EP20 · Economy · first published 2020-05-19
The Negotiator's Interview Pipeline and Puheenaihe | Sami Miettinen | Neuvottelija 20
A nine-minute channel update from May 2020 with a compact euro analysis inside it. Miettinen recaps the discussion about a euro break-up he had just had on the Puheenaihe channel, the scale of Italy's financing need, and the German Constitutional Court's Karlsruhe ruling on the ECB's purchase programmes. He also sets out what he recommended to the Finnish parliament's Commerce Committee in April 2020: get the national wholesale payment system finished, and prepare for connecting a central-bank financing channel to domestic consumption if other euro countries do the same. The rest is channel news — microphones, upcoming guests and Discord.
The Negotiator’s Interview Pipeline and Puheenaihe | Sami Miettinen | Neuvottelija 20
Summary: A short, eight-and-a-half-minute solo episode from May 2020: half channel update, half a summary of the euro analysis Miettinen had just delivered in two places — on the Puheenaihe channel and to the Finnish parliament’s Commerce Committee.
Its heaviest single figure is Italy’s government debt of EUR 2,600 billion, roughly a tenth of which has to be refinanced, on top of more than 10 per cent of GDP to cover the damage from the pandemic — together easily more than EUR 500 billion.
Its most durable part is the five-point crisis map Miettinen says he presented to the committee. He spells out two of them here.
A note on reading this. This is an 8 minute 52 second solo episode, and the article is scaled to it — not a summary of a long conversation but very nearly the whole of it. The scenarios are the situation as it looked in May 2020 and should be read as time-bound predictions, not as calls scored after the fact.
Where the episode came from: Puheenaihe and the break-up of the euro
Miettinen recaps his appearance on the Puheenaihe channel, where Rami Kurimo interviewed him alongside the Finns Party’s economic policy adviser and the markets commentator Juhani Huopainen. The question was blunt: what happens to the euro, and could something come apart by way of Italy?
The hour-long episode went through the scenarios. Here he condenses the one that can be calculated.
The scale of Italy
The chain Miettinen sets out:
| Item | Size |
|---|---|
| Italian government debt | ~EUR 2,600bn |
| Share to be refinanced annually | ~10 % of that |
| Pandemic damage to be financed (travel, industry) | over 10 % of GDP |
| Together | easily more than EUR 500bn |
And the question that follows: what if the markets will not give it to Italy?
Then, on Miettinen’s account, the position is the same as with Greece in 2012–2015 — capital controls, and a Eurogroup decision to finance whatever is needed through the EFSF and the ESM. A corona bond is the same attempt in a new form.
The difference he raises is one of scale: Greece was, measured by GDP, roughly the size of Finland. Italy is not.
Karlsruhe: what turned this into a legal question
The new factor in May 2020 is the German Constitutional Court’s ruling in Karlsruhe: the Bundesbank may not take part in the ECB’s unconventional operations unless the Germans receive a proper account from the ECB of why those measures are justified.
Miettinen calls this an extremely interesting question of EU law and says he intends to find an expert guest for it. The observation matters because it moves the fate of the euro from a question about markets to a question about competence.
The crisis map: what he recommended to the committee
Miettinen says he was invited to the parliament’s Commerce Committee in April 2020, and that one party’s parliamentary group additionally wanted to hear the same recommendations. He notes that he is politically unaffiliated and is happy to visit any party, so long as the starting point is the national interest.
There were five recommendations. He opens up two:
1. Finish the national wholesale payment system. This is his first recommendation. The reasoning is direct: if the euro fragments in the Greek manner and Italy is where it happens, payments have to work nationally. He notes that the finance ministry has a well-advanced project on this that simply needs to be completed as a matter of urgency. The subject is handled technically in Teraeuros in Motion Payment Systems | Henri Alakylä | Neuvottelija 11.
2. Prepare for a central-bank financing channel. If Italy resolves its euro crisis by having the Bank of Italy — perhaps through a separate credit institution — finance the state’s deficits, the same ought to be possible in Finland, where the deficits are also large. His candidate for that separate credit institution is Municipality Finance, not least because municipalities are under severe strain.
The reasoning is not enthusiasm but symmetry:
It would be foolish of us to try to tear it out of somewhere by selling assets or taxing away what little national wealth is left.
And the observation that recurs in Negotiator later: Finland is a fairly poor Western country — unlike, say, Italy, where households hold considerably more wealth.
Miettinen’s own thinking about the euro continues later in Euro, ECU2 and Hamilton | Sami Miettinen | Negotiator 347.
Channel news
The second half of the episode is an open channel update, and it is interesting as a period document.
- Growth. The channel had just passed Futucast in subscribers. Tuomas Malinen’s episode was on course to be the first to pass 10,000 views. It had been agreed with Malinen that the steps of the pandemic crisis would be worked through regularly — a third and a fourth appearance were coming. The previous one was Corona Black Swan 2 | Tuomas Malinen | Neuvottelija 18.
- Audio. The feedback had been blunt: get the audio into a listenable state. Pete Lipponen — chairman of the Uneton48 festival and an audiovisual expert — had looked over the equipment, and the conclusion was that the Røde condenser mics did not suit the room. A headset as the stopgap; the ambition is Shure-style dynamic mics on a boom arm, Joe Rogan fashion. There is an episode on this: Podcast Audio Technique | Pete Lipponen | Neuvottelija 19.
- The interview pipeline ahead. On the list: EU law, biohacking, the use of arbitration instead of going to court (with Sami Torstila as a possible guest), big data, and Matti Keloharju on his anchoring research and on whether people who excelled at the conscription-era cognitive test do well as investors.
- Community. The Facebook group had passed 1,200 members, and since the Puheenaihe crowd is younger, they had set up a Discord channel and invited Negotiator’s audience along. Podcast community has its own episode: Futucast and the Podcast Community | William von der Pahlen and Isak Rautio | Neuvottelija 21.
About the format Miettinen says plainly where it is borrowed from: Ask Me Anything, as Sam Harris does it.
Why this episode is worth reading five years on
Two reasons:
- It is a timestamp. In May 2020 the break-up of the euro was something dealt with as far up as a parliamentary committee — not a fringe worry. The Karlsruhe ruling was fresh, and where it led was not obvious.
- The first recommendation is still open. The national wholesale payment system was, in this episode, a “well-advanced project that simply needs to be completed as a matter of urgency”. It is a subject Negotiator keeps returning to.
And the sign-off is the same as ever:
In life you don’t get what you deserve, you get what you negotiate.
Related episodes
- Corona Black Swan 2 | Tuomas Malinen | Neuvottelija 18 — the episode referred to here as the channel’s most-watched to date.
- Podcast Audio Technique | Pete Lipponen | Neuvottelija 19 — the audio equipment discussion in full.
- Futucast and the Podcast Community | William von der Pahlen and Isak Rautio | Neuvottelija 21 — community and subscriber growth.
- Teraeuros in Motion Payment Systems | Henri Alakylä | Neuvottelija 11 — the national payment system in technical terms.
- Euro, ECU2 and Hamilton | Sami Miettinen | Negotiator 347 — the same question later and taken further.