There are signs again that Europe is off track with both the anti-European stance by Prime Minister David Cameron and his Euro-skeptics and the politics in a number of member states, not least in Italy, the third largest economy in Europe. But, Italy is not unique unfortunately.
Cameron’s foolishness has already been covered in a couple of our blog posts, and is especially sad since Britain could play a positive role if it could change its leadership’s narrow perspective, its anti-European stand and if it could seek real common solutions and not just protect its financial “City” institution’s desire to enrich their management, but not the nation.
The political uncertainty in Italy has reverberations throughout Europe, with no clear winner emerging from the Italian elections. None of the political parties have secured a majority in either houses of parliament. Pier Luigi Bersani’s center-left Democratic Party gained a majority in the Chamber of Deputies, but he was behind former Prime Minister Silvio Berlusconi’s right-wing faction in the Senate. But, the comedian, Beppe Grillo’s Five Star Movement will be strongly represented in both houses of parliament. Prime Minister Mario Monti’s centrist party garnered only 10% of the vote, and an alliance between his party and Mr. Bersani’s Democratic Party would not be enough to gain a majority in the Senate. Further, there is deep division between Mr. Berlusconi and Mr. Grillon on anti-austerity policies. Thus, uncertainty about Italy’s direction remains. .
The deadlock is causing vexation throughout Europe. German Foreign Minister Guido Westerwelle said recently, “What is crucial now is that a stable functioning government can be built as swiftly as possible. This is not only in the interests of Italy but in the interests of all Europe.” Yet, Germany is at the forefront of the problem with its insistence on harsh austerity already proven a disaster throughout Europe.
Other leaders in Europe are also expressing concern, but not taking the lead in a reversal of austerity, and are not acting to stem the move to radical largely right parties with anti-European nationalistic and bigoted agendas. The financial market’s reaction to the incertitude caused by the election appears to be reacting to a sense of downward and irresponsible politics and a lack of direction. Italian shares recently lost some 5% of their value. The yields on Italian ten-year bonds increased strongly. The Euro also dropped against the dollar and stock markets fell in France and Germany. But, we are likely to see wide swings depending on the news of the day without any sense of a firm future outcome.
We are not immune in America from these tribulations and dysfunctions in Europe. Europe’s collective move toward deep and thoughtless austerity policies have brought much of Europe to its knees economically, and despite the disaster these policies have brought upon the people of Europe, there is no clear sign yet that European leaders have learned any lessons.
But, Americans have no room to be smug. Our own dysfunction seems even more of a worldwide disaster given the global impact in terms of security, economy and international governance that the U.S. has. Together, these two groupings in Europe and North America represent about half of the globe’s economy and much of its scientific and technological talent.
Further, there are signs that the worse, not better, may lie ahead, unless our collective politics gets better, both at the national, regional and super-national levels. On the latter, I hope that Secretary Kerry and the new incoming Secretary of the Treasury, along with President Obama will put back on the top of our agenda the healing of our economies, will put in place jointly growth strategies and programs, and as part of this, proceed with the idea of a Trans-Atlantic trade pact. But, they need to also act on reigning in the excesses of our private financial institutions, which seem determined to go back to their old greedy irresponsible ways of not investing in the “real economy,” but again in destructive “paper transactions,” which undermine a sound fair economy that creates jobs and not just riches for the very few.
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