The newly formed government of Mario Monti has just received the green light from 281 Italian senators over 306. It is a new record of its sort. Our new Premier should have no problems at winning parliamentary approval also in the Lower House. Yesterday however, another Italian named Mario (Draghi) - the newly appointed president of the ECB - has warned Europeans leaders on the severity of the present financial crisis and called for a much more “robust economic governance” to be adopted at a continental level.
Monti’s speech yesterday was mostly focused on the state of the Italian economy and the measures that his government will have to take in order to pull the country out of danger, which are in line with what the former President of the ECB Jean-Claude Trichet had already indicated before resignation. However, according to the polls, the Italians are desperately in need for fresh faces and 58 percent of them are in favor of the political change that has just happened. Nevertheless Monti’s figure appears to be somehow less appreciated: only 50 percent of Italians are actually happy with their new PM.
Silvio Berlusconi has told his colleagues of the Pdl that the Monti’s Government represents a “suspension of democracy” given the fact that the present executive has not been voted by Italians. Congressman Domenico Scilipoti of “Italia dei Valori” (Italy of Values, Idv) was of the same advice, since on Thursday he entered the Senate wearing a black armband in sign of mourning for the “death of democracy”, as he told his colleagues. To the contrary, former judge Antonio Di Pietro – the leader of Idv - has indirectly criticized Berlusconi’s government to which he has referred to - during an interview - as a “cabinet of dwarfs and ballerinas”.
Now that Monti government’s team of new ministers is in place, Italians are beginning to understand why there has been so much ado about the supposed “technical” character of the executive. In fact it seems that what the President of the Italian Republic Giorgio Napolitano has accepted is a cabinet made almost entirely out of new faces. Among the most notable ministers there is the Intesa Sanpaolo’s former CEO Corrado Passera, who is now the minister of Economic Development, Infrastructure, and Transport. Another VIP (at least in Italy) is the founder of the Sant’Egidio Rehabilitation Community who has become Minister of International Cooperation (Andrea Riccardi). In order to recognize the rest of the new ministers though, most of the reporters that were present during the press conference at the Senate the other day had to google names on their laptops. This is certainly a first striking difference with the government of Berlusconi. Some have already done the math and discovered that the new cabinet is (on average) 67,25 old. The youngest minister (Renato Balduzzi at the Health Ministry) now is 56. Berlusconi’s IV government of 2008 was just 52.
However, Monti himself is certainly a “technician”, not a politician: Institutional Investor magazine has once famously defined him as “politically tone-deaf” and he himself admitted that “party politics” is not exactly his cup of tea. The son of a banker, he holds a degree in Economics and Management from the Bocconi University in Milan, but had completed his studies at the University of Yale, under James Tobin. He his most commonly known for his job as an antitrust tsar at the European Commission from 1995 to 2004 and precisely because he has opposed the merging between GE and Honeywell in 2001. At that time he had been considered as the hero of anti-trust measures as well as a champion of European regulatory zeitgeist.
Monti, who’s 68, was asked President Napolitano to form the new Italian government following the resignation of Berlusconi. Allegedly, the rationale behind this switch had to do with the fact that financial markets in Italy were in permanent turmoil precisely because of his presence. However, since Il Cavaliere’s departure, Italian financial markets have not performed much better. Main economic indicators have remained stable but the spread between Italian ten years Btps and German Bunds has recently decreased (although it is still very high) to 483 base points. Financial operators believe that this has to do with the fact that the ECB is buying Italian and Spanish bonds. The spread indicates the difference in productivity between Italian and German state shares. The “spread contagion” has now apparently hit Spain and France as well and that is why even economist Charles Wyplosz (one of the most influential in Europe) has recently said that “there is no solution to the crisis without the ECB”.
Regardless of the wider European crisis however, the new government of Mario “Brokeback” Monti (nickname hints at the backbreaking job he has accepted) will most probably face three different scenarios. It could somehow miraculously make it to the April’s 2013 elections without major drawbacks, it could approve the most pressing reforms (pensions and taxes) and then leave the ball to another democratically elected cabinet by this summer, or it could even break apart before the adoption of the aforementioned reforms. In that case Italians will have to vote for a new government practically now. Although, to be honest, the worst case scenario is somewhat less likely to happen.