Super Mario is back

Article about Super Mario is back

Feb 6, 2021

Mario Draghi was President of the ECB from November 2011 to November 2019 and became world-famous for his speech in London in which he compared the euro to a bumblebee. A bumblebee is not supposed to be able to fly, but it does fly. Draghi stated that the ECB is ready to do everything it can to preserve the euro. And believe me, that will be enough’, were his words. That statement coincided with the highest interest rate on bonds of the Southern member states. Since then, those interest rates have fallen sharply. The ten-year interest rates in Italy and Greece are now at 0.66%, in Spain at 0.12% and in Portugal at 0.06%. The Irish ten-year rate is even negative. Nevertheless, concerns about the euro’s continued existence threaten to return. Not so much because of the elections in the Netherlands or those in Germany in September. The elections in France next year are even behind the horizon. It is Italy that is once again at the political centre of the eurozone.

At the request of Italian President Mattarella, Mario Draghi will attempt to form a business cabinet. After the collapse of the Conte coalition, the only other alternative was early elections. In Italy, only the president can call early elections, but Mattarella did not feel comfortable organising them in the middle of the pandemic. It is not easy to form a new coalition in highly polarised Italy, but if anyone can do it, it is Super Mario. This is the man who could even get the Bundesbank to agree to quantitative easing. Without the right-wing Lega Nord and the anarchic Five Star Movement, all that remains is a broad coalition of fragmented centre parties. Moreover, the polls show that Lega Nord, together with Forza Italia and the Fratelli d’Italia, could achieve an absolute majority in parliament after the elections. That would be a right-wing coalition with strong anti-European sentiments. These three parties, therefore, prefer to call for new elections. That is also precisely the reason why the other parties do not want elections. Moreover, the Italian parliament has to elect a new president in 12 months’ time and he has a lot of power in Italy. With a Eurosceptic populist as the next President of Italy, the end of the eurozone and the European Union is very close. Any party that does not want this will therefore have to comply with Draghi’s demands. Super Mario is also uniquely capable of getting Brussels to give Italy the 200 billion from the support plan without any substantial reforms in Italy. The man is simply good with words.

This makes Draghi the only person who can save the euro not once, but twice. Draghi could become president of the ECB because he was governor of the central bank of Italy since 2006. In Italy, the governor of the central bank is appointed for life. Draghi’s predecessor, Antonio Fazio, is now 84. But Fazio was forced to resign on 19 December 2005 after a major scandal. ABN Amro tried to take over Banco Antonveneta, but Fazio pulled ahead of Banco Popolare Italiana (BPI) and Banco Popolare di Lodi. After the arrest of BPI’s top executive, a conspiracy was uncovered that revealed that Fazio and his closest associates were very receptive to gifts from the top executive. To top it all off, Fazio was officially indicted for promoting insider trading. In 2011, Fazio was even convicted of market manipulation. He received a prison sentence of 3.5 years and a fine of 1.3 million euros. That does not sound like the man who would have saved the euro. Without that failed takeover attempt by the Dutch ABN Amro, Draghi would never have got the top job at the Italian central bank and later the ECB. And Super Mario would never have been able to save the euro twice.

Chelton Wealth — Quanify GmbH is an independent asset manager. We serve private individuals, institutions, foundations and entrepreneurs with independent and personal asset management. If you would also like to be kept up to date with the latest news, please sign up here for our weekly newsletter. Would you like to know more about the possibilities? Then request a callback. We will contact you without obligation.

Missed an article? No problem, just visit our MARKET BLOG

Articles authored by Robert Jan Teuwissen

Published: Jun 8, 2021

Published: May 23, 2021

Published: Apr 10, 2021

Published: Mar 13, 2021

Published: Mar 2, 2021

Published: Feb 24, 2021

Published: Feb 6, 2021

Published: Feb 3, 2021

Published: Dec 2, 2020

Published: Nov 20, 2020

Published: Nov 19, 2020

Published: Nov 18, 2020

Published: Nov 12, 2020

Published: Nov 3, 2020

Published: Oct 30, 2020

Published: Oct 20, 2020

Published: Oct 17, 2020

Published: Oct 16, 2020

Published: Sep 22, 2020

Published: Sep 8, 2020

Published: Sep 2, 2020

Published: Aug 14, 2020

Published: Jul 21, 2020

Published: Jul 7, 2020

Published: Jul 3, 2020

Published: Jun 30, 2020

Published: Jun 25, 2020

Published: Jun 19, 2020

Published: Jun 16, 2020

Published: Jun 3, 2020

Published: May 26, 2020

Published: May 19, 2020

Published: May 8, 2020

Published: May 5, 2020

Published: Apr 28, 2020

Published: Apr 17, 2020

Published: Apr 16, 2020

Published: Dec 22, 2019

Published: Sep 8, 2019

Published: Aug 11, 2019