European Sovereign Crisis, Ground Zero – Sector Italy
Heavily cross-invested into each other, the EU economies, and the economies of the globe at large, were worried about contagion of financial disaster. Italy, mired with huge government debt, and close enough to Greece to suffer a setback at the slightest sign of trouble in its troubled neighbor’s economy, was the domino piece no one wanted to have to focus on.
Yet in the summer of 2011 the fears materialized, and Italy came under the spotlight. Its debt was heavily scrutinized, its political situation criticized, its setup placed in doubt, and pressure mounted for reform to be exercised before it was too late.
It led to a parliamentary crisis that culminated in a showdown between Silvio Berlusconi, Italy’s controversial prime minister, and his detractors.
It went something like this, in a nutshell: first, Berlusconi said he wouldn’t resign. The opposition cried and roared, and the Italian people were exacerbated in their majority, but none of them had time to mount an effective counter move. They didn’t have to because the markets were doing it for them.
Indeed, the markets responded to Berlusconi’s attempt to cling to power as they do in situations of volatility and uncertainty, and very negatively at that. Italian bond spreads spiked to record highs, rendering Italy’s ability to borrow money unsustainable overnight.
The signs were clear and straightforward, and the course of action evident: Italy needed to secure Berlusconi’s resignation, and fast, in order to calm down the markets and restore economic sanity to Italian borrowing. The Italian people’s opinions and perspective came in second, and didn’t matter at the end of the day because markets, as they stood, possessed greater importance and influence in world politics and economics, not to mention an overarching presence on the sociopolitical stage.
The reasons for this situation are: a) reaction time and b) coherence. People may rise up in unified mass protests, spontaneously and instantaneously, true, but it happens rarely and under extraordinary political and socioeconomic circumstances. The rest of the times they tend to react in fractured groups, over longer periods of time.
Markets, on the other hand, react instantaneously and unequivocally at all times, no exceptions, leaving little to the imagination. Their intentions are pronounced, and so are their needs.
In other words, time-wise and mass-wise, it’s markets first, on market time, and people second, on human time. (Just something to think about when trying to debunk the idea that markets possess agency in their own right. Like it or not, markets have agency, plenty of it. A simple observation of their nature and operation reveals that they have a distinct and replicable effect on human affairs – an effect which trumps and supersedes human time parameters and social cohesion. Put simply, markets are there first, unequivocal and loud, always, not in theory but in actual, tangible, measurable effect.)
Back to Italy and Berlusconi. The markets were successful in ousting him. Helped by a defection of a few fellow party members and faced with the loss of a majority in parliament, Berlusconi made his resignation an imminent development, and the markets reacted positively to the prospect, as did the Euro, shooting up. Everyone got the message loud and clear, and out went the Cavaliere brigade.
And that was that, change of government, end of story, beginning of another, all eyes watching, care of none other than our highly elaborate, perpetually-ticking economic indices and their rapid, incontrovertible effect on human affairs.
“It ain’t over till it’s over – and even then it’s never over. Life goes on, come rain or shine, boom or bust.” ~ Anon
Something to go by in these testing times. It’s intriguing, to say the least, where all this will lead. For now let’s set up this saga’s closure…
This is the first part of the final episode in a mini-series of three sovereign debt crisis stories, in which the markets, not the citizenry, proved to be the key players and principal force behind major political developments across the globe. New World Order will conclude with Part 2 of this piece, but will resume again with fresh takes and controversial spins on the agency of highly organized systems, and what their existence means for the human condition.
Let me leave you with a taster…
The markets have ascended in importance over the last decades, assuming a life of their own. Our increased ability to measure their operations and functions, their actions and reactions to what we do as a species has afforded us with a sophisticated ability to interact with them. At the same time it has enabled them to dictate our course in turn, through our diligent efforts to maintain and upkeep them. Their health and well-being demands certain actions on our part which transcend an individual’s needs, serving the market mechanism as a whole. We have unwittingly tied our health to market health.
In other words, the markets suffer, we suffer. They prosper, we prosper. They live through us and we live through them, and live for them, enabling them to make things possible for us. In fact, as things stand, they command our entire infrastructure.
But, like many individuals point out, markets are ultimately run by individuals. Control these individuals and you control the markets. Hold them accountable and you can regulate their function.
The question then becomes: who commands the markets, or the individuals behind the markets? Who are these people and what are their plans, goals and objectives?
Answer the question and we know who commands the world.
Then again, this may only be part of the story. Believing that everything can be traced and ascribed to key individuals, holding them accountable for everything that happens, is naive and missing the bigger picture. There’s the actual setup to consider, the byproduct of our advancement, which has its own requirements. It’s like trying to calm down a bull and a bear made sick by a virus: locating and neutralizing the infection makes everything okay again, but the bull and the bear remain, and so do their gravitas. You can’t pretend they’re not there, and you can’t blame them for everything. They’re neither good nor bad, they’re just beasts. They exist.
So do the markets, in very tangible ways. They’re here, among us, alive and kicking, ticking, and we need to understand them. We need to know who drives their daily behavior as much as we have to accept that they’re here to stay, always around, the elephant in the room that’s not going away, alongside our bull, our bear, and the entire menagerie of beasts that power our advanced, sophisticated, integrative society. We must finally come to terms with them and realize that their appetites exceed the needs of the brain cells that drive them, making them players in their own right.
The ontological implications are enormous. Most people aren’t eager to surrender consciousness and preeminence to something meta-human and hyperreal; it sounds silly and self-negating. Yet anyone who’s serious about understanding the markets within the context of humanity as well as humanity within the context of the economy, anyone who’s serious about development, progress and evolution, knows that the markets are the stepping stone to something larger, grander and beyond human atomic agency. Like any mechanism that coordinates the flow of resources around a given location, they’re the assembly lines through which the sum of its parts are integrated toward a greater dynamic. Out of many, one; not in theory but in measurable, observable, tangible practice. It’s a truism we can’t escape, but which we can further explore in order to best situate ourselves in it and develop alongside it.