for entrepreneurs to the brink of collapse.

NWe cannot remain closed until a vaccine is discovered, which unfortunately will not be soon. But we cannot afford to reopen without a well-established and sufficiently widespread test program: never possible that in three months we have not been able to copy what has been done in Seoul or Taiwan, or more simply in Berlin? If we reopened in a confused and blind way, we would risk having to close everyone at home in a few weeks, including those who could go out and work without risk: a new stress that businesses and citizens would have a hard time withstanding. At that point, the negative effects on citizens’ health itself, depression, anxiety, suicides, family violence would be very serious secondary effects of the treatment. Not only that, but there is a risk that crime will infiltrate the vast economic support project, Minister Luciana Lamorgese said in Parliament yesterday.

Where is there so much liquidity? Certainly not by taxing an economy that does not produce: it would definitely sink. Taxes don’t go up during a recession. At the most when finished. Least resorting to forms of forced withdrawal: for every euro collected forcibly the state would lose many more because a compulsory withdrawal, for example a property tax, would signal that we have lost access to the market. The debt held abroad would not be renewed and the Italians would also try to get rid of it. So where to find liquidity? Despite an initial gaffe from its president, the ECB intervened massively to provide liquidity. In March, the bank announced that from now until the end of the year it will purchase public and private securities for 930 billion euros. Our share 13 percent, so about 120 billion. And the ECB also said that if necessary, that figure could be increased during the year.

So all discussions on Mes, eurobond, Recovery fund are useless? No, because the ECB can put out a fire, but then fires must be prevented and avoided. The ECB cannot buy a trillion bonds a year forever. For this it takes the Mes, the Eurobonds or some other mechanism to deal with common shocks, that is shocks, such as Covid, which affect all the countries of the euro. This pandemic will not be the last common shock for the eurozone.

Problem already solved then? Absolutely not: the crucial European summit of tomorrow. Ask yourself what could happen if the eurozone countries quarreled tomorrow and the meeting ended without a joint statement, for example because the Italian Prime Minister pledges on eurobonds and his Dutch colleague does not want to hear about it, as happened in the penultimate meeting Eurogroup. After a European Council that ended badly, the spread on Italian government bonds would soar and only the interventions of the ECB would be able to lower it. The ECB can do it, but only by unbalancing its purchases of securities in favor of Italy. Its position would become increasingly difficult, viewed with suspicion by the countries of Northern Europe.

Salvini shoots zero on understandable Europe. Its a political choice, in our opinion crazy, but lucid. Its purpose is to take us out of Europe. But that the prime minister faces European meetings with phrases like Ready to do it yourself, not only counterproductive, absolutely lacking in credibility. How can Italy threaten to leave Europe and the euro? What would happen if we were alone? The liquidity should be provided by the Bank of Italy, and a lira not anchored to the euro would devalue as it happened in the nineties, when the lira devalued a year s and another as well, without our competitiveness in international trade steadily improving. Foreign investors would flee frightened by the risk of devaluation, the Italians, unless prevented by law, would invest in euros and dollars. Our stocks would lose value and public debt rates would skyrocket. A road that would lead us straight to a debt default, either because of inflation or by decree. Does anyone really think it is a preferable alternative to an imperfect Europe?

We are an extraordinary people, capable of producing cutting-edge research, capable of creating great companies and great innovations, with our fighters at the forefront of the virus we have shown a heroism that has moved the whole world. But Europe does not argue with Italians, it argues with representatives of our state. That an indebted state, which has often thrown up the taxes paid by citizens, accumulating debt unnecessarily, which does not know how to spend European funds, which in two months has failed to learn from South Korea to set up a system to test, isolate and face Covid. There is no doubt that some representatives of Northern European countries are sometimes narrow. But we must be a little more humble and realistic in recognizing that those who do not trust the representatives of our state have had any reason in the past.

April 21, 2020 (change April 21, 2020 | 22:46)

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