Giulio Tremonti, the president of the Foreign Affairs Committee of the Senate and author of the book Guerra o Pace, has issued stark warnings about the potential for another financial crisis, one he believes could be significantly more severe than the 2008 downturn. Speaking to Adnkronos, Tremonti expressed his concern about the fragility of the current economic system, calling it more artificial than what existed prior to the last crisis.
"The risk we are running is the possibility of replication of the 2008 financial crisis, but on a much larger scale. I don't know where or how it will occur, but it is highly probable to happen," he stated. Tremonti emphasizes the lessons learned from the past, particularly how globalization has exported capital but also imported poverty, resulting in economic inequalities and turmoil.
Reflecting on the global nature of financial systems, Tremonti criticized the rigid regulatory approaches taken by Europe, contrasting this with the more flexible economic policies observed in the United States and China. He believes these differences hamper Europe's competitiveness on the global stage, where it faces challenges from countries implementing state subsidies and looser regulations.
With regards to U.S. trade policies under former President Donald Trump, Tremonti noted the dual nature of tariffs, which he sees as both economic and political tools. He urged caution against the onset of global trade wars, advocating for shared economic rules to facilitate peace and cooperation between nations.
Tremonti’s critiques extend to Europe’s foundational monetary policies and the inception of the Euro, which he argues was created not to compete globally but rather to counterbalance the power of the German mark. He described the Euro's establishment as fundamentally flawed, as it did not seize the opportunity to be viewed as a global currency, leading to missed chances for European economic growth.
Further addressing the current environment, he argued, "The ideology of globalization has crashed. While the world remains interconnected, we are witnessing the resurgence of national powers asserting themselves, particularly under the administration of Trump,". This statement hints at the shifting dynamics of global politics and economics, where countries are becoming more protective and focused on national interests rather than the global ideals of free trade.
Tremonti urges leaders to acknowledge past mistakes rather than continue with current strategies, underscoring Europe’s need to reassess its over-regulated economic framework which, he argues, stifles innovation and competitiveness. He stated, "You can't trust those who caused the problems to fix them; you must start from acknowledging mistakes made over the past two decades."
The interview offers insights not only about the potential pitfalls of modern economic practices but also stresses the need for actionable solutions. Tremonti's emphasis on the importance of establishing rules aligns with the idea of creating stability within financial systems prone to crises. By learning from historical precedents, he advocates for proactive measures to address these challenges before they escalate.
Giulio Tremonti’s reflections serve as both a warning and a call to action for global economic leaders. With the specter of another financial crisis looming, his insights offer important perspectives on the interplay between global trade dynamics, national interests, and the inherent fragility of our interconnected economies.