No doubt the EU sees Italy’s incipient rebellion against it, and the Euro, as a mortal threat. They should.

Excerpt from The Streetwise Professor's

Thank God for the Revolution, But Don’t Take It For Granted

In Italy, the president, Sergio Mattarella, rejected a proposed government advanced by a coalition of populist parties from both left and right.  In the words of the FT, Mattarella “faced down” the populists–who just happened to have won the elections, and who trounced the “mainstream” EU-philic parties.  In so doing, the president was following hallowed EU tradition: the proles will vote until they get it right!

Ostensibly the reason for the rejection was the inclusion of a hardcore opponent of the Euro as the Finance Minister.  No doubt that was a convenient pretext.

The EU proclaims that it is democratic, and EU politicians routinely blast Trump and Orban and others for being authoritarian.  The EU is in fact demonstrably anti-democratic, and objectively far more authoritarian than those it excoriates as such.  Mattarella’s actions are clearly authoritarian and anti-democratic.

No doubt the EU sees Italy’s incipient rebellion against it, and the Euro, as a mortal threat.  They should.  But the reaction–thwarting the results of an election, rather than mounting a persuasive campaign that appeals to voters and addresses their concerns–reflects a weird combination of arrogance and defensiveness.  This is the reaction of frightened people who understand at some level that theirs is a deeply flawed project, and that they have no idea on how to address these flaws.  S0 rather than addressing the sources of discontent, or even attempting to understand them in a serious way, they attempt to suppress its expression–even (especially?) when that expression occurs at the ballot box.  Incapable of facing them down in an election, the EU oligarchy must resort to facing them down through undemocratic means.

Here is economics prof Steve Keen

Brussels-Rome war: EU holds back Italy’s anti-euro tide for now

By pushing a presidential veto of Rome’s proposed new government, Brussels may have secured the euro’s status in Italy, for now. However, it may prove to be only a stay of execution.

As I write, a constitutional crisis has erupted in Italy after its President – who normally fulfils only a ceremonial role – refused to allow the prospective new coalition government to appoint Paolo Savona as finance minister.

Superficially, this is a ridiculous decision: Savona is a distinguished 81-year-old economist who has worked at Italy’s Central Bank and Treasury, created the first model of the Italian economy, and – among numerous other honors – was a minister in a previous Italian government in 1993-94. Was his age the problem?

No, President Sergio Mattarella’s problem with Savona is that he is a critic of the euro. And Mattarella’s obstructionism is a problem for the prospective coalition government of the self-described anti-establishment Five Star Movement (founded by the satirist and activist Beppe Grillo) and the originally secessionist, but now federalist, Lega Nord (Northern League) – because about the only thing they have in common is opposition to the euro and the austerity policies that have come with it following the 2008 crisis.

In round one of what will be a protracted battle, the prospective prime minister Giuseppe Conte has resigned; the leader of Five Star has called for the president to be impeached; and the president has invited former International Monetary Fund director, Carlo Cottarelli, to form a government instead.

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The first battle in the war between Brussels and Rome has thus been won by Brussels: I have little doubt that Mattarella was lobbied very strongly by EU figures to block Savona, because he is capable of developing the real weapon that Five Star/Northern League could bring to bear against the euro – the “mini-BOT.” Named in reference to Italy’s “buoni ordinario del tesoro,” which are short-term government bonds, these would be government-issued notes valued at between €1 and €500, which would be issued to people and companies owed tax refunds by the government. These, in turn, would be valid for paying taxes, buying train tickets, getting petrol at government-owned fuel stations, and so on.

These sidestep the euro’s monopoly as legal tender in the eurozone because a vendor does not have to accept these if they are tendered in an exchange. But they can be accepted, perhaps at a discount to face value, and thereby become an alternative means of payment to the euro.

This is a weapon that Greece prepared, but never used, because Yanis Varoufakis, in what he describes in Adults in the Room as “Mea Maxima Culpa” (“my most grievous fault”) decided to leave the decision to Alexis Tsipras. Tsipras demurred, and the result was a Greek tragedy.

An alternative-means-of-payment is a much more cogent weapon in Italy’s hands than it would have been in Greece’s. Italy’s economy is six times larger than Greece’s and average salaries are almost double (though per-capita income has fallen substantially since the global financial crisis); its economy, particularly in the north, is an industrial powerhouse; and its climate supports a huge range of agricultural products. Much more of what Italians need to buy can be purchased from other Italians than was ever feasible for Greece (the only categorical exception is oil). The mini-BOT could really free Italy from the stranglehold of the euro

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Brussels will seek to blame the anti-euro rebels, but the real villains of this crisis are the euro itself and the Maastricht Treaty. As the rebel British economist Wynne Godley stated back in 1992 when the Treaty was signed:

“If a country or region has no power to devalue, and if it is not the beneficiary of a system of fiscal equalization, then there is nothing to stop it suffering a process of cumulative and terminal decline leading, in the end, to emigration as the only alternative to poverty or starvation.” (Wynne Godley, ‘Maastricht and All That’ London Review of Books, October 1992)

Full article here