Will Italy face off with the European Union? From Tom Luongo at tomluongo.me:
Deputy Prime Minister Matteo Salvini just declared himself the leader of the Europe’s future. He refuses to budge one inch in negotiations with the European Union over Italy’s budget now threatening to take down the government.
And in doing this he not only speaks for Italians, he is now speaking for that growing part of the European population who sees what the EU is morphing into and recoiling in horror.
Protests in France over Emmanuel Macron’s new tax on diesel have turned violent. The British leadership has completely betrayed the people over Brexit. They may win this battle but the animosity towards the Britain’s leadership will only grow more virulent over time.
As the core leadership in France and Germany fades in popularity, held in place because of domestic political squabbling, Angela Merkel and Macron are ratcheting up the rhetoric against the rising nationalism Salvini represents and are now pushing hard for their Federation of Europe before both of them leave the scene in the next few years, at best.
If they lose their battles with Salvini and Hungary’s Viktor Orban they may be run out of office with pitchforks and firebrands.
Bernard Connelly, author of the brilliant expose The Rotten Heart of Europe (which should be required reading) asks the salient question about Brexit no one associated with Project Fear can confront.
If separation from the EU is so complicated, why was no one talking about blockades and economic catastrophe before the Scottish Independence referendum in 2014?
The answer is simple. No one in power expected the referendum to pass and when it didn’t the issue ended.
Now, back to Italy. Salvini can do make these bold threats because his Lega keeps rising in opinion polls every time he makes them.
Since then, Salvini has continued to pull ahead of Luigi Di Maio, the country’s other deputy premier, as the public face of hardline opposition to the EU. Salvini’s League party rose to 36.2% in voter intentions in November, the fourth straight poll showing an increase, according to an Ipsos survey in newspaper Corriere della Sera. Five Star, which emerged as the biggest single party in March’s general election, slipped to 27.7% this month, from 28.7% in October.
And that puts Salvini exactly where he wants to be, in the driver’s seat, directing the show down with Brussels over Italy’s future.
But it’s not just Italy’s future he’s playing for anymore. He knows that Italy is now the standard bearer for resistance to the EU’s particularly odious strain of technocracy. He soft-pedaled the issue of Italeave on the campaign trail because it was good politics.
Once in office he and his partner M5S’s Luigi Di Maio then went full-steam ahead with an economic package that was equal parts campaign promises fulfilled and a thumb in Merkel’s eye.
Salvini declared with Orban to develop a “League of Leagues” to storm the Bastille of the European Parliament in May’s elections.
And the more he does this the more popular he becomes.
But, more importantly, the more he and Di Maio stick to their guns the more Italians come to see Brussels as the enemy of their future. And make no mistake, they are looking at how Theresa “Gypsum Lady” May is delivering a Brexit of everyone’s nightmares to Britons and becoming more willing to face the dreaded ‘uncertainty’ breaking with the EU represents.
So Salvini threatening to take down the government he is currently the de facto leader of is a declaration of war against Brussels and the rest of the Italian political establishment who will try to work against him in budget and debt talks.
Lega is currently the junior partner in Italy’s government. Snap elections could easily see the party top 40% of the vote and have an almost insurmountable popular mandate for taking the confrontational approach to Brussels while scaring his coalition partners, M5S, into following him.
This is a major gambit by Salvini, and if he is successful he will become a lightning rod for Euroskeptics across Europe to break with Merkelism and the consolidation of power around Germany within the EU.
Italy’s debt problems are not solvable within the euro. Salvini understands this. The biggest impediment to his plans are the Italian people themselves. They have to come to the conclusion that the short-term pain of leaving the euro is worth the long-term benefits.
I don’t know if Salvini has made that case clearly enough for them to this point, but this is absolutely what he will have to do. It is something Theresa May refused to endorse any version of which is why she allowed Brexit talks to produce an agreement that was worse than the one Britain already has as a full-member of the EU.
The Goldman Angle
And here is where I’m going to shift gears on you a bit. Because it’s something we have to keep an eye one. There’s something serious brewing within Goldman-Sachs. Martin Armstrong has been all over the potential wipeout of Goldman as part of the European sovereign debt crisis.
Because we have 3 countries now bringing charges and/or suits against Goldman Sachs, it appears that this will mark the beginning of the end for the firm. When the Euro cracks, they will also be blamed for their role in Greece and the rest of Europe. Don’t forget that Mario Draghi is also ex-Goldman Sachs. When the Euro cracks, there will be a microscope applied to every communication that was ever carried out between Draghi and Goldman Sachs. Every trade they have pulled off will be inspected with its tentacles into the European bond market.
The now multi-country scandal involving Malaysia’s 1MDB fund and senior members of Goldman leaving positions of power, from former CEO Lloyd Blankfein to former Trump economic advisor Gary Cohn Europe’s future is tied directly to Goldman’s access to and abuse of power over the past generation.
And now the resignation of Andrea Vella Goldman’s co-head of Asian Investment Banking. The rot within
Goverment Goldman Sachs runs deep. The destruction of Greec was all about protecting Goldman.
And even if there is no Goldman angle directly related to Italy’s debt and banking situation, which I very much doubt, remember formerPrime Minister Mario Monte, who was installed to stop Silvio Berlusconi from taking Italy out of the euro back in 2011.
I agree with Armstrong that it would be good for President Trump to rid his cabinet of any vestiges of Goldman’s gang, especially Treasury Secretary Steve Mnuchin, lest he get caught up in this, guilt-by-association style.
Because don’t think for one second that Salvini doesn’t know what the real story behind Italy’s debt is and who is hurt worst by exposing it to the vicissitudes of the market. At this point he’s daring Draghi to stop supporting Italian bond yields.
Let yields rise. Let’s find out who is behind the insolvent Italian banks swimming naked as the tide rolls out, liquidity dries up and the whole European debt market seizes up.
And if it’s Goldman again then then expect the biggest fight yet for the future of the EU. If Salvini plays it right, Italeave not Brexit becomes the clarion call for ending the Davos Crowd’s push for global control.