Issue link: https://maltatoday.uberflip.com/i/1231020
15 NEWS maltatoday | SUNDAY • 05 APRIL 2020 NEWS This doesn't mean that history repeats itself. First of all, Europeans are by far much less trigger-happy than they used to be. We are now much more aware of the dangers of war and racism, and no one foresees the probability that Euro- peans would go to war with each other again. But what we are are clearly seeing, is this: since 2008 our politicians have been using a textbook economic and financial response to economic crises that crop up, supposedly, unexpectedly. This time around, we will be using the same text- book measures again, only on a much bigger scale than previously. I suppose it's naive to think that if we apply the same measures we have ap- plied during the last economic crisis, we will be getting a very different result, but maybe, eventually all the liquidity in the system will stick and things will stabilise on a permanent basis. They may well do for some time, but what will happen if say, in ten years' time we are faced with another economic crisis? Shouldn't we also get used to the idea that when we come out of lockdown and the pandem- ic is over, we are going into economic recession and Italy will be at risk of im- ploding? It is not in our political and economic interest that Italy goes into an economic crisis, but it seems that risk is being un- derrated, and this should not be the case given the potential political risks if such a scenario occurs. We are taking huge risks without knowing exactly where we are going to land. We are in uncharted territory and we need a very elaborate and definite navigation plan – the truth is: we don't have it and politicians them- selves do not necessarily know what they are doing. We are in a very tough bind here. Mal- ta should not be so averse at the idea of the Eurobond, but we should also start looking for more practical solutions. It's pointless to toe the line at this point when the whole house is on fire. While we put out the fire, we should also start coming up with very well-structured plan for the future. I'm not saying we need to be idealists. Yes, we should take in more debt to issue much needed economic re- lief, and even increase public spending, but in the meantime, we should also start planning for the future and have the ca- pability of having more options at hand, given that the world tomorrow is going to be a very different place and we don't know how is it going to be. In Malta, specifically, we are exclusively using a European textbook solution. This European textbook is a crisis-by-man- agement system where the ones most benefiting are big companies and banks, while small businesses get crushed and workers feel most of the pain. Is the sys- tem broken? Most probably. Malta, apart from taking ownership of the risks and effects of the Euro's financial system, is also risking to have its financial services industry shut down by the EU – sounds like a very bad deal if this happens. This is a particular crisis and we need surgical solutions for it. For starters, lo- cally, we can minimise most of the dam- age by temporally conditioning banking policy: introduce debt jubilees, reduce existing interest rates, clean up the bal- ance sheets, and yes, why not? Let build- ing contractors and big property specu- lators default on their loans to flush out rent-seeking capital from the system. At their current state, no one wants to own Maltese banks any way, yet they are a strategic asset which are essential to pro- vide much needed relief to small busi- nesses and workers at this critical stage. And without any doubt we should also move in to cancel contracts with Elec- trogas and Steward and immediately appropriate all public assets which have been given off through corrupt govern- ment contracts. Although I write all my words here with healthy skepticism and self-doubt, I write this next postulation with a lot of conviction: the legalese we are told about being unable to appropriate public assets given off under corrupt contracts is total bullshit. Any driven lawyer can create strong cases for the right politi- cal decisions in these cases, however the problem is that our professional and ac- ademic class is totally compromised in a system of jobs, networking and govern- ment contracts. I'm afraid there will be hardly any economists or lawyers who will compromise their careers with solu- tions which may hurt someone in office or on the board of a big company. I digress. Once the liquidity was out and the financial relief enacted, Maltese politicians are more interested in hold- ing meetings with Sandro Chetcuti and discussing the opening of spring hunt- ing, so they aren't going to save you. And in ten years' time, we'll be doing a big disaster clean-up by ourselves. May I be proved totally wrong. This European textbook is a crisis-by- management system where the ones most benefiting are big companies and banks, while small businesses get crushed and workers feel most of the pain It is not in our political and economic interest that Italy goes into an economic crisis, but it seems that risk is being underrated Italian PM Giuseppe Conte: his country's debt is already over 130% of GDP. The coronavirus pandemic will cripple the eurozone country further A meeting of EU finance ministers. The bloc is split over whether member states should take joint liability for a massive eurobond that would provide liquidity to 'spendthrift' countries like Italy... but the need to avoid austerity measures is essential