With the fate of the Italian finance ministry post resolved amicable earlier in the day, Giuseppe Conte, Italy’s new prime minister, accepted the offer to form the new Italian government and revealed the following key members of the his cabinet:
- DI MAIO NAMED NEW ITALY ECON DEV MINISTER, DEPUTY PREMIER
- SALVINI NAMED NEW ITALIAN INTERIOR MINISTER, DEPUTY PREMIER
- DI MAIO, SALVINI TO BE MINISTERS IN NEW ITALY GOV
- SAVONA NAMED NEW ITALY EUROPEAN AFFAIRS MINISTER
- TONINELLI NAMED NEW ITALY TRANSPORT MINISTER
- GIORGETTI NAMED NEW ITALY PREMIER’S UNDERSECRETARY
But the most important nomination was the following:
- GIOVANNI TRIA NAMED NEW ITALIAN FINANCE MINISTER
Why most important? Because Tria is the supposed compromise finance minister, replacing Savona, who will instead be in charge of European Affairs. And, as we noted earlier, Tria was expected to be far more moderate (read: “not Euroskeptic”) than Savona; and the moment his nomination was announced earlier in the day it sparked a sharp rally in Italian bonds ad stocks.
There is just one problem: as we reported earlier citing two of Tria’s recent articles, the 69-year-old economist is just as as vocal a Euroskeptic if not more, than Savona. This is what we wrote earlier:
what has spooked the establishmentarians in the early rounds of due diligence is the following article from December 2016 published in the Formiche, titled “Vi spiego la competizione truccata in Europa che favorisce la Germania” or translated “I’ll explain the rigged competition in Europe that favors Germany” in which Tria, like other run-off-the-mill euroskeptics, criticizes the European monetary union and its fixed exchange rate for allowing countries – such as Germany – to run high external surpluses and says fiscal policy should compensate for that lack of flexibility.
Meanwhile, as Bloomberg’s Lorenzo Totaro and John Follain report, Tria publicly called for a debate on the euro in both Italy and in the rest of Europe, saying that “the biggest danger is implosion, not exit,” in an article co-written with Renato Brunetta, a senior lawmaker of ex-premier Silvio Berlusconi’s Forza Italia party.
In the article published in March 2017 in In Sole, looking at the outlook for the euro-region, Tria said that the “German economy’s growing surplus shows that monetary expansion, without a policy that aids economic convergence between the various countries, merely fuels an imbalance that puts us in conflict with the rest of the world.”
In other words, it appears that Salvini managed to replace one Euroskeptic with another, and instead of Savona, it will be Tria who will push for exploding the Italian budget, i.e.using fiscal stimulus, to offset Germany’s unfair advantage, i.e., back to the square one we were over the weekend.
We wonder how long before Brussels realizes that it has replaced one deficit addict with perhaps an even bigger one…
… and what the Italian president’s, and the market’s reaction, will be then.
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