Mercury Rising 鳯女

Politics, life, and other things that matter

The organ grinder and his monkey

Posted by Charles II on July 11, 2011

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Image from Huffpo

John Hooper, The Guardian:

Silvio Berlusconi learned on Saturday that judges in Milan had ordered his company Fininvest to hand over more than half a billion euros to his deadliest rival.

The money is compensation for bribery of a judge to rule in Berlusconi’s favour in his struggle with the industrialist Carlo De Benedetti for control of Mondadori, Italy’s biggest publishing house.

Berlusconi himself was put on trial for bribery in connection with the Mondadori judgment, but the charges against him were dropped in 2001 after being timed out by a statute of limitations. In their written ruling, however, the Milan appeals court judges said he was “jointly responsible” for the corruption.

They said it was “beyond any plausible reasoning” that Fininvest’s lawyers would have been given the money to bribe the judge while “the owner of the company that paid and benefited was kept in the dark”.

Meanwhile the Italian economy is going wobbly (via the invaluable Bill McBride). Luke Baker, Reuters”

European Council President Herman Van Rompuy has called an emergency meeting of top officials dealing with the euro zone debt crisis for Monday morning, reflecting concern that the crisis could spread to Italy, the region’s third largest economy.

The market pressure is due partly to Italy’s high sovereign debt and sluggish economy, but also to concern that Prime Minister Silvio Berlusconi may be trying to undermine and even push out Finance Minister Giulio Tremonti, who has promoted deep spending cuts to control the budget deficit.

Basically, the money boys have Italy in their sights and think they can roll Berlusconi, who actually sounds as if he’s trying to protect the Italian economy from the Austerians.

2 Responses to “The organ grinder and his monkey”

  1. Phoenix Woman said

    How interesting. Berlusconi may well go down, not for his crimes, but for the one time he actually acted in the national interests of his country.

    • Charles II said

      Well, we’re early in the interpretive stage. Berlusconi is old and beleaguered–a walking billboard of Italy’s excesses. It wouldn’t be surprising if his finance minister were corrupt, and perhaps Berlusconi is using his slide toward indictment as a firewall to protect himself. So is he acting for the interests of his country? It’s unclear.

      What the Reuters article does make clear is that there are financial interests who were counting on Tremonti to bring down the ax on any bits of social welfare in Italy and that now that he’s in danger of the brig, the Austerians are not in total control. The financial interests sound to me as if they are rattling the sabers as part of an effort to create a bond panic; Roubini quotes this (paywalled) report by Paul DeGrauwer that the EMU framework invites speculative attack. From The Economist, page 2:

      In total the cabinet approved deficit-cutting measures of €40 billion ($55 billion). The finance minister, Giulio Tremonti, wanted to dispel any spectre of a Greek collapse in Italy. But he is under pressure, especially from Mr Berlusconi’s coalition partners in the Northern League, to consider the political consequences. Alarmed by the ruling parties’ dismal showing at local elections in May, the League’s leader, Umberto Bossi, has called for a U-turn: tax cuts funded by drastic cuts focused on defence spending.

      The four-year austerity budget is a compromise. Mr Tremonti got his deficit reductions. Yet all but €6 billion of the tax rises and spending cuts will take effect after 2012, hinting that there may be an election next year, before they bite. Mr Bossi got a promise of lower income tax, accompanied by a hint that the shortfall may be made good by a gradual rise in VAT.

      In this case, where you have investment banks vs. Berlusconi, I’m not sure who to root for. It could be like the Edwin Edwards v. David Duke election, where the slogan was “Vote for the crook!” In this case, vote for the smaller crook, whoever that is.

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