Italy's Salvini says government is finished, wants elections

[webfact]

Italy's Salvini says government is finished, wants elections

By Giuseppe Fonte and Gavin Jones

 

Italian Prime Minister Giuseppe Conte speaks during a meeting with European Commission President Ursula von der Leyen in Rome, Italy August 2, 2019. REUTERS/Ciro De Luca/Files

 

ROME (Reuters) - The leader of Italy's ruling League party, Deputy Prime Minister Matteo Salvini, declared the governing coalition to be unworkable on Thursday after months of internal bickering and said the only way forward was to hold fresh elections.

 

The shock announcement follows a period of intense public feuding between the right-wing League and its coalition partner, the anti-establishment 5-Star Movement, and it throws the euro zone's third-largest economy into an uncertain political future.

 

Salvini said in a statement he had told Prime Minister Giuseppe Conte, who belongs to neither coalition party, that the alliance with 5-Star had collapsed after barely a year in power and "we should quickly give the choice back to the voters".

 

Parliament, which is now in its summer recess, could reconvene next week to carry out the necessary steps, Salvini said, referring to the need for a no-confidence vote in the government and the resignation of the premier.

 

Tensions came to a head on Wednesday when the two parties voted against each other in parliament over the future of a project for a high-speed train link with France.

 

5-Star has more parliamentary seats than the League, but Salvini's party now has twice as much voter support, according to opinion polls, and it has often threatened to try to capitalise on that surge in popularity with new elections.

 

However, it remains to be seen if things will go as Salvini plans. Pushing the nation back into election mode in August, when Italians are on holiday and parliament is closed for the summer recess, is unusual and could be unpopular and risky.

 

President Sergio Mattarella is the only person with the power to dissolve parliament, and may be unwilling to do so ahead of preparatory work in September for the 2020 budget, which must then be presented to parliament the following month.

 

Italy, which has Europe's second-largest sovereign debt burden after Greece, has already angered the European Union with an expansionary 2019 budget and Salvini wants to make major tax cuts next year, setting up the prospect of another EU clash.

 

Italy has not held an election in the autumn in all the post-war period.

 

"WE ARE READY"

If Mattarella decides not to dissolve parliament, he could try to install an unelected "technocrat" administration of which there have been several examples in Italy's recent history, though an alternative parliamentary majority appears elusive.

 

5-Star Leader Luigi Di Maio said his party did not fear elections.

 

"We are ready, we don't care in the least about occupying government posts and we never have," he said in a statement. He accused Salvini of "taking the country for a ride" and said sooner or later Italians would turn against him for it.

 

Speculation of a government crisis mounted late on Wednesday when Salvini, speaking at a rally south of Rome, peppered his speech with hints that he had enough of 5-Star, accusing it of stalling the League's key policies.

 

Markets sold off Italian government bonds early on Thursday and the day proceeded with closed-door meetings between Salvini and Conte and between Conte and Mattarella.

 

The League issued a statement listing a raft of areas in which it had a "different vision" from 5-Star, including infrastructure, taxes, justice and relations with the EU.

 

The two parties were fierce adversaries ahead of an inconclusive election in March 2018, before forming their unlikely alliance which has often ruffled the feathers of financial markets and the European Commission.

 

5-Star was the largest party at last year's elections but it has struggled since the government was formed, while Salvini has prospered thanks to his popular hard line on immigration and a charismatic and informal "man of the people" public image.

 

(Additional reporting by Giselda Vagnoni, writing by Gavin Jones; Editing by Mark Bendeich)

 

-- © Copyright Reuters 2019-08-09

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[bartender100]

Would not be surprised if Italy was out of the EU before the UK, they owe Trillions of Euros to other EU nations, only way is to default

 

https://www.forbes.com/sites/simonconstable/2019/06/20/doomed-how-theres-no-way-out-of-the-debt-crisis-for-italy/#7f35ec1368bb

[mercman24]

i think there are a few other bancrupt countries in the EU that is kept under wraps, Greece and Spain for starters, Ireland close behind,

[kingdong]

and none of these bankrupt countries can devalue their currencies because they,re in the eu,the eus going to implode.

[30la]

As before, more than before ....

 

"The shock announcement follows a period of intense public feuding between the right-wing League and its coalition partners, the anti-establishment 5-Star Movement, and it throws the euro zone's third-largest economy into an uncertain political future."

 

What do you mean? the shock would be if the government worked, which is almost impossible in Italy!
Too much corruption, too many parties and too many incapable people who want to inculcate their misconceptions to citizens!
With these incapable, Italy is ungovernable!

[bristolboy]

1 hour ago, bartender100 said:

Would not be surprised if Italy was out of the EU before the UK, they owe Trillions of Euros to other EU nations, only way is to default

 

https://www.forbes.com/sites/simonconstable/2019/06/20/doomed-how-theres-no-way-out-of-the-debt-crisis-for-italy/#7f35ec1368bb

Before the announcement of elections, Italy was paying 1.4% interest on its bonds. After, 1.57%. So that's a very low interest rate.

And, no Italy doesn't owe trillions to euros to other EU nations. About 45 percent of its debt is owed to foreign entitites such as banks and investment funds. But not to governments. The total amount owed to foreign entities about is about 850 billion euros.   

[JonnyF]

4 hours ago, webfact said:

Italy, which has Europe's second-largest sovereign debt burden after Greece, has already angered the European Union with an expansionary 2019 budget and Salvini wants to make major tax cuts next year, setting up the prospect of another EU clash.

I wouldn't be at all surprised to see a referendum on Italy leaving the EU. They are not at all impressed with the austerity that is being pushed onto them from Brussels. 

 

I'm just glad we'll be out before the house of cards starts to tumble. ????????

 

[bristolboy]

1 hour ago, JonnyF said:

I wouldn't be at all surprised to see a referendum on Italy leaving the EU. They are not at all impressed with the austerity that is being pushed onto them from Brussels. 

 

I'm just glad we'll be out before the house of cards starts to tumble. ????????

 

Someone else who doesn't bother to provide links.

Whatever the virtues or demerits of the Euro, the League had to disavow its previous threats to abandon the Euro.

Italians Still Want the Euro

https://www.bloomberg.com/news/articles/2018-06-05/euro-skeptics-won-the-election-but-italians-still-want-the-euro

 

Support for EU membership above 80% in most member states amid Brexit mess

Apart from the UK the highest level of support for leaving was in the Czech Republic, where 66 per cent supported Remain and 34 per cent Leave. Italy was close behind as the next most Eurosceptic country, with 72 per cent Remain and 28 per cent Leave. Austria and France were the third and fourth most Eurosceptic. 

https://www.independent.co.uk/news/world/europe/brexit-eu-survey-italy-ireland-portugal-eurosceptic-poll-a8888126.html

[Baerboxer]

4 hours ago, bristolboy said:

Before the announcement of elections, Italy was paying 1.4% interest on its bonds. After, 1.57%. So that's a very low interest rate.

And, no Italy doesn't owe trillions to euros to other EU nations. About 45 percent of its debt is owed to foreign entitites such as banks and investment funds. But not to governments. The total amount owed to foreign entities about is about 850 billion euros.   

 

Who owns the banks and investment funds that are Italy's creditors? And in which country are they registered?

 

Greece effectively owed lots to German banks IIRC. And who benefited most from the loans to Greece? That's right the German banks.

 

One of the downsides with the EU is the ECB and Euro. Now under the control of the convicted criminal former IMF boss and former French Minister. 

 

 

[bristolboy]

5 hours ago, bristolboy said:

Before the announcement of elections, Italy was paying 1.4% interest on its bonds. After, 1.57%. So that's a very low interest rate.

And, no Italy doesn't owe trillions to euros to other EU nations. About 45 percent of its debt is owed to foreign entitites such as banks and investment funds. But not to governments. The total amount owed to foreign entities about is about 850 billion euros.   

I forgot to include the link:

https://www.ceps.eu/wp-content/uploads/2019/06/PI2019_11_Italian-public-debt-holdings.pdf

And there is this:

As of January 2014, the Italian government debtstands at €2.1 trillion (131.1% of GDP). However, Italy has the lowest share of public debt held by non-residents of all eurozone countries and the country's national wealth is four times larger than its public debt.

https://en.wikipedia.org/wiki/Italian_government_debt

And since Italy's current debt is 132.2% of its GDP, it's dubious much has changed.

[Andrew65]

7 hours ago, mercman24 said:

i think there are a few other bancrupt countries in the EU that is kept under wraps, Greece and Spain for starters, Ireland close behind,

Ireland's debt/GDP position is distorted by the likes of Google & Facebook's market capital being included in their GDP.

 

Such companies bring the bare minimum into an economy, whilst returning the maximum for their investors.

[Andrew65]

5 hours ago, bristolboy said:

Before the announcement of elections, Italy was paying 1.4% interest on its bonds. After, 1.57%. So that's a very low interest rate.

And, no Italy doesn't owe trillions to euros to other EU nations. About 45 percent of its debt is owed to foreign entitites such as banks and investment funds. But not to governments. The total amount owed to foreign entities about is about 850 billion euros.   

Is some of that Target 2 debt? Target 2 is the "elephant in the room" in the EUrozone. Currently around a trillion Euros of government debt that's kind of hidden.

[bristolboy]

7 minutes ago, Andrew65 said:

Is some of that Target 2 debt? Target 2 is the "elephant in the room" in the EUrozone. Currently around a trillion Euros of government debt that's kind of hidden.

Even if Target 2 debt is included, it doesn't mean that Italy owes anything like trillions to EU nations nor even to foreign interests.

Italy's Target 2 liabilities hit new 14-month low in July

 

MILAN, Aug 7 (Reuters) - The Bank of Italy’s liabilities towards other euro zone central banks fell further in July, reaching a new 14-month low and returning where they stood before the current populist government was elected, data showed on Friday.

Italy’s so-called Target 2 debt fell to 435.89 billion euros ($487.46 billion), the lowest level since April 2018, compared with 447.58 billion euros in June, the Bank of Italy said.

https://www.reuters.com/article/italy-target-2/italys-target-2-liabilities-hit-new-14-month-low-in-july-idUSS8N24U024

[Andrew65]

9 minutes ago, bristolboy said:

Even if Target 2 debt is included, it doesn't mean that Italy owes anything like trillions to EU nations nor even to foreign interests.

Italy's Target 2 liabilities hit new 14-month low in July

 

MILAN, Aug 7 (Reuters) - The Bank of Italy’s liabilities towards other euro zone central banks fell further in July, reaching a new 14-month low and returning where they stood before the current populist government was elected, data showed on Friday.

Italy’s so-called Target 2 debt fell to 435.89 billion euros ($487.46 billion), the lowest level since April 2018, compared with 447.58 billion euros in June, the Bank of Italy said.

https://www.reuters.com/article/italy-target-2/italys-target-2-liabilities-hit-new-14-month-low-in-july-idUSS8N24U024

Isn't total Target 2 debt around 1 trillion Euros? So Italy owes nearly half of the total for the 19 country bloc?

[bristolboy]

20 minutes ago, Andrew65 said:

Ireland's debt/GDP position is distorted by the likes of Google & Facebook's market capital being included in their GDP.

 

Such companies bring the bare minimum into an economy, whilst returning the maximum for their investors.

Yes, GNP would be a better standard to use.

In 2018 it's GNP was about 299 billion dollars.

[bristolboy]

4 minutes ago, Andrew65 said:

Isn't total Target 2 debt around 1 trillion Euros? So Italy owes nearly half of the total for the 19 country bloc?

I don't know what the total is. Does it matter? Is Target 2 debt especially toxic?

[candide]

8 hours ago, bartender100 said:

Would not be surprised if Italy was out of the EU before the UK, they owe Trillions of Euros to other EU nations, only way is to default

 

https://www.forbes.com/sites/simonconstable/2019/06/20/doomed-how-theres-no-way-out-of-the-debt-crisis-for-italy/#7f35ec1368bb

 

6 hours ago, bristolboy said:

Before the announcement of elections, Italy was paying 1.4% interest on its bonds. After, 1.57%. So that's a very low interest rate.

And, no Italy doesn't owe trillions to euros to other EU nations. About 45 percent of its debt is owed to foreign entitites such as banks and investment funds. But not to governments. The total amount owed to foreign entities about is about 850 billion euros.   

Actually foreign owners hold now only 30% of public debit, less than 50% of which hold by Banks. So the main victims of a debt default will be Italian.

https://www.google.com/search?client=ms-opera-mobile&source=hp&ei=UhhNXf_XL9CmaNe-odAD&q=who+owns+italy+debt&oq=who+owns+italy+debt&gs_l=mobile-gws-wiz-hp.3..0i19j0i22i30i19j0i8i13i30i19l4j33i22i29i30.2250.9063..9666...0.0..0.115.1454.17j2......0....1.......8..41j0j46i131j0i131j46j0i70i251j0i22i30j0i22i10i30.jrXkYto4X9k

 

[Andrew65]

8 minutes ago, bristolboy said:

I don't know what the total is. Does it matter? Is Target 2 debt especially toxic?

Target 2 is like a hidden bailout mechanism, that's why I called it the "elephant in the room".

 

The large size of government borrowing in debtor countries like Italy, Greece and Spain means that borrowing becomes difficult. The normal route for borrowing involves the government selling bonds which are bought by foreign banks and institutions. Such institutions become wary of indebted countries fearing the sort of haircuts and danger of defaults experienced in Greece.

But they can do so through Target2 without having to repay the loans or even pay interest

There is another, less well publicised route for borrowing. This is the Eurozone’s Target2 clearing system.

Just as the Bank of England acts as the clearing bank for the UK’s commercial banks, Target2 acts as a clearing system for Eurozone central banks. When one Eurozone country needs to make payments to another country funds are transferred via Target2. There is a difference however. In the UK case, commercial banks have to supply eligible financial assets to clear their accounts. In Target2, national central banks are allowed to accumulate debts without any requirement to repay them.

Target2 started off as a simple payment system for cross-border transactions in the Eurozone, the countries that adopted the euro in 1999. Its use is mandatory for the settlement of any euro transaction involving the European Central Bank and the national central banks of the Eurozone member states.

This would not present a problem if Eurozone economies were roughly in balance, with payments between them being largely offsetting, but since the Global Financial Crisis, this is far from the case. A key underlying problem is that the Eurozone does not satisfy the economic conditions for being an Optimal Currency Area, a geographical area over which a single currency and monetary policy can operate on a sustainable long-term basis. The different business cycles in the Eurozone, combined with poor labour and capital market flexibility, mean that systematic trade surpluses and deficits will build up – because inter-regional exchange rates can no longer be changed.

[candide]

51 minutes ago, Andrew65 said:

Ireland's debt/GDP position is distorted by the likes of Google & Facebook's market capital being included in their GDP.

 

Such companies bring the bare minimum into an economy, whilst returning the maximum for their investors.

On the other hand, the Italian GDP should be increased by around 20% to take into account the black economy.

[Andrew65]

2 minutes ago, candide said:

On the other hand, the Italian GDP should be increased by around 20% to take into account the black economy.

I read something interesting a few years ago about the Italian economy. Because so much of Italian retail operations are locally owned, cafes restaurants, pizzerias etc (in comparison with say the UK), much more money tends to stay locally, Italians tend to be more cash-wealthy than other countries.

 

There's still obviously tax avoidance & corruption, but this is also a factor.

[bristolboy]

4 hours ago, Andrew65 said:

Target 2 is like a hidden bailout mechanism, that's why I called it the "elephant in the room".

 

The large size of government borrowing in debtor countries like Italy, Greece and Spain means that borrowing becomes difficult. The normal route for borrowing involves the government selling bonds which are bought by foreign banks and institutions. Such institutions become wary of indebted countries fearing the sort of haircuts and danger of defaults experienced in Greece.

But they can do so through Target2 without having to repay the loans or even pay interest

There is another, less well publicised route for borrowing. This is the Eurozone’s Target2 clearing system.

Just as the Bank of England acts as the clearing bank for the UK’s commercial banks, Target2 acts as a clearing system for Eurozone central banks. When one Eurozone country needs to make payments to another country funds are transferred via Target2. There is a difference however. In the UK case, commercial banks have to supply eligible financial assets to clear their accounts. In Target2, national central banks are allowed to accumulate debts without any requirement to repay them.

Target2 started off as a simple payment system for cross-border transactions in the Eurozone, the countries that adopted the euro in 1999. Its use is mandatory for the settlement of any euro transaction involving the European Central Bank and the national central banks of the Eurozone member states.

This would not present a problem if Eurozone economies were roughly in balance, with payments between them being largely offsetting, but since the Global Financial Crisis, this is far from the case. A key underlying problem is that the Eurozone does not satisfy the economic conditions for being an Optimal Currency Area, a geographical area over which a single currency and monetary policy can operate on a sustainable long-term basis. The different business cycles in the Eurozone, combined with poor labour and capital market flexibility, mean that systematic trade surpluses and deficits will build up – because inter-regional exchange rates can no longer be changed.

So, on balance, I'd say it's a better kind of debt for Italy to have. For the Germans, not so good, but it can stand the gaffe.

[Moti24]

The EU will collapse after Brexit; losing a major contributor is what The EU is worried about.  Greece and Italy are the biggest problems, with more to come crawling out of the woodwork, I'm sure.

 

Johnson should just tell The EU to shove it where the sun doesn't shine; calling their bluff will send those Eurocrats into panic mode, and not one of them will be able to do anything about it.  I've still got a stash of Francs, Marks, Pesatas and Lire, I'll dust them off.

[nauseus]

11 hours ago, bristolboy said:

Before the announcement of elections, Italy was paying 1.4% interest on its bonds. After, 1.57%. So that's a very low interest rate.

And, no Italy doesn't owe trillions to euros to other EU nations. About 45 percent of its debt is owed to foreign entitites such as banks and investment funds. But not to governments. The total amount owed to foreign entities about is about 850 billion euros.   

Whoever they owe it to, Italy’s public debt is €2.4 trillion. 

 

https://www.bloomberg.com/news/articles/2019-04-04/the-euro-s-2-7-trillion-italy-problem

[nauseus]

7 hours ago, bristolboy said:

Someone else who doesn't bother to provide links.

Whatever the virtues or demerits of the Euro, the League had to disavow its previous threats to abandon the Euro.

Italians Still Want the Euro

https://www.bloomberg.com/news/articles/2018-06-05/euro-skeptics-won-the-election-but-italians-still-want-the-euro

 

Support for EU membership above 80% in most member states amid Brexit mess

Apart from the UK the highest level of support for leaving was in the Czech Republic, where 66 per cent supported Remain and 34 per cent Leave. Italy was close behind as the next most Eurosceptic country, with 72 per cent Remain and 28 per cent Leave. Austria and France were the third and fourth most Eurosceptic. 

https://www.independent.co.uk/news/world/europe/brexit-eu-survey-italy-ireland-portugal-eurosceptic-poll-a8888126.html

The Italians have the Euro. What choice do they have? What can they say? What can they do?

 

They are screwed already.

[nauseus]

1 hour ago, bristolboy said:

So, on balance, I'd say it's a better kind of debt for Italy to have. For the Germans, not so good, but it can stand the gaffe.

Slag the hell out of Brexit and the Pound but for Italy: it's a better kind of debt for Italy to have! 

 

Amazing.

 

 

[bristolboy]

1 hour ago, nauseus said:

Slag the hell out of Brexit and the Pound but for Italy: it's a better kind of debt for Italy to have! 

 

Amazing.

 

 

Not everything that goes on in the EU has to do with Brexit. Obsessed much? And I'm not surprised that you distorted my quote by leaving out the second part. You know, about it being worse for Germany but it can stand the gaffe. 

[nauseus]

1 hour ago, bristolboy said:

Not everything that goes on in the EU has to do with Brexit. Obsessed much? And I'm not surprised that you distorted my quote by leaving out the second part. You know, about it being worse for Germany but it can stand the gaffe. 

I think you are more obsessed with Brexit than I am. Your full post (quote) was above my reply/post for all to see, so everyone knows. The subject of this topic concerns Italy, not Germany.

[bristolboy]

11 minutes ago, nauseus said:

I think you are more obsessed with Brexit than I am. Your full post (quote) was above my reply/post for all to see, so everyone knows. The subject of this topic concerns Italy, not Germany.

Really? You're the one who brought Brexit up in a context that had nothing to do with Brexit.

"The subject of this topic concerns Italy, not Germany." Whereas someone brought up the subject of Target2 and who Italy owes money to. But what does an entirely internal Eurozone issue have to do with Brexit and the pound? Obsessed much more?

And whatever may have been posted above, your misuse of the quote is still dishonest.

 

[nauseus]

34 minutes ago, bristolboy said:

Really? You're the one who brought Brexit up in a context that had nothing to do with Brexit.

"The subject of this topic concerns Italy, not Germany." Whereas someone brought up the subject of Target2 and who Italy owes money to. But what does an entirely internal Eurozone issue have to do with Brexit and the pound? Obsessed much more?

And whatever may have been posted above, your misuse of the quote is still dishonest.

 

The threat of forced adoption of the Euro is part of the reason for the leave vote. 

[bristolboy]

1 minute ago, nauseus said:

The threat of forced adoption of the Euro is part of the reason for the leave vote. 

Apart from the fact that such a threat is purely imaginary, that still has absolutely nothing to do with the facts about Italy's Target2 debt. Unless of course every time the Euro is mentioned in any context that somehow relates to the UK. From obsession to monomania.