Of course, the real answer is: It doesn't! And now all the bets are off because this is the real fight. This one really is a matter of life and death. Money is a subject that explained well, can draw massive rallies like Grillo's in Rome the night before the election. There are serious claims that 800,000 attended. No Caesar ever addressed such a crowd.
The bankers will fight this understanding of money every step of the way. This is their leverage. Without the ability to create money out of thin air, the banksters will see a MAJOR reduction in living standards. And as Evan-Pritchard points out, the moneychangers are organizing a new coup in case Grilloism gets out of hand—which is what they expect.
Grillo's followers are certainly an interesting bunch. This is Italy's damaged classes—the young and educated, the small business owners, etc. who have been walloped by the economic crises since 2007-8 These are the people who normally supply the energy a society needs to succeed. And like the old Populists used to say with feeling, "There is as good in the ranks as ever came out of them." Time to worry banksters. When this group turns on you, your days are numbered.
Anger Builds In Italy As Old Guard Plots Fresh Technocrat Take-overAmbrose Evans-Pritchard, The Daily Telegraph | Mar. 3, 2013
Italy’s president Giorgio Napolitano is exploring the creation of a second technocrat government to break the political log-jam and calm markets after key parties failed to reach an accord, risking a serious popular backlash.
Italian officials say the Bank of Italy’s governor Ignazio Visco is front-runner to take over as premier despite warnings that this will be seen as an elitist ploy. It is far from clear whether the Democrats (Pd) in charge of the lower house will back the idea.
The plans amount to a near replica of the outgoing team of Mario Monti, though one greatly weakened by the earthquake upset in the elections a week ago . Almost 57pc of the vote went to groups that vowed to tear up the EU-imposed austerity agenda.
Stefano Fassina, the Pd economics chief, said his party is vehemently opposed to “any form of technocrat government, new or old”, insisting that the election result must be respected. Mr Fassina said 90pc of the country had rejected the Monti agenda and warned that it would be a grave error to try to force through the same reviled plans a second time.
Comedian Beppe Grillo repeated his vow to “bring down the old system” and dismissed the latest talks as cattle market trading by a depraved political class trying to circumvent the will of the people. “I repeat for the umpteenth time, the Five Star Movement will not back any government. It will vote law by law in keeping with its platform,” he said.
“We’re not a political party, we’re a civic revolution. This country is in ruins with two trillion in debts and we have to rebuild it from scratch,” he told a scrum of journalists. In a rhetorical play on the slogans of 1789 and 1917 he exhorted “all citizens” to descend on parliament.
Mr Grillo repeated his call for an “online referendum” on the euro and vowed to buy back €600bn of Italian bonds held by foreigners if his movement gains power, a de facto default and withdrawal from the EMU system. He has in the past called for Argentine-style “haircuts” for bondholders. “Within a year we won’t have enough money left to pay the pensions and public sector wages,” he told told Bild am Sonntag.
His newly-elected army of senators and deputies - fresh-faced idealists in their 20s or early-30s with no experience in public life - met for a “conclave” to thrash out the party line. Most of the 163 “grillini” have never met their leader, or each other.
They crowded into a room at the Hotel Saint John, many sitting on the floor with their napsacks as if it was opening day at university. Their first action was to create a “Google group” to handle logistics.
“Nothing like this has ever happened before in the history of the Italian Republic. We are seeing a true crisis of the regime,” said Professor Luca Ricolfi from Turin University.
Investors have discounted Mr Grillo’s wild rhetoric as comic chatter, but his relish for shattering taboos in putting unthinkable ideas into play. “People in Brussels can handle old-style politicians like Silvio Berlusconi but Grillo really worries them because this is a protest against the entire system, and they are afraid it is spreading to other countries,” said Giles Merritt from Friends of Europe.
The EU policy elites are increasingly alert to the danger of losing popular consent for the EU Project. European Central Bank governor Benoit Coeure said Europe must pay more attention to the “social contract” if it is to avoid feeding “nationalist temptations”.
Mr Coeure warned that record unemployment across much of Europe - reaching 59pc for Greek youth -- was eroding the job skills of a generation and doing lasting damage to future growth,
While the tone is changing, there is no sign yet of a retreat from fiscal belt-tightening. “Given that average debt exceeds 90pc of GDP in the EU, I don’t think there’s any room for manoeuvre to leave the path of budgetary consolidation,” said EU economics chief Olli Rehn.
“We won’t solve our growth problems by piling new debt on top of our old debt,” he said. Defying his critics, Mr Rehn said John Maynard Keynes himself would not be a Keynesian today’s circumstances.
Yet Mr Rehn also warned Germany politicians that it would be courting fate to push Cyprus into default and exit from the eurozone in the belief that the island is too small to pose a contagion risk. “Even if you come from a big EU country, you should be aware that every member of the euro zone is systemically relevant,” he told Der Spiegel.
Separately, it emerged that the eurozone bail-out fund (ESM) may not be used after all to recapitalise banks, even once the banking super-regulator is in place. Klaus Regling, the fund's chief, said opposition from the creditor states may kill the idea altogether.
If so, this will breaches a summit accord in June by EU leaders to deploy the ESM directly to break the “vicious circle” between banks and sovereign states.
Failure to implement the deal would be a blow for Ireland and Italy, leaving them shouldering the full burden left from a bank crisis that was partly caused by northern creditors. The International Monetary Fund said it is imperative that the EU upholds the specific pledge made to Ireland in the summit text.
Germany, Austria, Finland, and Holland have all all said they would not let the ESM cover "legacy assets" left from the bubble. They now seem to be resiling from the accord altogether. more
The Germans are going to have to face up to the fact that the folks who have really screwed up are not the kids with the Ph.D.s living in their parent's homes, it's the German banks who are in major trouble because they thought they could become as rich as the crooks in London or New York. What actually happened is that they came late to the party and were taken like a bunch of rubes.
Italian Elections: Europe's Lost Generation Finds Its VoiceBy Fiona Ehlers, Julia Amalia Heyer, Mathieu von Rohr and Helene Zuber
For years, Europe's young have grown increasingly furious as the euro crisis has robbed them of a future. The emergence of Beppe Grillo's party in Italy is one of the results -- and is just the latest indication that disgust towards European politics is widespread.
Only a few weeks ago, they hardly would have thought it was possible. But now here they are; their first public appearance following their surprise success in the Italian general election. In a hotel in Rome, not far from the Piazza San Giovanni, eight of the 162 newly elected parliamentary representatives of Movimento 5 Stelle (the Five Star Movement, or M5S) are squinting into the spotlights and speaking softly -- and what they are saying actually sounds reasonable.
They are talking about empowering Italians and giving people more of a say in political decisions -- and they want to know how their tax money is being spent. Grassroots politics is the goal. Their efforts remain somewhat clumsy, but they are sincere.
This group includes a male nurse, an IT specialist and a single mother -- all in their 30s or 40s with good educations and no previous political experience. Soon, they will enter the newly constituted parliament, which will be younger, have more women and, on the whole, be best less politically experienced than any other in Italian history. M5S emerged as the strongest single party in the lower house of parliament, the Chamber of Deputies, and the second strongest party in the upper house, the Senate. The party garnered nearly one-third of its votes in Sicily. The "Grillini," as the followers of former comedian Beppe Grillo are called, are the true miracle of this otherwise so chaotic election.
They are not clowns, but rather sincere young people who see themselves as a mouthpiece for everyday Italian citizens. These fledgling politicians do not rant and rave like Grillo, the founder of their movement.
In fact, it was just over a week ago that Grillo gave one of his loud and passionate speeches to half a million fans only a few hundred meters from here. He is their whip, their firebrand, "our megaphone," as his people call him -- and many of them can hardly stand him anymore. Grillo, who looks like he leapt straight out of a Baroque fountain by Gian Lorenzo Bernini, and whose voice has grown hoarse from screaming, only offered the usual populist slogans: "Politicians are parasites -- we should send them all home!"
'Let Them Do Their Work!'
Grillo himself did not run for office because it would have violated his own party's rules. He has had a criminal record ever since he was convicted of manslaughter for causing a car crash in 1980 in which three people died. Now, it's up to his candidates to take the lead. "Now that they are in parliament," someone wrote in his blog, which is the most widely read in Italy, "let them do their work, take a backseat!"
Grillo is an Italian phenomenon, but his party's election results are an expression of the mounting rage and anxiety that is spreading throughout crisis-stricken Southern Europe. A new citizens' movement is taking shape, one that shares a mistrust of the established political system and a desire for more grassroots democracy. Only in Italy has it been democratically legitimized thus far.
These irate citizens are also united in anger against their own elite: politicians who have been tainted by party scandals and corruption, yet still remain in power or leaders who are seen as being the mere lackeys of Germany and Chancellor Angela Merkel. more
So now we discover the Bundesbank is sitting on a study that claims that by some quite reasonable statistical measures, the Italians are more wealthy than the Germans. One can see why this information would be kept a secret. The German taxpayers are supposed to backstop institutions like Deutsche Bank because they made bad loans, among other sins, to Italian banks. I am sure the average German will be "delighted" to help out.
A 'Politically Explosive' Secret: Italians Are More Than Twice As Wealthy As GermansWolf Richter, Testosterone Pit | Mar. 9, 2013
It would collect “micro-level structural information” on household wealth. A massive bureaucratic undertaking. Surveys went out in 2010. Results are now ready. No one in Europe had ever done a survey on that scale before.
And no one might ever do it again. Because, in the era of bailouts and wealth-transfers, the results are so explosive that the Bundesbank is keeping its report secret—and word has leaked out why.
The surveys were conducted on a national basis, with each central bank publishing its own report. They would then be combined and summarized by the ECB into a cohesive picture of how wealthy—or how poor—people in various parts of the Eurozone were. A number of countries already published their reports, including Italy and Austria.
What the Austrian National Bank found was not pretty (20-page PDF). The considerable wealth in Austria was very unevenly distributed. The wealthiest 5% owned nearly half of the country’s wealth. Their median wealth was €1.7 million in diversified assets. The lower 50% owned only 4% of the country’s wealth. Of them, 83% rented their homes. Their median wealth was a measly €11,000 consisting usually of a car and a savings account. That’s half of the people! And 10% had a net wealth of less than €1,000.
This unequal distribution of wealth created a huge gap between median income (half the people earned more, the other half less) of €76,000 and average income of €265,000 (pushed up by a small number of extremely wealthy households). And that’s why some countries don’t even publish average income values. Too much truth would hurt.
Germany’s data is likely to be similar—but the Bundesbank is treating its report like a secret. Because the results are, let’s say, awkward for two reasons.
The highly unequal distribution of wealth is one of them. The German government already went through wild gyrations late last year, and now again, over its Poverty Report that exposed some inconvenient facts that were then edited out—something that was leaked immediately, and it caused a ruckus [read.... Censored: Poverty Report in Germany].
Italy is the other issue. But it may be too hot for the Bundesbank to touch. Italy’s report (142-page PDF) finds that median household net wealth has increased 56% since 1991. And from 2008 to 2010, it increased by about 5% annually, despite the crisis!
But the wealth of German households stagnated during much of that time while they paid taxes out of their noses. And now they might learn that Italy’s median household wealth is €163,875—while Germany’s is closer to Austria’s, around €76,000. Less than half!
“Politically explosive,” sources at the Bundesbank whispered to the FAZ.
These reports show that in some countries, like Italy, where government finances have been in crisis, median household wealth is actually greater than in some financially healthy countries where governments have kept deficits and debts down.
Germany’s federal government only had a minuscule deficit in 2012. But high taxes and the citizens’ greater willingness to pay them—though cheating is a national sport—have over the years extracted a lot of wealth from the people and transferred it to the government. In Italy, people have been more adept at hanging on to their wealth. To the detriment of government finances. Other studies have shown similar trends, but never on such a scale with such detail, and in this “harmonized” and easily comparable manner.
It could stir up a firestorm in Germany. It’s not just jealousy. Strung-out German taxpayers would have to be bamboozled into bailing out the mountain of Italian government debt that the Italians, whose median wealth is twice that of Germans, refused to pay for. It won’t sit well. Not at all. It could become a political nightmare for Chancellor Angela Merkel, who faces an election in a few months and must keep any kind of tumult out of the scenery.
If the report ever sees the light of the day in unvarnished form—not a certainty given the debacle of the Poverty Report—Bundesbank statisticians will be trying to explain away the difference between countries like Italy and Germany. Household wealth is particularly high in countries with high homeownership rates, they will argue. In countries where renting is popular, like Germany, a considerable part of the housing stock is owned by the government and rented out in a subsidized manner. Thus the wealth is public, etc. etc. Because the bailout saga must go on. The messy reality that Germans can’t afford to bail out their richer neighbors must not be allowed to interfere with the grand and glorious saga of the euro.
Every country in the Eurozone has its own collection of big fat lies that politicians and eurocrats have served up in order to make the euro and the subsequent bailouts or austerity measures less unappetizing. Here are some from the German point of view..... Ten Big Fat Lies To Keep The Euro Dream Alive. more