Photo: World Economic Forum
In the recent Italian elections, incumbent Prime Minister Mario Monti recieved a brutal 10% of the vote.
In part it was because people didn’t like his austerity/reform policies, but the real reason he was so disliked is that he was seen as a “puppet” of other Brussels or Angela Merkel, doing their bidding in Italy.
People do not like it when outsiders are calling the shots.
Since the Eurozone crisis has started, Germany has basically called the shots. This may be more de facto than de jure, but as the richest country, with the largest coffers, policy has essentially gone by what the Germans want.
This is an unfortunate political reality.
And now we see this on display again.
Frederik Ducrozet, an economist with Credit Agricole, tells Business Insider.
I think the Cyprus deal as it stands a big deal indeed, mostly in terms of bad signalling (as the ongoing normalisation in Eurozone capital flows remains fragile and vulnerable to sudden stops) and politics (Germany still imposing its rules despite growing discontent in the South).
There were multiple reports which indicated that Germany told Cyprus: Confiscate your depositors’ money or leave the Eurozone.
That’s a terrible political dynamic, and on top of Italy it exacerbates a bad overall political situation.
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