The pitfalls back of market growth

Financial markets continue their unstoppable growth. After the impressive recovery of April, also May disappointed the expectations of many short sellers[1] who were betting on a downward correction in the market. After a prolonged period of lockdown, the opening in all countries have generated a great euphoria on the financial markets, making the run-up to pre-coronavirus levels continue.

For a long time, we have relied on earnings as the main value driver in the stock market. Wasn’t the price / earnings (P/E)[2] ratio one of the main multiples for valuing stocks? So far, although most companies have reported earnings well below the levels provided by both guidance and analyst forecasts (except those in the technology sector, communications and stay-at home stocks[3]), the market is slowly returning to its pre-crisis level. The Nasdaq composite has returned to very few percentage points from the historical highs.

The numerous negative macroeconomic data amplify the paradox of this overview, almost one-way upwards. The International Monetary Fund estimates[4] predict negative GDP projections in almost all countries of the world, with rare exceptions such as China and India (respectively + 1.2% and + 1.9% in 2020) which in turn are far from the standard growth rate. In 2020, a 7.5% drop is expected in the Euro area with a 4.7% rebound in 2021. We wonder  how long it will take to return to the levels of GDP before the coronavirus.

United States-5.94.7
United Kingdom-6.54.0
United States-5.94.7
United Kingdom-6.54.0
Source: IMF. Pil outlook in percent change.

Additionally, the estimates on unemployment  in the United States reached 14.7% in April, more than triple from 4.4% in March[5]. We must keep in mind that about 70% of the consumption in the United States is due to the US families themselves. Who will consume in the USA considering that unemployment increases?

Together with the macroeconomic assessments there is  the total uncertainty concerning the vaccine too. Although some (few) trials have been successful, an effective vaccine seems to be far from being achieved. Nowadays, the most promising vaccines are being tested. However, it seems that investors have recently forgotten the main uncertainties that this health and economic crisis has caused: there are no effective treatments, we do not know if, and possibly when, profits will return to pre-covid 19 levels, we do not know the consequences of the reopening or if the autumn period could lead to a new wave. And I could continue with many other uncertainties.

So, where does all this optimism come from? The real question is to wonder if perhaps ‘there is no alternative’ market. In fact, alongside all these uncertainties, we have unquestionable certainties: the central banks continue and will continue to print money unceasingly, guaranteeing unlimited stimuli (two examples are the Federal Reserve and the Bank of Japan). The decisions of the main central banks to provide disproportionate liquidity on the market have probably favored a recovery in the short term, but its sustainability will have to be assessed. Inevitably, all these interventions have brought the returns on cash and bonds to such low levels as to generate an implicit investors’ willingness to expose themselves more on the stock market, in order to obtain a more satisfactory risk-return. Added to this is the so-called ‘fear of missing out’ (FOMO) by investors, or the fear of missing the opportunity at the time of the bullish trend to take advantage of the rally[6], which in turn feeds further rises. The problem remains, however, the macroeconomic context, which could lead to an upward trend only in the short term.

Another factor of extreme importance is the possible cold war between the United States and China which could further fuel uncertainty on the markets. The immediate reaction was naturally negative. Such contexts increase the risk-premium and endanger global development. Obviously, an increase in the risk-premium[7] leads, in most cases, to a decrease in the share price. Bear in mind that we are talking about the two major powers in terms of global GDP, and serious repercussions could, with a chain effect, involve all markets.

As for the European market and in particular the Eurozone, the main news concerns the Recovery Fund proposed by the European Commission which should guarantee 750 billion with an issue of thirty-year securities guaranteed by all countries, with a mix of loans and grants. Very complicated negotiations will open in the following months. We are finally approaching a debt mutualization at the European level (eurobond). The problem is that the funds will be accessible no earlier than 2021. Consequently, the instruments available in European countries will be, at least until the end of 2020, the Sure, the Esm and the purchases of government securities by the European Central Bank. These initiatives were taken with great euphoria on the markets, above all that of government bonds which saw a narrowing of spreads[8].

We cannot predict whether the stock rally will last much longer since we are in a truly anomalous market. In this context, investor sentiment seems to count far more than macroeconomic and microeconomic fundamentals. However, there is a crucial principle of the economy: in order to be sustainable in the long term, growth must be based on solid structures  and these, nowadays, seem to be very fragile. In the extreme case, there is the risk of creating a bubble which, if it explodes, would cause further negative consequences on the market.

Gianlorenzo Zeccolella


[2] Price over earnings is one of the most important multiples, used to assess the equity value of a company. When P/E = 15x, the stock price is 15 times its earnings per share.

[3]  Typical examples for stay-at-home stocks are Netflix or Zoom.



[6] In finance, a rally is a period of sustained increase in the price of an asset.


[8] The spread is the differential between the returns of two securities with the same maturity (typically 10 years). One of the securities compared is considered as a benchmark.

EU needs a joint reaction against the covid crisis

The covid-19 pandemic hit Europe violently. The new coronavirus, which infected the first human in the Chinese region of Hubei, is changing our lives, subverting the political and economic framework. In the initial phase, the response of the European countries was scarcely coordinated and, often, late. The impact of the virus has been particularly severe in the economically most developed regions: Lombardy, Emilia-Romagna and Veneto in Italy; the Community of Madrid and Catalonia in Spain; the region of Paris, Ile de France; Bavaria, North Rhine Westphalia and Baden Württemberg in Germany; the Stockholm’s county in Sweden; Flanders in Belgium. Inevitably, the deep integration among the economies of the various EU countries was also an efficient vehicle of transmission for the virus. In absence of a joint strategy for the reopening, at European level, the risk of new spreading of the infections through these paths will be even higher in the next weeks.


Here you can see the diffusion of the virus on the interactive map


The most affected countries, Italy and Spain, have adopted very strict measures. They allowed to continue to carry out the production only to the companies producing essential goods and services or involved in strategic activities for the management of the crisis. On the other hand, the majority of EU countries chose a softer lockdown, closing commercial business in contact with the public, leaving most of the production companies open[1]. However, these restrictions, necessary to reduce the sanitary emergency, risk to undermine the European economy. The dimension of the crisis will diverge country by country. Indeed, the strictness of the measures, the direct and indirect damages of the epidemic and the financial capacity of each country to support its economy will make the difference. A precise and punctual intervention from the State is needed, providing the required liquidity to make it through the crisis.


The necessity to finance the spending with debt and its critical issues.


The main sources of financing for a State are taxation and the issuance of bonds on the markets. In the midst of a pandemic, a short-term increase in taxation is not a sustainable tool. The objective is to safeguard firms and to keep the productive and economic system alive. Instead, it is inevitable to increase the public debt to reduce the impact that an announced economic recession will have on every citizen’s life. As they demand loans on the markets to finance their spending, the States issue debt securities. Like any other loan, also government bonds embed the market risk – a reduction in the market value of the bond may cause losses to the holder – and, in extreme cases, the risk that the capital lent will not be completely reimbursed.
Generally, the more investors – banks, financial institutions, pension funds and households – will find it likely that the loan will not pay off, the more they will demand a high yield for the risk they are bearing. At the same time, the cost of the debt for the State will increase as the risk perception of the investors increases. Political and economic events together with the amount of debt outstanding affect the finances of the States. Moreover, they influence also the investors’ expectations and bond yields. A typical unit to measure the risk on public debt is the spread between a safe asset – usually in EU the reference is the German bund – and another government bond. Besides, to evaluate the dimension of a public debt it is common to use the Debt/GDP ratio (this topic was also discussed here).

The current situation of Public debt in the main EU countries;jsessionid=3EE7A0FCAD10FF1B716097B51DEA188E

It seems clear that the European States are not all in the same condition. Spain and Italy currently are facing the hardest consequences from the pandemic, but they are also the States with the highest debt. In the last years Italian GDP grew slowly[2], and its debt reached 134% of GDP in 2018[3]. Similarly, Spain had a Debt/GDP ratio equal to 97.6%[4] in the same year. However, recently Spanish GDP had a consistent growth, 2% in 2019 and an average growth of 2.8% per year since 2015[5]. Nonetheless, before the financial crisis in 2007 Spain had a debt/GDP ratio equal to 35%[6]. The huge increase in debt due to the crisis forced the Spanish government to reduce the public spending and to enforce several additional reforms to increase its competitiveness and maintain the possibility to raise funds issuing debt on the markets.


Therefore, Spain and Italy are caught in the crossfire. On one side they are facing an unprecedented sanitary crisis, on the other they have to spend massive amount of money for the reconstruction of their economies. In addition, they may not be able to benefit of cheap borrowing on the markets.


Already as 21st April, the yield on 10 years Italian government bond (BTP) was 2.02%[7]. The equivalent yield on Spanish bonds was 0.97%[8]. As a comparison, it is interesting to see that the yield on 10-years German bonds is negative, equal to -0.481%[9]. Germany had a Debt/GDP ratio of 61.9%[10] in 2018. While, Netherlands has a yield of -0,177%[11] and France has 0.06%[12]. Following the increase of these debts, also the related yields will grow. The cost of financing will increase for all the EU countries, but this effect will be much bigger for the States that already have a high debt.;jsessionid=3EE7A0FCAD10FF1B716097B51DEA188E


The debate about the EU measures against the crisis


The sanitary crisis is a global emergency. In front of covid-19, there is no virtuous country, nor vicious. It makes no sense to blame the most affected countries with moral judgements. This crisis is symmetric, differently from the financial crisis of 2008. Notwithstanding, its impact and the timing will be different country by country. Since the beginning of the emergency, there has been a hard debate in the EU. The two factions were the supporters of a joint issuance of debt as common response to the crisis – among them Italy, Spain, France – and the opponents – among them Germany and Netherlands. At least in the initial phase, the opponents, confident on their ability to face the economic crisis on their own, were available to help the other countries only under strict conditions. Their proposal involved rigid rules on the repayment of the public debt and on the duration of the loans – European Stability Mechanism (ESM) with enhanced conditions credit lines.
Meanwhile, the European institutions gave their support to the most damaged countries with the specific Pandemic Emergency Purchasing Programme (PEPP) of the European Central Bank (ECB). So far, this intervention allowed to all the countries to maintain a low yield rates on their bonds. This is especially true for Italian BTP. Additionally, EU allocated other 540 billion euro to support the economy (more info here). Unfortunately, the dimension of the crisis requires further interventions. Issuing common debt – Eurobond or European recovery bonds – to finance the economic reconstruction can be the correct solution. Eurobonds would allow to the countries in difficulty to borrowing low cost from the market, making a step further in the European integration process.


Why a joint intervention is in the interest of the whole EU?


It’s not only a matter of European solidarity. Facing a recession of Eurozone GDP estimated as 7.5% by the IMF[14], no one is stable. There are not solid countries and individualism is not a feasible option. Furthermore, the European Union is a supranational organization that has shared for many years the benefit of being an open economic area. Freedom of movement for workers, goods and capital generated an interdependence among the member States. This is also confirmed looking at the destination countries for the export of Netherlands, Spain, France, Germany and Italy in the figures below.;jsessionid=3EE7A0FCAD10FF1B716097B51DEA188E

The export is a fundamental component of the GDP for all the countries above. Especially for Netherlands that accrued an export/GDP ratio of 82.5% in 2019. Instead, Germany had a export/GDP of 46,9%[15]. Analysing the destination of this export it is extremely evident that the biggest share is directed to other EU countries. Italy is the fifth country for the percentage of goods and services received by the Netherlands and the sixth for Germany. While, Spain is the seventh destination country by dimension of export for Netherlands and the eleventh for Germany. Moreover, Germany and Netherlands are also destination of a significant share of Italian and Spanish export[16].

The European economies are deeply connected. Now it’s time for the European leaders to find an agreement for common and strong measures against the crisis. It will take time. It may require changes in the treaties and the EU budget has to be increased with additional contribution from every single country. This is in the interest of all the member States. Otherwise, the economic crisis will follow the same paths as the epidemic. The risks are an economic depression and the rise to the power of Eurosceptic parties, which may lead to the end of the European project.


Michele Corio



































Banking Union: a step for more stability

Giovanni Sgaravatti

Giovanni Sgaravatti

The Banking Union is a set of rules, established to strengthen the European financial system. Its main components are the Single Supervisory Mechanism (SSM) and the Single Resolutory Mechanism (SRM). Their focus is on preventing and managing banks’ crises.

The Single Supervisory Mechanism monitors banking activity to increase the solidity of the financial system. It reduces the risk of banks’ crises, which are threats for the economic stability of the single States and the entire Union. Mainly, the SSM checks and guarantees that the Euro-Area banks have enough liquidity to absorb potential losses coming from wrong strategic decisions of the management or from crises.

European Central Bank in Frankfurt.

On the other hand, the Single Resolutory Mechanism is applied when a bank is already facing a crisis or financial distress is considered very likely. The objective is to manage the bankruptcy of a single institute in the least harmful way for the financial system and the people. The SRM functioning has been conceived to increase responsibility in the banking system. Banks must manage carefully their financial resources, maintaining a sustainable level of exposure to risk. Besides, it is crucial for the regulators to avoid contagion effects, namely the risk that the bankruptcy of a bank affects the stability of other banks and institutions.

A debated element of SRM regulation is the so-called “bail-in” mechanism that does not allow to the State, except for special situations, to buy out banks that are close to default. Under “bail-in” regulation, when a bank is going bankrupt the costs of the failure is not only paid by the shareholders, bondholders too may be involved if necessary. A reason in favour of “bail-in” is that it encourages banks to be prudent, reducing hazardous behaviours of the management. Indeed, the achievement of high returns in investments requires a higher exposure to risk. This does not always lead to positive outcomes, but if someone, external to the bank, is available to cover the losses or save the bank in hard times, then the drawbacks will be less harmful. Management can be less worried about losses and bankruptcy risk. “Bail-in” works exactly against this inefficiency.

The main alternative is the “bailout”. In this case, the State would intervene, using taxpayers’ money to fix the bank management inefficiencies and mistakes. Some countries, Italy is an example, could have a dramatic growth of public debt because of “bailout”, especially if the default involves big national banks. Another possibility to solve the crisis of a bank is the Deposit Guarantee Scheme, a fund created collecting capital from all the banks of the system. In Italy, such a fund, the Fondo Interbancario per la Tutela dei Depositi (FITD), is used to cover the depositors from losses in case of bank distress. Depositors are covered up to 100,000 euro. Theoretically, tools of this sort could be used also to prevent catastrophic effects deriving from big banks’ failures.

Banking Union: Member countries in blue.

Banking Union has faced many criticisms, especially raised by small and medium entrepreneurs, who blame it for the limited access to credit of these recent years. This is partially true. After the Basel agreements and the birth of SSM in 2014, banks have become more and more cautious in supplying credit. However, such inefficiencies are not completely ascribable to European regulation, for example, Italian banks were not always supplying credit in a transparent and trustworthy way. In 2015 in Italy, Non-Performing Loans (NPLs) (i.e. debts which are unlikely to be paid back) were as much as 16% of the total. The EU average is 3.4%. Moreover, 70% of these NPLs were distributed to 4.7% of debtors with an average value of 2.2 million euro per loan. Hence, small entrepreneurs have reasons to complain, the malfunctioning of the system is certainly not their fault.

However, it is important to stress that the drastic rules imposed on the banking system to increase capital reserves and creditworthiness’ standards have been crucial to increasing the solidity of the Italian economy. The failure of a bank causes damages to investors, depositors, entrepreneurs and (with “bailout”) also to taxpayers.
Finally, among the benefits of the banking union it is also worth mentioning the SEPA, Single European Payment Area, which involves 36 countries and allows to make bank transfers easily, only using the IBAN.

In conclusion, the banking union appears to be a source of advantages to the Italian economy much more than a cause of drawbacks. Restrictions are a requirement for stability, and recent history should have taught us that a stable banking and financial system should be preferred to one little regulated.

Michele Corio, Giovanni Sgaravatti
With special thanks to Beatrice Armanini

Saviour or traitor to the Fatherland? Tsipras, Europe and Greece after the political elections

Map of the cities founded by Ancient Greeks:
Fonte: My country? Europe

Zante. It is the first thing I remember of Greece, the island that in my imagination has always represented the most beautiful poetry of Italian literature, A Zakynthos, by Ugo Foscolo. The second, going a fragment ahead with the memory, are the endless expanses of olive groves that open from our bus. It’s the summer of 2009, I’m not even 18, and the first trip to the other Adriatic coast will be the first of a long series to discover the many fascinating places that Europe can offer. The guide, in his fifties, as well as a subtle indifference towards the Turks, introduces us to what is the temple of Greek civilization, where the first games, which later became the Olympics, were born. We are in Katakolon, a city in western Greece where a civilization is born, grows, and leaves many of its props in what is today’s society. Hellenia, Mediterranean culture, Europe. It is really a paradox that the same Olympic games of 2004, whose management – to use a euphemism – was not too clear [1] , were the spark that caused the economic crisis to explode, to then bear its bloodiest decade over a decade later.

Greece voted during this summer, and the political scenario was completely reversed compared to five years ago. The popular formation of Nea Dimokratia won the elections, reaching the threshold of absolute majority in Parliament, and relegating Syriza to the opposition after four years of government made of roller coasters and frontal clashes with the European Union.

There are many ideas that the Greek case can offer. After a summary of Greece’s relationship with the European Union in recent years, I will focus on two; the figure of Alexis Tsipras and his excellent political abilities, and how the Greek political system is structured following the political vicissitudes of the last decade.

Greece has experienced an era apart in recent years, constantly in the eye of the storm, with the default risk that has crossed it until it is on the verge of no return. But the problems of the Greek crisis have more distant roots, which sink in past decades. They have existed since the entry of Greece into the then European Community, born for political reasons, and it is paradoxical that its crisis was born exclusively for economic reasons [2] . After altering its accounts to enter the European Community in 1981 [3] , and still to be able to organize the 2004 Olympics, Greece has always had an uneasy relationship with the Union, exacerbated by the crisis of recent years.

In January 2015 Alexis Tsipras leads Syriza, an anti-capitalist leftist party, to a resounding success, touching the absolute majority of seats in Parliament (149 out of 300), and forming a Government with the Greek nationalists of ANEL highlighted its strategical capabilities. The scenario that Alexis faces is dramatic; the country is strangled by public debt, and is faced with its responsibilities by the austerity policies of the European Union. In this struggle between austerity and debt sustainability, Tsipras decides to hold a Referendum in which he asks whether to accept the agreement with Troijka, which provides for a debt recovery plan after implementing austerity policies. The Referendum was rejected in 2015 with over 60% of the votes. But the Union does not accept discounts, and threatens to kick Greece out of the eurozone if the pact is not accepted. Tsipras resigns, he goes to early elections, which once again reward Syriza who, again with the figure of Tsipras, will again form a government with ANEL. There is no way out. Tsipras finally decides to accept the austerity policies promoted by Brussels, disavowing a clear popular will. In the eyes of many it is an unprecedented reverse, a betrayal of the demos difficult to digest. And at this point I stop. Tsipras’ parable would open the doors to a debate as long as it is difficult to discern a univocal perspective; there are those who label him as a traitor to the homeland, as he who could have opened them leads them to a different type of leftist, rejecting the diktat of the Union and leading an alternative, and did not do so. As many, they welcome him as a wise, reasoned figure: one who, having experienced the complexity of a state and its objective responsibilities towards itself and towards the outside, has revised its positions in the most useful way to its country, to put him back on track, to give him sustainability, and to avoid a default that, among other things, Greece has definitely passed only a few months ago [4] .

Alexis Tsipras, leader of the extreme-left party Syriza

Whose responsibility was this crisis? Was it possible to manage it better? The austerity of the Union in wanting to submit Athens to its economic choices, or the negligence with which local politicians (who preceded Tsipras by a few decades) have faced expenses and tampered with public accounts, weighing everything on their citizens’ shoulders? Despite the attitude of Brussels towards Athens (although on the ways and attitudes there would be a lot to talk about) it was a strict but necessary plan to save the Hellenia from bankruptcy, but it also provided a formidable propaganda tool for all those Eurosceptic parties who oppose the Union and its policies. The image of a Union serving banks that puts at risk the lives of the European peoples in order to serve the interests of the power groups has now entered the collective imagination of all forces hostile to the Union, and to remove this label will not be simple at all.

You can choose the angle you want to observe the figure of Tsipras, of his widely disavowed values, and of his way of acting, pragmatic up to the unbelievable. The only thing that cannot be changed are the numbers: if so many observers foresaw a collapse of Syriza for these elections [5] , this was not the case. Despite highly unpopular moves, Tsipras remained standing, testifying to his exceptional political qualities. Syriza has lost so in the center, with moderate voters who have decided to move towards a political formation that gives them confidence and stability on the markets, but not on the left, where the PSOK remains distant the enormity of 20 percentage points. All this leads us to affirm that Syriza contained the defeat very well for 3 reasons: 1) it has recovered a million votes compared to the European Elections, and in general its result has gone well beyond the forecasts of all the research centers 2) It maintains the monopoly of the left electorate 3) It is proposed, if needed, as a possible government partner, given that the many souls that make up Nea demokratia leave more than a doubt about the stability of a single-color executive.

The Greek parliament after last elections:
Nea Dimokratia got the 39,85%, Syriza got the 31,53%.

Looking at the global, Syriza’s result pushes us to two other considerations. The first concerns the future of social democracy. What Syriza, the extreme left party, has given to PASOK, a party linked to the social democracy of the new millennium, is a historical lesson; they fell to around 10% of the vote and thus took the monopoly of the electorate of this area. From this overtaking “to the left” what derives from it? Can the electoral strategy of “extremization” of the left speech be replicated elsewhere with the same electoral results, or is Syriza’s unique situation facilitated by more circumstances? How much did Tsipras’ charisma and economic crisis affect his success? If we look elsewhere the only case where the left has outclassed social democracies and where it continues to have the pulse of that electorate is France with Mélechon (also a leader of extraordinary qualities). Elsewhere the Socialist Party, after a phase of decline, maintains the monopoly of the left world, as in Spain and Portugal. So does the strength of Syriza derive from the ability of the leader, from its contents or rather from the external context? A good question, to which only other empirical evidence will be able to provide more accurate answers.

On the other hand, the ideological barricades against extremist parties are more alarmingly confirmed, dictated more by a disproportionate fear of dissenting voices, than by the real consistency of phenomena destined for political marginality. The case of Golden Dawn, on which the media of half of Europe have focused, is the classic example. As the Greek elections have shown, the right-wing electorate prefers to merge votes on a more credible government alternative on all fronts, alias Nea Dimokratia, rather than on those who promote policy that is absolutely unworkable in today’s society. It is no coincidence that Golden Dawn has halved its votes compared to 2015, in favor of an ideologically moderate party that is actually more suited to dialogue with Europe and the markets. From the two points just taken, we derive a strong structuring of the Greek political system in a bipolar sense; a well-structured left-and-right alternative, which steals votes in the center, ready to capitalize on the mistakes of others, supported by other small parties that remain to watch, but which can always play a potential for government or blackmail [6] , like demonstrates Syriza’s alliance with ANEL in the past legislature, and how it could happen again.

What will be the future of Greece, the cradle of European civilization, is a puzzle that is difficult to solve. Difficult because the trust that the Greeks put in the Union is almost nothing, and given the disastrous turnout for the latest policies where one person out of two voted, it demonstrates precisely this dissatisfaction of the electorate 7] . Certainly, the clash with the Union has left bloody wounds at all levels, which only a generation of responsible politicians, we hope, will be able to heal.


Alessio Vagaggini

[1] On this topic: Il Sole 24 Ore, Le Olimpiadi in Grecia del 2004 furono l’inizio del default, Vittorio Da Rold, 14 Febbraio 201,  & Il Fatto Quotidiano, Quando Goldaman Sachs truccava i conti della Grecia per farla entrare nell’Euro, Leonardo Martinelli, 26 Marzo 2012.

[2] On how Geece entered in the European Community, please have a look at Limes, Tsipras, l’Europeista immaginario, Tra Euro e Neuro, n°7 – 2015.

[3] On these inconsistencies, one may observe, the European Community may have pretended not to see in order to ease the the access of Greece in the European Community and become part of the OTAN, with the scope of make it get far from Soviet Union’s influence

[4] Il corriere della sera, La Grecia esce dal programma di aiuti: addio alla Troika dopo 8 anni di crisi, Giuliana Ferraino, 19 Agosto 2018.

[5] The Guardian, Syriza betrayed its principles – and the Greek people. Its days are numbered, July the 5th 2019.

[6] According to Sartori’s definition, highlighting the importance of small parties on the decisions made by a given government. .

[7] Il Post, La crisi in Grecia spiegata in 12 grafici, 4 luglio 2015.

Monetary Union, the Italian case

In Italy, the monetary union is often taken as a scapegoat for all the ills of the last twenty years. To verify the factuality of this criticism we must weigh the disadvantages of the single currency with the advantages. Furthermore, a critical effort to verify the counterfactual (i.e. what would have happened if we had not adopted the euro) is paramount.

euro One euro Italian coin, picture by Alberto Moglioni

The disadvantages reiterated by the discontented is in having lost the monetary sovereignty and in the unfavourable exchange rate. Let’s start with the first topic. What was once the role of the Bank of Italy has now passed to the European Central Bank (ECB). The advantage of being able to print money lies in the possibility of using expansive monetary policies and devaluation. With the former, the central bank aims to lower interest rates, favouring consumption and investment. While with devaluation export is favoured and the cost of labour is lowered.


A (dis)continuity in the European Governance

Antonio Tajani descends from the highest seat in the European Parliament. He shakes hands with compatriot David Sassoli, who takes his place. They smile. This snapshot closes the waltz of the leadership positions of the European Union of these days, or of those who more than others will influence the choices of the Union, and therefore our lives, from here for the next five years. Following the elections of the new European Parliament on May 26th, the face of the Union and its representatives have changed. The change, however, did not take on the dimensions that during the electoral campaign they feared. During the first months of 2019, in fact, an apocalypse was expected, a revolution in terms of numbers and values ​​within the decision-making spheres of Brussels [1]. The fact is that this epochal change has not been realised; there have been some adjustments in the control room, and some fluctuations in public opinion, but the European Union maintains its values ​​and its different souls that characterise it.

If some balances have changed, others have remained firm. But which balances do we talk about?



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