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Renzi, Machiavelli and the public platform

Monday, 5 December, 2016

Niccolò Machiavelli: “The demands of a free populace, too, are very seldom harmful to liberty, for they are due either to the populace being oppressed or to the suspicious that it is going to be oppressed and, should these impressions be false, a remedy is provided in the public platform on which some man of standing can get up, appeal to the crowd, and show that it is mistaken. And though, as Tully remarks, the populace may be ignorant, it is capable of grasping the truth and readily yields when a man, worthy of confidence, lays the truth before it.” Discourses on Livy (1517), Book 1, Ch. 4 (as translated by LJ Walker and B Crick)

Whither now, Italy, after Matteo Renzi, a man of standing, appealed to the crowd, only to see his proposed reforms rejected by the public platform? The most pressing matter is the country’s banks, which have bad debts of €286 billion on their books. The third largest institution, Banca Monte dei Paschi di Siena, needs a €5 billion recapitalisation, urgently. Although the situation is alarming, the can is kicked further down the road. The reason is that if the debts were written off, junior bondholders would take a massive hit, and many of these are ordinary Italians who bought useless bank debt.

Thanks to Renzi’s referendum, borrowing costs are increasing, making it very expensive to get capital for Italy’s zombie banks, and now there’s a government without a mandate. The fear is that the instability of Italy may spread from Rome to Brussels and beyond. Quoting Cicero, Machiavelli noted that the populace may be ignorant, but it is capable of grasping the truth.

Italy


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