An American Crisis
Shaken Eagle
Guilt-ridden explanations about why sites are not regularly refreshed with new content are boring and we’re not going to offer any of them. Suffice it to say that while you are sitting around in your underwear reading stuff on the Net, someone is off fighting your battles – though of course not necessarily on your side…
At any rate, the news of the day is of course the upcoming End of the World as We Know It – the global financial crisis. It is a subject about which Italy is on the whole very poorly informed. Most Italians still suspect that it is largely a problem for the US – due to the usual kinds of kicks; pet rocks, CB radio. healing crystals, lo-carb diets and sub-prime mortgages; that Americans are liable to get involved in.
There are a number of reasons for this. One is that all significant Italian media are owned either by industrial groups (the dailies) or, in one way or the other, by politicians (television). None of these entities has an interest in stirring up anxiety. In the offices of news organizations, playing down the global financial crisis is referred to as “behaving responsibly”. Beyond that, very, very, few Italian journalists would know a credit swap if it bit them on the ass. This is in no way an easy crisis to explain and the Italians are – to their credit it would now seem – conservative in their investment habits, so they are hardly equipped to grasp what has happened even if there was a commentator around prepared to tell them.
This of course does not mean that no one is speaking. Political figures and house economist are deeply engaged in being “reassuring”, often with amusing results. For instance, it is quite normal to hear, not only from the same commentator or politico, but in the same paragraph, that this crisis is: A) “unlike any other” (code for, “please don’t worry, this is not the Depression all over again”) and that B) “this is a wonderful time to make investments because after this kind of thing prices always bounce back” (...).
As ever, the very loose mouth of the Prime Minister, Silvio Berlusconi, has been much at work. Last week he advised the Italians (shortly after informing them that he and George W. Bush had decided to close the world’s stock markets for an indefinite period; something, it turned out, that he had, ah “heard”) that, because Enel and ENI – respectively the “privatized” State electrical and oil monopolies – appeared to be crashing on the markets, they were a wonderful investment opportunity, bound to bring in “big profits in a year or two” as their share prices return to normal.
Leaving aside the fact that it is odd to hear a prime minister touting the stock of two companies that are supposed to be privately held, the Italians – who, as we mentioned, are conservative investors – couldn’t quite see the logic of buying into something that was nosediving.
Failing in that, Mr. Berlusconi tried again a few days later by announcing that he “understood” that swarms of sovereign investment funds owned by Arab governments were getting ready to come and rape Italian women and children; er, that is, run hostile takeovers on Italian companies, which of course would drive prices up terribly; but that he, personally, would see that they did not…
He succeeded so well in protecting Italian firms from “predatory” takeovers that no-one bit at all and the Italian Foreign Minister has now been sent on a sales trip to a number of Middle Eastern capitals to attempt to drum up interest. In the meantime, the Libyan central bank has acquired not quite five percent of Italy’s Unicredit Banca, the country’s largest and wobbliest financial institution. The damned rag-heads – not quite a direct quote, but close – are even insisting on having a seat on the Board. This however was not predatory – even though the Government seems to have been told about it only at the last instant – because, should the Libyans suddenly announce they were joking, take their marbles and go home, the whole Italian banking system would presumably be in an extremely embarrassing fix.
The point being that Mr. Berlusconi, who hasn’t personally the least clue about what is going on, tends to view his role as that of the nation’s cheerleader, keeping up morale rather than anything else. It is probably fortunate that he does not in fact enjoy any very significant powers of intervention. Still, he has given his word that no Italian bank will be allowed to fail. This could easily be a problem – it certainly was for Ireland, which did something similar, though more credibly – but fortunately no-one of any importance (that is, with any money) took the Prime Minister seriously. It isn’t up to him anyway.
But this is just politics and Berlusconi is just a politician. And we are just us, with no more clue as to how the credit worm is going to turn than anyone else. So, rather than go on macro-economizing, we are going to stop for the moment.