I seriously doubt whether Warren Buffett, of Berkshire Hathaway fame, has any particular or specific views upon the European Union’s little coup d’etat in Italy this weekend just past. And a coup really is the correct way to describe it. Despite what the electorate was saying, there’s no way a government which isn’t onside with the glories of ever increasing European union can be allowed to take power. To the point that the appointment of a eurosceptic finance minister was a deal breaker, something that just could not be permitted:
Italy’s president was last night accused of an ‘appalling’ betrayal of the will of his people after ignoring impeachment calls and imposing a technocratic government led by a Europhile.
MEPs said the country was in ‘meltdown’ and hit out at Sergio Mattarella after he appointed former International Monetary Fund official Carlo Cottarelli to lead an interim administration.
Just hours earlier Mr Mattarella had faced calls to be impeached after rejecting plans from the anti-establishment 5-Star Movement and League parties to install a Eurosceptic as the country’s economy minister.
This is all most certainly within the President’s formulated powers. But still.
By accusing President Mattarella of doing the bidding of Germany, France and Brussels to keep them out of power, Five Star and the League have started a campaign against the EU and its spending rules. They will try to turn the vote into a referendum on Europe, hoping to create a Brexit moment in one of the union’s founding members. Italy is the eurozone’s third largest economy. Any challenge to its membership would send shockwaves through Europe.
As Matteo Salvini, the League’s leader, has said, the election will be a contest between “the people and the elite” — a phrase straight from the populists’ guide to politics. The League and Five Star campaigned separately in the March elections before joining forces to build a government, and analysts believe that if they officially form an alliance before voting in September they will triumph.
Now maybe that will happen and maybe it won’t. But Varoufakis thinks there’s a chance it will:
The singular reason for Italy’s woes is its membership of a terribly designed monetary union, the eurozone, in which the Italian economy cannot breathe and which consecutive German governments refuse to reform.
Well, yes, that’s definitely true.
Beyond his moral failure to oppose the League’s industrial-scale misanthropy, the president has made a major tactical blunder: he fell right into Salvini’s trap. The formation of another “technical” government, under a former IMF apparatchik, is a fantastic gift to Salvini’s party.
Salvini is secretly salivating at the thought of another election – one that he will fight not as the misanthropic, divisive populist that he is, but as the defender of democracy against the Deep Establishment. He has already scaled the moral high ground with the stirring words: “Italy is not a colony, we are not slaves of the Germans, the French, the spread or finance.”
And yes, so might that be.
Which brings us to Mr. Buffett. He has famously said that he likes to by a business or two when he can see that there’s a moat around it. There’s something protecting it from market competition and thus gifting it economic and pricing power. Which is fine, that’s his preference. But we do need to note that a moat is a defence, but not an impregnable one. Sure, it’s possible to build castles ever grander but eventually some unstoppable force will come along and beat any specific defence. Which is where my rather strained analogy comes from concerning Italy and the EU.
Sure, it’s possible for the Italian President to have that little coup. The people who quite clearly won the election aren’t going to be the government because it would be – at the least – inconvenient for the EU’s plans if they did. But such a moat of dissing the potential finance minister does have a limitation or two. What does happen if there’s an absolute majority after this next election? One as a result of the Italian electorate shouting that they will be heard, thanks very much?
We should note that the slaughter after a bigger battle is higher, the stronger the defences are that have been conquered the more power must be used to do so and the larger the venting after it happens.
A little bit of give and take on the rules of the eurozone might well head off, in a manner this manipulation might not, the event of Italy actually leaving the euro if the electorate truly get their dander up.
Of course, I’d be overjoyed by the death of both the euro and the EU. Others, those likely to cause it, might not be so happy.