He returns to attend Consob’s regular annual meeting with the financial market. After two years in which the event had to be kept at a distance, sul webIn compliance with anti-covid regulations, this year, for the first time since 2019, Consob has once again adopted the face-to-face meeting formula.
The appointment is set for today Tuesday, June 21, at 11:00 in the Palazzo Mezzanottethe historic headquarters of the Italian Stock Exchange.
During the introductory speech of the President of the Commission, prof. Paolo Savona, also emphasized an alternative proposal to restrictive monetary and fiscal policy. We are talking about a portfolio capable of self-protection against inflation. Here is a transcript of some key passages related to this topic:
Last year, Italian savings still held up well, but early signs for 2022 show signs of a slowdown in flows. There was also a clear trend, which showed a clear acceleration in 2021, to invest in speculative instruments and foreign markets, options not always based on rational criteria. Relying solely on the market for the care of these attitudes, often motivated by the predictions that reality has been given the responsibility to deny, could lead to serious economic and social consequences, as well as opposing the constitutional provision that considers the savings as a public good. .
A first step to be taken, which is part of the objectives pursued by Consob at the beginning, but which has become urgent to do, is to channel savings towards the productive initiatives of companies of all sizes. It is true that the close relationship that has been established between monetary policy and the evolution of regulated markets is causing fluctuations in the value of companies that discourage such investments, but a closer and healthier relationship between prices and profits is emerging. on which inflation works favorably. , because price increases affect the global market and do not profoundly affect terms of exchange between domestic and international companies. Inflation mainly affects end consumers whose resources come from substantially fixed income and savers who have invested in debt securities.
The strengthening of the representative component of the productive activity towards which to direct the saving finds legal validation in the art. 47 of the Constitution which states that protection is obtained through the “direct and indirect promotion of participatory investment in popular savings in the country’s large productive complexes”. These investments provide a solid foundation for integrative and self-managed well-being by members of a low-productivity, high-fertility society; tackling an aging population with a pension system largely anchored in solidarity-sharing methods does not seem appropriate to properly address the life cycle of citizens and ensure real macroeconomic and financial stability.
A second step is to create self-protecting portfolios that save inflation, in which equity investments play a key role. The proposal envisages a balanced composition between securities and real estate assets, entrusting profitability to the trends of the real economy, thus freeing monetary policy from the burden of unusual maneuvers on interest rates. The technical solutions may be different and the policy would have the main task of creating the most appropriate legal structure of acceptance, to give life to a protective mechanism of savings that satisfies the constitutional dictates.
It should be noted that a dimensional balance between securities and real estate assets is already present in the aggregate stocks of our savings, although they are not subject to the same rules, especially, but not exclusively, tax. In other words, there is an innate drive in the saving behavior of Italian households and companies, given that the two components have always proceeded in a fairly balanced way, despite the large differences in their treatment and the delays in the redevelopment of buildings in terms of sustainability. A similar attempt made at European level, although limited, but which can be integrated with the proposed proposal, is that of long-term investment funds (ELTIF) and individual savings plans (PIR), the latter implemented in Italy especially.
The self-protection capacity of this portfolio against inflation would be even more effective if the saver decides, in a balanced way against the euro, its investments denominated in foreign currencies for export.
Clearly, domestic inflation-linked construction issues, such as the one forecast for this week, are well valued by savers because they protect the real value of the investment over a long period of time, testifying to confidence in the soundness of public debt and receiving confirmation. . of the authorities. , of the validity of the request for protection defended here.
The rationale for the proposal is based on the fact that securities with a return below the inflation rate suffer a loss of purchasing power, while real estate assets tend to show increases in value.
The proposed solution has the advantage of not imposing greater burdens on the state budget and would be in line with the constitutional provision that encourages and protects savings “in all its forms” and “favors access to savings “Ownership of the farmer” and “To the direct ownership of the farmer”; the latter destination must be assessed over time as a result of the implementation of this specific constitutional policy.
On the ways to protect the savings and on the consideration that this is a primary political goal, the disputes go back to the works of the Constituent Assembly and show no willingness to mitigate. The obligatory reference on the subject, together with the distributive justice of the tax burden, are the writings and political commitment of Luigi Einaudi, whom we want to remember as one of our great masters.
The protective bulwark erected in the post-war period to save on securities was identified by assigning our central bank the task of defending the purchasing power of the lira while enjoying independence in monetary options. The events and institutional crises that have taken place since the end of the Bretton Woods Agreement (1971) have complicated the fulfillment of this task for our central bank, whose elections today must be reconciled with those of the other national central banks. present at the ECB and with the conditions prevailing in the global market.
An initial calculation of the validity of the assumptions underlying the proposed proposal indicates that, from 2008, the year of the global financial crisis, to 2021, inflation affected the purchasing power of Italian financial savings in the global order. 16% (State data), plus the 12% drop in the value of our properties (BIS data). If the existing portfolio had the proposed characteristics, the overall loss would have been 14%, partially recovered if a balanced currency composition had been followed; in fact, given that in the period under review the dollar appreciated by 23% against the euro, a portfolio half of whose assets would have been denominated in US currency would have reduced the indicated loss to 2.5 %, acting in the direction of self-protection.
Over the same period, wages registered satisfactory protection, as hourly wages rose by an average of 21% (state data), fully recovering from inflation and benefiting from low average labor productivity. 3.8%). The seven categories of pensions paid increased by an average of 34% (INPS data); this percentage leads us to reiterate the request that, in an economy characterized by strongly asymmetric frequency distributions, the averages must be accompanied by indicators of kurtosis to assess whether they correctly represent the observed phenomenon.
The trends in the biennium 2020-2021, tormented by the limitations of the supply for health reasons, further prove the validity of the proposed proposal, emphasizing that the compensatory mechanism between the incidence of inflation in real estate and the increase in the value of real estate has the hypothesized characteristics, even in the absence of a policy aimed at equalizing treatment. The first data for 2022, also affected by supply constraints after the invasion of Ukraine, show an increase in inflation, a rise in property prices, the dollar is still slightly up against the euro, stable hours of wages and a decline in the value of shares.