Right-wing American commentator Edward Luttwak (author of Coup d’État: A Practical Handbook, and controversial articles like ‘Give war a chance’ and the heavily criticised ‘President Apostate‘) gave a novel and clear-cut explanation of the credit crunch and its likely effects on the Italian public during a discussion last week on RAI3’s Ballarò.

Novel because, unlike most of Luttwak’s arguments, it didn’t involve blaming the Italian communists for the problem. (No doubt he’s working on a complex formula that will permit a public dressing down of Oliviero Diliberto for somehow convincing the capitalist world to come up with the financial ‘products’ that have caused the crisis).  

Clear cut because it identified the only social strata that is likely to be affected by the credit crunch. According to Luttwak this strata will be the ‘raffinati’ or ‘refined’ Italians who’ve been gambling on the price of pork bellies and other similarly frivolous and fool-hardy daily pursuits of the rich and famous.

This will be of some relief, perhaps, to ordinary savers and mortgage holders throughout the country. Would that it were true, but all the signs are, despite the assurances of Berlusconi and finance minister Tremonti (a trustworthy pair if ever there was one),  that there will be knock on effects for more than just high-fliers.

An example – Italy’s largest and most aggresive bank UniCredit has been holding a series of surprise board meetings throughout the week – including one today, Sunday  – as rumours leaked about possible liquidity and share dividend issues at the bank.

Less discussed is the fact that a number of Italian local councils (comune) including those of Milan and Catania have investment portfolios that appear to be heavily exposed to the crisis. Catania, prior to the worldwide crisis, was already practically bankrupt (for a number of months street lights have been turned off in the Sicilian city, to save on electricity bills), while Milan has some hefty bills coming up in preparation for 2015’s Expo. Both will also be subject to the new fiscal federalism which is an essential political plank of Berlusconi’s coalition. 

It should be remembered as well that over the last number of years Italian state pensions have been cut, with incentives introduced to push normal workers, as opposed to Luttwak’s pork-belly speculating ‘raffinati’ into private investment in order to boost their projected pension. On the day that Lehman brothers went bankrupt, the Italian banking site ‘patti chiari’ still had their shares listed as ‘basso rischio’ or ‘low risk’.[1]

For the first time ever, this Monkey is hoping that Luttwak’s analysis is correct.

[1] http://www.adoc.org/index/it/comunicati.show/sku/3893/Lehman+e+Patti+Chiar.html