Italy’s Silvio Berlusconi offers to leave office

“There is no alternative….”

Margaret Thatcher

According to the New York Times, Italy’s battered and irrelevant Prime Minister Silvio Berlusconi:

…offered a conditional resignation on Tuesday, agreeing to step down but only after Parliament passes an austerity package — before the country will go to early elections, government sources said on Tuesday evening.

The move comes in the face of an escalating debt crisis that has hobbled Greece, threatens Italy and could infect the rest of Europe.

Infect? Italy’s national crisis is also a significant component of the Eurozone’s system crisis. It is not an agent external to the Eurozone. Italy is Europe’s third largest economy. Because of Italy’s size and importance, it should come as no surprise that:

Speaking after a meeting of European Union finance ministers in Brussels on Tuesday, Olli Rehn, European commissioner for economic and monetary affairs, said Italy’s economic and financial position was “very worrying.” He added that the European Commission was “concerned about the situation and we following the situation very closely.”

Ironically:

“‘The problem in Italy is not primarily the real data,” Germany’s finance minister, Wolfgang Schaüble, said in Brussels on Tuesday. “The debt is high, the deficit is not — economic data are not that bad. The problem is a lack of trust from the financial markets and that of course is a realistic situation. And this trust has to be strengthened.”

It is a matter of “trust,” and thus, in the first instance, “a political crisis as much as an economic crisis,” as David Dayen points out. Finance capitalists across the world just do not trust Italy to resolve its problems, to solve them, in other words, to their satisfaction. This mistrust is contagious. The economic crisis is a political crisis because Italy’s sovereign debt crisis, like those found in Greece, Spain, Portugal, Ireland, etc., ineluctably threatens the core institutions of the Eurozone system. Whence the Euro, we might wonder, when so many national economies collapse?

To be sure, Italy’s sovereign debt crisis will not spare Italy’s political institutions and political culture. The imposition of an austerity regime on Italy will necessarily modify its political institutions, and thus kinds of politics Italians can feasibly give themselves in the future. Alterations of this sort are features of the austerity project. They amount to an economic and political constraint placed on Italy’s democratic institutions.

From the part to the whole: The Eurozone’s political crisis — will it exist tomorrow, the day after? — also helps to determine its financial crisis. After all, imposing austerity regimes on Italy and Greece will fail to resolve the Eurozone’s economic problems. It will, at best, transform them into a diminished quality of life for many living in those countries now suffering sovereign debt crises. This ‘best case’ outcome will, in turn, merely create another political problem for the Eurozone and, naturally, for those countries forced to endure an austerity regime. Europe’s transnational institutions and some of its national institutions will appear less than sufficiently rational and thus able to provide in the future an acceptable standard of living for many living in the Eurozone. In fact, this rationality deficit has already appeared as such: The Europeans and the G-20 have no answers, according to Barry Eichengreen. Consequently, “[t]he republic of the centre [in Europe] has institutions and media behind it, but it is tottering,” according to Serge Halimi. Armies await their orders, for civil order — Which civil order? Whose civil order? — must be kept intact even if the new transnational order demolishes the lives of millions.

Ahhhhh, Andrew Ross Sorkin

I found it noteworthy that Mr. Sorkin, currently a New York Times financial ‘journalist,’ quickly responded to a lament made by a member of his key audience (h/t to Yves Smith of Naked Capitalism):

“I think a good deal of the bankers should be in jail.”

That is what Andrew Cole, an unemployed 24-year-old graduate of Bucknell University, told me Monday morning in Zuccotti Park, the epicenter of the Occupy Wall Street movement. Mr. Cole, an articulate young man dressed in jeans, a sweatshirt and with a blue wool beanie on his head, had just arrived by bus from Madison, Wis., where he recently lost his job.

There was nothing particularly menacing or dangerous about Mr. Cole. He said he had come to participate in Occupy Wall Street because he believed in its “anticapitalist” message. “I see Wall Street as responsible for the mess we’re in.”

I had gone down to Zuccotti Park to see the activist movement firsthand after getting a call from the chief executive of a major bank last week, before nearly 700 people were arrested over the weekend during a demonstration on the Brooklyn Bridge.

“Is this Occupy Wall Street thing a big deal?” the C.E.O. asked me. I didn’t have an answer. “We’re trying to figure out how much we should be worried about all of this,” he continued, clearly concerned. “Is this going to turn into a personal safety problem?”

As I wandered around the park, it was clear to me that most bankers probably don’t have to worry about being in imminent personal danger. This didn’t seem like a brutal group — at least not yet.

Well, I do wish the protest will not turn into a personal safety problem for this Bankster or for any other Bankster. After all, illegal killing is wrong when a mob commits the act or when a President authorizes the act.

That said, my strongest wish has the #OccupyWallStreet protest creating the conditions under which the Banksters will eventually confront a serious legal-political problem, one specific to their situation. This problem would include prison-time for those Banksters found guilty of crimes by legally rational courts. Although it should not need to be said but I shall say it anyway that wanting jail time for those Banksters guilty of crimes is a much different wish than wanting them guillotined or sent to reeducation camps, as suggested by Roseanne Barr, a celebrity given to hyperbole whom Sorkin quoted in order to focus attention on and thus to enhance the physically menacing features present in any protest movement seeking justice for institutional crimes. Thus does a ‘responsible journalist’ (“lapdog to bankers,” Yves Smith) recklessly impute criminal motives and a capacity for violence to a protest action that has been peaceful till now and remains committed to seeing justice done. Sorkin furtively sought to achieve this transformation by a sleight-of-hand trick: It’s the uppity unemployed, not the Banksters, who are dangerous. Well…. No!

“Lapdog to bankers” — it’s good work if you can get it.

Cross posted to Fire Dog Lake

Quote Of the day

Mark Weisbrot, a co-Director of the Center for Economic Policy Research, recently took to task the United States and the European Commission, the European Central Bank (ECB), and the International Monetary Fund (IMF). The United States is the key member of the IMF and is thus responsible for its actions. Weisbrot criticized them because “They were trying to force the Greek parliament to adopt measures that would further shrink the Greek economy and therefore make both their economic situation and their debt problem worse, while inflicting more pain on the Greek electorate.” But it is not just the Greek economy which is in crisis. “The threat from the Troika,” Weisbrot argued, “was putting the whole European financial system at risk, since it raised the prospect of a chaotic, unilateral Greek default.”

What we are seeing here, then, is a triumph of ideology and interest over reason and solidarity.

Weisbrot drew an obvious conclusion from his analysis:

The “European debt crisis” is misnamed; it is not so much a debt crisis as a crisis of policy failure. There are always alternatives to a decade without growth, trillions of dollars of lost output, and millions of unemployed that the European authorities are offering to the people of Spain, Portugal, Ireland, Greece and now Italy. All that is lacking is the political will and competence to change course.

Quote of the day

Le Soir quotes Jacques Delors as saying (see also this):

“Open your eyes: the euro and Europe are on the brink. And not to fall, the choice seems simple: either member states accept the closer economic cooperation that I have always claimed, or they transfer more powers to the Union.”

On the brink of what? Mike Whitney will tell us:

It means the [European financial] system is under great stress and beginning to slow down. It means investors have lost faith in the ability of policymakers to fix the system. It means there’s a panic underway and people are moving into cash. It means the eurozone is headed for a crackup. It means we are on the brink of another financial crisis.