The Berlusconi Bounce. Bunganomics to the rescue
So it has come to this. America’s trading reassured by a few tens of thousands of payrolls and the presence of Super-Silvio at an urgently convened press conference in Rome. And at the time of writing it seems to have worked, with American traders sending New York stock markets higher courtesy of the “Berlusconi Bounce”.
A correspondent suggested to me yesterday that the rise of the robot traders had led to the lay-offs of financial experts who have the capacity to trade political risk. The Berlusconi Bounce is surely evidence of that.
Here’s what the Italian PM said:
1. That Italy is under “speculative attack” and that this attack is aimed specifically at Italy. [Actually I have a little bit of sympathy for this – see my Wednesday blog post.]
2. That Italy would bring forward the achievement of budget balance by one year to 2013 from 2014. [How on earth? Massive cuts, and surely he’ll have to raise taxes to do this, and this from the man that all but abolished property taxes to get himself elected (HT Hugo Dixon)]
3. A constitutional budget balance rule to keep tax and spend in check permanently. [Interesting, good in theory for long term debt sustainibility]
4. Bad news for George Osborne AND Mickey Mouse. “Emergency meeting of G7 finance ministers meeting in the coming days” [the G7 is obviously an almost redundant organisation in modern day Geo-economics. We are told that the G7 stands for the G7 most industrialised nations, but “7 most deindustrialised nations urgently in need of capital from the other G20 nations such as China that they didn’t invite” would be a better, if less punchy description.]
Suggestions coming out of Italy are that the Budget measure is the blood sacrifice that Italy is paying for one thing and one thing alone – persuading the divided European Central Bank to buy its bonds, bring down the interest rate and quasi-monetise Italy’s massive debt. The biggest Bunga Bunga of all. And precisely the nightmare that German voters were promised would never occur.
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