Super Mario’s World: Has Italy found an unlikely hero in new Prime Minister, Mario Monti?
He’s not perfect, but markets are convinced that Monti can do just that. When there are foes to fight and coins to collect, Super Mario is a pretty safe bet
Arriverderci, Silvio. Buongiorno, Super Mario. The replacement of Silvio Berlusconi with Mario Monti marks the turning point in Italy’s struggle to keep its head above the financial floodwaters.
Just like the synonymous moustachioed Italian plumber, Italy’s new Prime Minister faces a never-ending stream of foes. Fortunately, Monti has three superpowers when it comes to rescuing Italy from the crisis.
First, he’s apolitical. In a reversal of the British experience, Italy experienced the consensus of Pentapartito in the 1980s, followed by a partisan implosion in the 1990s. To push through essential market reforms, Super Mario needs a Luigi.
Second, he’s a Eurocrat. Having been Italy’s European Commissioner for ten years and involved in umpteen think-tanks and commissions, he knows the corridors of European power intimately. With Italy’s EU partners writing the cheques, having someone they feel they can trust gives Italy more leeway.
Third, he’s an economist. Bond markets like the idea that the person in charge lies asleep at night worrying about ‘lo spread’. And you can guarantee that’s the case with Monti: an academic economist and former rector of Italy’s top business school, who studied under James Tobin at Yale.
While his former mentor is famously a Keynesian, Monti is certainly not. In Brussels, he triumphantly battled state subsidies and broke up monopolies.
With a budget rife with subsidies and a country rife with insider deals, he can stare down corporate interests and trim the government fat.
He has a track record. In the 1970s, with Italy gripped by run-away inflation, the happy-printing government refused to publish official money supply figures.
But Super Mario came to the rescue and published his own ‘Monti M1’ and ‘Monti M2’: embarrassing the government and reining in its excess.
Tempering this maverick streak is one of the most pragmatic free-market minds in Europe. No-one but the softly-spoken 68-year-old could advocate a second austerity package in a week and still have socialists clamouring for him to become Prime Minister.
The Italian problem is not intractable and, unlike Greece’s, can be solved whether Italy stays in the Euro or not. Italy is a wealthy country – far wealthier in assets than its German paymasters. The problem is political.
Fresh from passing Berlusconi’s austerity package, Italy needs another: sell assets, loosen labour laws, and cut spending. In short, it needs free markets, and needs someone that can sell them to a sceptical public.
He’s not perfect, but markets are convinced that Monti can do just that. When there are foes to fight and coins to collect, Super Mario is a pretty safe bet.
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