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Super Mario To The Rescue?

Italy has a new prime minister and they have given him an easy first assignment: save the country, fast, before the whole place goes down the tubes. The NYT has a profile of the new PM, Mario Monti:

The consensus in Italy is that President Giorgio Napolitano, who nominated Mr. Monti in record time on Sunday to replace departing Prime Minister Silvio Berlusconi, had chosen judiciously, picking an economist with strong European credentials and longstanding familiarity with Europe’s power brokers.

It remains to be seen, however, whether Mr. Monti — who has no hands-on political experience at home — can convince financial markets that he can overcome Italy’s snarled domestic politics and implement the cost-saving measures that Italy has promised to whittle down a mountain of debt and boost growth.

But Monti is a technocrat, not a politician. He wants to fill his cabinet with technocrats too. Sure Mr. Monti and his friends might have the best ideas on how to fix Italy’s economy, but they do not know how to navigate Italian politics. The markets already fear that Monti will fail. Yields on Italian 10-year bonds climbed back above 7 percent today before falling back to more reasonable levels in later trading. Those yields are likely to rise again as markets grasp the nature of the complex problems ahead.  “The danger is that the situation in Europe may now be too far gone for even the most steely and brilliant of technocrats to turn things around”, writes Gideon Rachman at the FT.

For the Italy to survive in the eurozone, Monti, a fledgling politician, needs to clean up Naples, erase connections between Italian government and organized crime in southern Italy, get Italians to actually pay their taxes, and clear the economy of powerful professional guilds and localism.  Mussolini managed to get the trains to run on time, but the rest of it was beyond him.  Mario Monti will have considerably fewer powers and if he starts to tread on too many established interests, he will have more daggers in his back than Julius Caesar as the deeply resourceful and supremely wily Italian political system defends its perks and its privileges from this well-intentioned reformer.

Via Meadia wishes Prime Minister Monti the best, and will be delighted if the technocrat turns into a shrewd and effective ringmaster.  But we are not holding our breath.

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