Signs you've gone on holiday to a fascist dictatorship

And what that means for the markets in Italy and Spain.

In 1969, as a nine year-old, the only real sign that we had gone on holiday to a fascist dictatorship was the policemen with machine guns walking up and down outside the hotel. The only other real sign was that Maria, my first true holiday love and our waitress at the Riviera Hotel Benidorm, would religiously count the number of chips each of us were given. Say what you will about Spanish fascism, it had the regularity and order of a well-run capitalist fast food outlet.

Meanwhile, across the Mediterranean, in Italy, they were about to embark upon "The Years of Lead" a roughly decade-long strategy of tension that would see both left and right-wing bombing and kidnapping campaigns designed to discredit their opponents and destabilize Italy. So serious was the threat, in 1990, the government of Giulio Andreotti revealed to Parliament the existence of "Gladio", NATO’s secret network of weapons readied should there be a communist coup in Italy.

Since the installation of King Juan Carlos I in Spain in 1975 and the creation of the First Republic in Italy after the Second World War both nations have designed political systems specifically to keep the extremes out of their politics – in the case of Spain it is fascism and, in the case of Italy, communism. The transition of, in particular, Spain to an unrecognizable modern democracy within a lifetime makes it almost inconceivable that either of these countries could return to their former roots. And yet as the financial crisis intensifies, the disenfranchisement of the young through unemployment and the loss of a stake in society re-ignites the 1899 words of Gustave Le Bon in The Psychology of Socialism when he says, "As soon as he has a family, a house, and few savings, the workman becomes immediately a stubborn Conservative. The Socialist, above all, the Anarchist-Socialist, is usually a bachelor, without home, means or family; that is to say a nomad…and barbarian."

Reinforcing the disenfranchisement, the contradictions within Europe are intensifying; German house prices are continuing to rise whilst Spanish property is still falling. Some estimates suggest that prices in Spain will decline between 10 and 30 per cent in the years to come, putting increased pressure on the banking system. Another cash injection can’t be ruled out. Some twenty billion euros from the European Stability Mechanism – equivalent to one year’s profits - would do the trick. In Italy property prices have hardly started to fall – they are only some six per cent down since 2010. But that isn’t the problem.

What is more worrying for the system is that the crisis that started in the property markets is now spreading to the funding of the small and medium-sized businesses which are the life blood of these nations. Euphemistically these are called "Non-Performing Loans" but to you and me they are businesses that can’t meet their debts because the economy is still in reverse gear. Larger companies have recognized this and are cutting out the banks (who can’t lend, won’t lend) and are going straight to the bond markets for their money. For smaller companies, a self-reinforcing spiral has been put in place at an employer level.  It’s also showing up in the habits of the eurozone as a whole – household borrowing has descended to a crawling pace and as we know capitalism can’t survive without a functioning credit cycle.

Problems in the banks will exclude the young from having a stake in society, as le Bon identified, which turns the financial crisis into a petri dish of social unrest. The post-war political structures of Italy and Spain were arguably put there on a "so-it-can’t-happen-again" basis. Powerful national democracies reinforced by semi-autonomous regional governments rife with self-interest and corruption makes it near-on impossible to have an electoral fascist or communist up-rising that would return them to their collective pasts. But also it creates a sclerotic system unable and unwilling to adapt and respond to crisis in a timely way. So it can’t be said that there won’t arise out of the intensification of the financial crisis a marked movement either to the left or the right in either or both of these countries borne out of a disenfranchised youth which spells trouble for their financial markets. At present both the Spanish and Italian bond markets are being held up by overt or covert market operations which is saving them from any form of real market analysis but this isn’t going to last and with it will come political change and even the end of the euro experiment.

Source: Bloomberg

 

Photograph: Getty Images

Head of Fixed Income and Macro, Old Mutual Global Investors

Getty
Show Hide image

The decline of the north's sporting powerhouse

Yorkshire historically acted as a counterweight to the dominance of southern elites, in sport as in politics and culture. Now, things are different.

On a drive between Sheffield and Barnsley, I spotted a striking painting of the Kes poster. Billy Casper’s two-fingered salute covered the wall of a once-popular pub that is now boarded up.

It is almost 50 years since the late Barry Hines wrote A Kestrel for a Knave, the novel that inspired Ken Loach’s 1969 film, and it seems that the defiant, us-against-the-world, stick-it-to-the-man Yorkshireness he commemorated still resonates here. Almost two-thirds of the people of south Yorkshire voted to leave the EU, flicking two fingers up at what they saw as a London-based establishment, detached from life beyond the capital.

But whatever happened to Billy the unlikely lad, and the myriad other northern characters who were once the stars of stage and screen? Like the pitheads that dominated Casper’s tightly knit neighbourhood, they have disappeared from the landscape. The rot set in during the 1980s, when industries were destroyed and communities collapsed, a point eloquently made in Melvyn Bragg’s excellent radio series The Matter of the North.

Yorkshire historically acted as a counterweight to the dominance of southern elites, in sport as in politics and culture. Yet today, we rarely get to hear the voices of Barnsley, Sheffield, Doncaster and Rotherham. And the Yorkshire sporting powerhouse is no more – at least, not as we once knew it.

This should be a matter of national concern. The White Rose county is, after all, the home of the world’s oldest registered football club – Sheffield FC, formed in 1857 – and the first English team to win three successive League titles, Huddersfield Town, in the mid-1920s. Hull City are now Yorkshire’s lone representative in the Premier League.

Howard Wilkinson, the manager of Leeds United when they were crowned champions in 1992, the season before the Premier League was founded, lamented the passing of a less money-obsessed era. “My dad worked at Orgreave,” he said, “the scene of Mrs Thatcher’s greatest hour, bless her. You paid for putting an axe through what is a very strong culture of community and joint responsibility.”

The best-known scene in Loach’s film shows a football match in which Mr Sugden, the PE teacher, played by Brian Glover, comically assumes the role of Bobby Charlton. It was played out on the muddy school fields of Barnsley’s run-down Athersley estate. On a visit to his alma mater a few years ago, David Bradley, who played the scrawny 15-year-old Billy, showed me the goalposts that he had swung from as a reluctant goalkeeper. “You can still see the dint in the crossbar,” he said. When I spoke to him recently, Bradley enthused about his lifelong support for Barnsley FC. “But I’ve not been to the ground over the last season and a half,” he said. “I can’t afford it.”

Bradley is not alone. Many long-standing fans have been priced out. Barnsley is only a Championship side, but for their home encounter with Newcastle last October, their fans had to pay £30 for a ticket.

The English game is rooted in the northern, working-class communities that have borne the brunt of austerity over the past six years. The top leagues – like the EU – are perceived to be out of touch and skewed in favour of the moneyed elites.

Bradley, an ardent Remainer, despaired after the Brexit vote. “They did not know what they were doing. But I can understand why. There’s still a lot of neglect, a lot of deprivation in parts of Barnsley. They feel left behind because they have been left behind.”

It is true that there has been a feel-good factor in Yorkshire following the Rio Olympics; if the county were a country, it would have finished 17th in the international medals table. Yet while millions have been invested in “podium-level athletes”, in the team games that are most relevant to the lives of most Yorkshire folk – football, cricket and rugby league – there is a clear division between sport’s elites and its grass roots. While lucrative TV deals have enriched ruling bodies and top clubs, there has been a large decrease in the number of adults playing any sport in the four years since London staged the Games.

According to figures from Sport England, there are now 67,000 fewer people in Yorkshire involved in sport than there were in 2012. In Doncaster, to take a typical post-industrial White Rose town, there has been a 13 per cent drop in participation – compared with a 0.4 per cent decline nationally.

Attendances at rugby league, the region’s “national sport”, are falling. But cricket, in theory, is thriving, with Yorkshire winning the County Championship in 2014 and 2015. Yet Joe Root, the batsman and poster boy for this renaissance, plays far more games for his country than for his county and was rested from Yorkshire’s 2016 title decider against Middlesex.

“Root’s almost not a Yorkshire player nowadays,” said Stuart Rayner, whose book The War of the White Roses chronicles the club’s fortunes between 1968 and 1986. As a fan back then, I frequently watched Geoffrey Boycott and other local stars at Headingley. My favourite was the England bowler Chris Old, a gritty, defiant, unsung anti-hero in the Billy Casper mould.

When Old made his debut, 13 of the 17-strong Yorkshire squad were registered as working-class professionals. Half a century later, three of the five Yorkshiremen selec­ted for the last Ashes series – Root, Jonny Bairstow and Gary Ballance – were privately educated. “The game of cricket now is played in public schools,” Old told me. “Top players are getting huge amounts of money, but the grass-roots game doesn’t seem to have benefited in any way.”

“In ten years’ time you won’t get a Joe Root,” Rayner said. “If you haven’t seen these top Yorkshire cricketers playing in your backyard and you haven’t got Sky, it will be difficult to get the whole cricket bug. So where is the next generation of Roots going to come from?” Or the next generation of Jessica Ennis-Hills? Three years ago, the Sheffield stadium where she trained and first discovered athletics was closed after cuts to local services.

This article first appeared in the 19 January 2017 issue of the New Statesman, The Trump era