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The conference proceedings of the first night of the Diocesan Social Week. The report of Dr. Anastasia

of Bruno Anastasia

An economic crisis? Not only that ... an in depth look is difficult. The current crisis is a challenge and an intellectual no accident has generated a vast production of interpretations. It is not easy to see - right up in bottom - what happened / is happening, much less pre-see for sure what it will be the outcome.

The reason for these particular difficulty is that this is a crisis, "global", not only because it involves (involving) the economics of the whole world, but also because it deals with (and partly depends on) other dimensions: geopolitical and social, not only economic and financial. Expose and discuss it is therefore difficult task that requires extensive expertise. It seems to be at a turning point in history, not just the business cycle. And though the story is easy to understand ex post, but while it does, and takes place ... it is much more complicated.

The harsh 2009 recession

So let us first briefly to describe this crisis. What we refer when we speak of the 'current crisis?

The macroscopic phenomenon is so noticeable: in the western world in 2009 was by far the worst year - in the last 60, after the Second World War - as a dynamic production, incomes and consumption. There was a clear negative dynamics: decreased fuel consumption, reduced international trade, collapsed production, decreased revenues. This time there is no doubt: the word crisis, recession are usable by the way, in a distinctive way. We went back: in a recession, in fact.

The world GDP in 2009 is projected to decline by 1, 1%, that of developed countries by 3.4%, 5% of that of Italy. And the forecast for the Veneto and Friuli are aligned with the Italian average, with a decline in each region around 5%.

The debacle was not limited to the West: involved - albeit with less intensity - even the so-called emerging economies (now revealed) of the large countries of the developing world - China, Brazil and India - that have slowed the race . But they continued to move closer to our standards of income seen ... that we (the West) we went back.

The drop in demand - namely the contraction of consumption, investment, imports - has generated a tremendous drop in production which, in turn, led to a significant reduction in employment levels.

Millions of jobs have been erased, and others are in danger, in Europe and America. It is estimated that since the beginning of the recession - from about mid 2008 - are gone now (Fall 2009), nearly 3 million jobs in Europe and nearly 7 million U.S.. Consequently increased the rate of unemployment is now close to 10% in the U.S. (15 million unemployed, double the 2007), is over 9% in the euro area.

The comparison with the '29

Mai, after the Second World War, was recorded in the West such a disaster. This has led scholars to compare the current crisis with that of '29: the similarities in behavior and indicators in the first 15 months of crisis - the dynamics of industrial production and world trade - are impressive. Different, since then, there was certainly the reaction of governments and in particular the stance of monetary and credit policy, this time intervened massively to avoid insolvency megabanche of which, with serious (and unpunished) managerial imprudence, had accumulated excessive risks. If allowed to fail would have dragged along with it an avalanche of investors and a general collapse of confidence. The State has - at least so far - a short circuit prevented the general market. But in '29 the economic policies undertaken by states have prolonged the crisis: the monetary tightening caused bankruptcies and a frightening increase in unemployment, protectionism - the illusion of protecting the national economy through import duties and competitive devaluations - Penalties the most competitive industries, oriented to commercial transactions and international production; weakened the purchasing power of consumers, because tariffs and devaluation made imports more expensive, he created a climate of increasing international instability, the dramatic premise war.

The immediate source of the crisis

immediate origin of this decline is primarily the financial crisis exploded in the context of Anglo-Saxon, English and American, with the emergence of serious difficulties in some mega banks (HSBC, Northern Rock, Lehman Brothers - it had accumulated a net debt of 600 billion, about 1 / 3 of the entire amount of the debt of the Italian State).

The roots of the crisis can be traced back essentially to the credit management practices prevailing in particular in the United States, with the granting of housing loans in amounts too high for anyone to proceed with the purchase or renovation of housing. And mortgages, however, able to finance not only the spending for home consumption but also "normal" because they "guaranteed" by the expected increase in the value of the dwelling, by reason of a market and then pulled a sale price expected to rise in progressive (as opposed to purchase). The growth in housing operated by carpet for a thriving financial market of securities representing debts connected to the mortgage market that was thought immune from the risk - related to differences in creditworthiness of borrowers - because that risk was appropriately divided and mixed in special packages with other types of bonds, less risky . Thus it was thought that systemic risk was under control and potentially harmless.

But at some point the demand for housing began to fall, to market saturation and, in general, for a return to favorable market conditions demand. That 's what happens all the time but you always tend to forget: they had already learned the Dutch in 600, while the financial crisis resulting in the huge and disproportionate increase in the value of tulip bulbs. What did they learn? That no good for the price can grow indefinitely powered by unidirectional expectations.

When the decline in demand has materialized, by the book, it dragged with it a widespread and worsening economic prospects of a large section of population that has begun to consume less and, above all, not pay the mortgage repayments.

The bursting of the housing bubble brought down the market value of bank shares, with this chain has collapsed all over the securities market.

The stock market values \u200b\u200bhave been reduced to 30% of the pre-crisis. Over the assets of the banks have huge holes generated due to the combined effect of the increase in "suffering" (bad loans) and the collapse of the value of their investments.

It was therefore blocked credit, you are rarefied means of payment. It has rapidly affected the real economy, ie factories, offices, the world production. As long as governments have not taken charge of the situation in various ways and have not provided, at rates close to zero now, plenty of liquidity to enable banks to cleanse their balance sheets. So Originally private debts have become public. To finance the states have increased the issuance of public debt securities that were purchased by banks, which thus improved the composition of their assets, reducing the weight of risky assets, namely those involved in the outbreak the housing bubble.

Other critical factors.

imbalance in income, the geopolitical changes, the virtual economy. But it was not only this, that is, only a big financial crisis. At least three other aspects need to be remembered, not only to grasp its nature cyclical.

First. The growth of U.S. consumption, thanks to easy credit was a sort of shortcut to the road "normal", physiological, which depend on the dynamics of consumption from income and wages. Thanks to the boom in housing values, American consumers have increased without at the same time there was no significant growth of average wages. It was a shortcut to take high-demand ("doped", in fact), in the face of a social situation characterized by a continuing strong polarization of incomes and wages, with the growth of the clumps to the extreme: for low-income immigrants and low-skilled, higher incomes for highly skilled workers.

A second factor to be mentioned, emblematic of new events and fraught with consequences, is linked to the unprecedented global imbalances. Not the traditional gap between the North (rich) and South (poor), but among investors / exporters (primarily China, Germany, Japan, Russia, Saudi Arabia) and consumers / debtors, countries that - as the saying goes - "live above their means. " Recall that 70% of savings in countries with trade surplus is "absorbed" by the U.S. external deficit. The financial sector has managed for some years to accomplish the miracle of making compatible the convenience of one to save money (to finance their customers) and the other to consume. But the crack has already certified the medium-term unsustainability of this situation and the need, now, a strong adjustment.

How can this be adjusted? The 'best' is to a "soft landing: China to accelerate domestic growth (+ consumption + welfare) and exports by reducing the accumulation of dollars, becoming the engine of global demand in fact, the United States by reducing the consumption and hence imports reduce the external deficit and meet their savings, investments and production. Part of this best-case scenario also expect a gradual adjustment of exchange rates, with falling dollar and euro and the yuan rising.

We are in the desirable range, not sure of the forecast. Other scenarios can be envisaged: that the crisis is found to be transient and you try to continue as before, at least until the next speculative bubble, or who, like Japan in the past decade, it is screwed into a deflationary spiral in which expectations of falling prices holding back any initiative, or that, conversely, a blaze inflation - means that in the 70's has reduced the value of the stock of dollars earned from Europe in the 50s and 60s - face now as a disadvantage China (Chinese dollar reserves amount to over two trillion dollars, about 15% of U.S. GDP).

Finally, there is a third aspect to remember. That helps explain why the world of economic value is increasingly unstable. This third issue is the value of knowledge, information, communication, the so-called "intangible assets", the cost of reproduction tends to zero. The more of our shopping basket is composed of intangible services (information, knowledge, communication) is more exposed to the dynamics of fluctuating values \u200b\u200bresulting from the inherent difficulty of "protecting" the stability of the price of products easily replicated and spread them up at the cost ... zero (Look at everything that happens with music, software etc.).. Knowledge is expensive to produce it, but, once produced, it is difficult to hold and (if not built into machine) and it is easy for clubs to costs and revenues of 0. This is not an economic issue, not related to the history of finance, it is rather related to technological and social - in the overall transition from Fordism to post-Fordism - but it is the multiplication factor, the real important factor for some, an environment where uncertainty and risk are sovereign.

conclude the diagnosis: a crisis like all the others?

A minimalist point of view says that this is a crisis like all the others, just a little 'more intense quantitatively. What is physiological for the capitalism go up and down. And that everything will work out with a little 'patience and so much optimism.

An opposite point of view says that nothing radical will be as before, that will change not only the policies and rules of finance but also the conduct of all: this second point of view sometimes gives the impression that you are exchanging the crisis with the revenge of ethics.

I tend to think that this crisis will have important effects, but do not expect too many incentives for the conversion of styles life. Constraints are not enough if you do not want (or can not) open your eyes.

Some figures on Italy and North East
And Italy? And the North East? We are too interconnected, linked to the rest of the world not to have been deeply affected. The crisis started from Wall Street has arrived in full and fast also to the economy of our small businesses, our industrial districts, through three belts.

The first was the reduction in global demand and therefore the opportunities for our exports. Veneto and Friuli together exported 24 billion in the first six months of 2009 against 30 billion during the first six months of 2008: - 20%.

The second operational belt has come through the difficulties of access to credit and changing expectations of employers: this has resulted in a sharp decline in investment and hence in the demand for intermediate goods.

Finally, even firms producing for the final market have had to deal with the fall in consumption.

Less exports, less investment, less consumption means fewer jobs at the end. Compared to the overall levels of employment pre-crisis, we can estimate a fall in Veneto and Friuli at least 70-80000 units, but only at year end will be possible to have a budget done. Certainly have been involved, particularly in the first phase, especially workers in the secondary sector (manufacturing and construction): then males, and often foreign. Increased layoffs: in the first nine months of 2009 more than 30,000 workers involved in the Veneto and Friuli by individual or collective dismissal, which were inserted into the appropriate lists of mobility, more than double the figures for the previous year. Increased suspensions: nobody knows exactly how many workers in the Veneto and Friuli have been made for some period in layoffs: we can hazard an estimate, for 2009, a number not far from 100,000. Decreased recruitment: decreased much of the use of fixed-term contracts, has declined to replace workers who have resigned or have retired. Decreased the transformation from apprenticeship contracts or fixed-term contracts indefinitely. The reduction in recruitment and processing has made it difficult for young people entering the labor market.

It 'obvious that, as a consequence of the above, the unemployed have grown: from 103,000 in the second quarter. 2008 to 137,000 in the second quarter. 2008, 30% more. In Veneto in the first nine months were submitted nearly 100,000 applications for unemployment benefits by people who were made redundant or who have completed a job dependent term. But not all redundant, not all workers have completed the necessary requirements - insurance and contributions - for access to unemployment benefits.

forecasts circulating talk of a possible recovery, however, without recovery of employment. It is expected for 2010, a situation most likely even more difficult on the labor market. Also because the strong appeal to the suspension, of layoffs, has certainly limited layoffs, unemployment, and then, but there is a strong question mark about what will this situation continue.

positive expectation is fueled by the finding that countries - like Italy, Germany and Japan - where the decline in economic activity was more related to that world demand can benefit from the positive signals coming from emerging economies and, therefore, be an advantage in the resumption of production compared to countries - as the United States, Britain and Spain - the crisis is linked mainly to the internal affairs of the financial sector and the construction sector.

The specificity Italy

There are some important characteristics that differentiate Italy from other countries.

one hand, some structural problems stem from well before the crisis is not the crisis in crearceli although, of course, does not help to solve them. First, the reference is to the issue of debt with all that means: high levels of evasion, weak state, lack of civic virtue.

Other problems are rather subdued in Italy: Italian families are, on average, incomparably less indebted than Anglo-Saxons and then the crisis of the revenue on the loss of jobs may be better absorbed by the fabric of the family that still works relatively even though less than before, as the first social safety net.

Towards the end
We live in a difficult phase but at least interesting. And this crisis can be useful to retrieve all the questions about a story you do, that is not already given, that is not a linear process of continuous growth in living standards.

What we do is new at the same time, in political-social thinking in a world where the West is not the only center, and old, from an ethical point: be good, respect the ten commandments .

The challenges for policy makers

Many crucial decisions "calls" from crisis relate to the public sphere: as the quotient state / market, such as regulation of credit and finance, such as monetary policy, such as driving the global imbalances, and acting on the face of unemployment. It 'called into question, therefore, heightened responsibility of acting directly in the political field and in the vicinity, who in any way contributes to the opinions that then become decisions.

Some useful knowledge from food. Expectations and a greater development of "quality" (fewer goods and more services?) (1)

But hence the need for greater awareness also in terms of personal behavior, social psychology would say that all contribute to form.

An initial awareness training as men and women (West): Is it appropriate for non-food and not easily soothed expectations for further quantitative development. Some estimates tell us that it will take years to return to the level of income / consumption in 2007. We have reached a point where we must dedicate ourselves to quality, understood as a preservation / improvement of what we have (education, welfare) - and it is not easy -. It 's a special challenge for the new generations will inherit a lot, a great heritage, but also much to be restored to keep it functioning properly. Many changes are affecting the rest of the internal structure of consumption and production, in particular changes dictated by the need for long-term demographic changes related to the problems of environmental sustainability, the growth of education. In this perspective, the crisis can not be interpreted as a crisis by saturation of needs. And the outlet is not helpful to the decline: the world is full of needs, including primary, dissatisfied, is full of new and original questions. Even the West and our societies are full of requests for improvement in the quality of the environment, infrastructure and services (health, welfare, culture). There is no general crisis "on demand". We're not, we do not miss what to do, although we recognize that we have a lot. It is, rather, to give and seek time and tools to respond to new economic, technological and social. In this process of structural adjustment policy can do much, but not all. In the end, innovation can give useful results and establish itself as a social phenomenon only through business investment. And that this investment can be expressed need modern infrastructure, well-regulated markets and a more equitable welfare system.

The value of work (2)
A second

awareness that we cultivate is a useful effect on the relationship between income / wealth (for income). The financial crisis has destroyed a lot of wealth (furniture); certainly this fall has been more consistent reduction of current income from employment. May eventually lead to some re-balancing (meaning at least a minor imbalance) in the relationship between wealth / income on one side and income / wages / salaries other. This may be the positive face of the crisis, self-correction of a system in which, like all international studies show us, social inequality tends to rise continuously and the value of work to decline (compared to that of the annuity).

On the civic obligations of solidarity and subsidiarity (3) A third

awareness is related to the duties of solidarity. First of all, the "gray" which is expressed through the redistribution by the State and through the institutions of the Welfare (mandatory contributions, mandatory insurance, etc...) It 'should remind us that no solidarity at local, small communities and personal networks will never have the size and strength of redistribution by the State through taxes and social transfers: in other words, it is plausible no one would think that in solidarity with the equivalent of what today we can not do, given the role of the state. As is or appears unrewarding, we must be aware that the first solidarity is the fulfillment of civic duties arising from citizenship. Too many feel curiously claim on the community - on the basis of a domesticated personal accounting - like pensions, schools and hospitals (which will cost more and more) came from the sky. In addition to solidarity "gray" to be developed, it is clear, all forms of solidarity that may be expressed at different spatial scales: the period of crisis which implies that solidarity is never enough.