After reading Magistrate’s Rachelle Montebello’s sentence on Pia Zammit vs It-Torċa, I have some remarks to make.

The Court found It-Torċa’s editor, Victor Vella, not guilty of libel for a front-page story implying that Pia Żammit, an actress, was a Nazi sympathiser. The implication was made with a picture of her wearing a Nazi-uniform on the front-page of the newspaper and an ensuing article complaining that the actress was making a light-hearted and funny gesture with a Nazi-uniform without mentioning the fact that the actress was wearing the uniform specifically for a play.

Basically, what the magistrate concluded was that the newspaper made a legitimate value-judgement instead of publishing an explicit defamatory statement which is conveyed as a state of fact.

Now, the magistrate may have some very good reasons why the Media and Defamation Act may have not been able to provide the tools for a guilty judgement. The judgment may also be advantageous to the press in general. After all, the advantages of having a liberal-libel regime greatly offsets the disadvantages of having a tight-legal regime which can easily find its defendants guilty. So, in actual fact, and admittedly, the magistrate may have, unwittingly, made a favour to the media in general.

However, there are problems with the magistrate’s sentence and I would not have interpreted the case like her. The judge considered It-Torċa’s piece as a value-judgment and an honest opinion in contrast to a state of fact. The problem with this distinction here is that It-Torċa had clearly implied, even explicitly I would say, despite the editor’s acrobatic manner of delivering it, that the author is a Nazi. Therefore, the newspaper tried to sell the fact that the actress is a Nazi. After all, it is also a state of fact that It-Torċa made reference to an actress as a Nazi without alluding to her acting role. And surely, this was not an honest opinion given that the author knew very well that the actress was wearing the Nazi-uniform for a play, while deliberately not mentioning this fact. It is a deceitful opinion with the intention to deceive and libel on misconstrued facts. I can make many value-judgements which can be relative to the case of affairs, context, philosophies and ideas too. Back in my university-days, when I published the fictional-story, “Li Tkisser Sewwi”, the Nationalists were accusing me and the author of promoting pedophilia. We didn’t sue. We told them to fuck off, but you get my point.

One may debate the distinction between values and facts, but value-free judgments are also hard to come by, and values may be attributable to state of facts with clear implications. The value of being a Nazi comes with a proven and commonly-known criteria of beliefs which have direct and real impacts on society. But, and maybe, the problem here is neither with the law nor with the magistrate, but the entity which is abusing the law’s emphasis on objectivity by circumventing it with not so much ambiguous implications. It’s like stealth libel or what is recently called “fake news”.

The context of the medium should also be considered. It-Torċa is not a newspaper or journal: it is PR-machine for the bad elements of government masquerading as the General Workers’ Union’s independent newspaper. It’s more of a cesspit of fascist diatribes and authoritarian threats than a newspaper. Apart from defending on a consistent basis corrupt government ministers, It-Torċa has, also, on a consistent basis, defamed and libeled artists, journalists and activists in the most vindictive manner possible and many of these people aren’t even public persons. To add insult to injury, It-Torċa, is fully subsidised by the government. Government bank-rolled the Union in 2013 by renting its premises in Paola while the Union supports its press with its resources and personnel. Add up the government-sponsored adverts and you end up with a PR machine which is fully-subsidised by the government.

I write this with sadness, of course, because I had a very good relationship with Union Press. I used to sell my stuff to It-Torċa during my years as a free-lance writer. I was also a regular client at their printing press and also brought them many other clients. I was good money for them and I used to be happy with that knowing I am supporting a workers’ press. All of this changed when Labour entered office in 2013 and editors, Union officials, and people like me who actually brought value at the Union and its press moved on to government-jobs. We were not replaced with younger stalwarts, (Sandro Mangion made a brief stint and left soon after), but with Labour Party and government cronies without any values and principles who were ready to publish anything they were fed. Victor Vella, the current editor is one of these mercenaries. He is the kind of person who will prostrate in front of the powerful-all-to-be because that’s the only thing he knows. At L-Orizzont, Josef Caruana had already degenerated into a fascist-punk bullying other journalists for covering government-corruption. I don’t think the Union Press will change its ways either because its editors today don’t know any better and Union leaders also don’t have the will to use their means of communication in the interests of their members and workers in general. Artists, journalists and writers have always been associated with workers in their daily-economic struggles and the Union should strive to fight for their interests too.

It always better to err on the side of caution, so once again the magistrate may have done the media a favour by delivering this verdict. On the other hand, I’m also convinced the law does provide the necessary tools to define the matter of this case as libelous. It is an untruth to describe an artist as the character he or she is trying to portray. Imagine an author writing a first-person fictional account of a guy who kills the Prime Minister. In his role as servant to the ultimate master, Victor Vella would probably launch a tirade on how an author is planning to kill the Prime Minister. Is that libelous? Maybe not. Is taking the artist’s work literally and implying it as a state of fact libelous? Is a man a pedophile for playing the act of a pedophile in a play? I think that may be more libelous than not.

Everything we have done at the National Book Council since 2013 has gravitated around one single and main objective: to boost the revenue streams of the publishing industry stakeholders, giving priority to publishers and authors.

In order to achieve this, we had to develop a roadmap which first of all involved rebuilding the entity itself. From a starting budget of €50,000 a year and one employee, we developed to a team of seven employees and an annual budget of €1 million a year, excluding salaries and capital expenditure.

The most obvious and immediate challenge was to renovate the annual book fair, which we rebranded into the Malta Book Festival. This was an outstanding success, as year after year the Festival went on to consistently hit all-time record sales.

Meanwhile, we started building a legal framework on par with EU standards, which was also meant to increase revenue streams. We introduced Public Lending Rights at our public libraries, and we are currently lobbying the University of Malta to adopt the same legal framework to introduce a PLR scheme at its Melitensia section. We are positive that an agreement will be found with the University of Malta and that they will comply with EU law under our direction.

Having built the entity’s financial and adminitrative foundations, we then started a legal process to reform the book industry and bring it into line with EU standards. We introduced a legal notice to formally regulate the National Book Council. This was only the start, as in 2018 we initiated a very long consultation process with our stakeholders meant to implement the necessary legal reforms.

After lengthy consultations with publishers, in 2019, the National Book Council convened the first ever National Congress of Authors, where more than 150 authors had showed their support to the bills being proposed. It is the first time in our history that book industry stakeholders mediated between each other to find a common ground and adopt a coherent policy on their legal and financial affairs.

This process was concluded in August 2020, when two bills have been drawn up and published: a bill which which would give the National Book Council the autonomy it deserves, and the copyright reform bill which will transpose the EU Copyright Directive on the Digital Single Market. The former bill is a consolidation of the already existing legal notice, while the latter will introduce new legal rights for publishers, authors and also press publishers.

Simultaneously, we drew up a legal notice, which has been approved by the Ministry of Finance, to introduce tax incentives for publishers and authors. This financial reform will give publishers a 100% tax break on all royalties paid to authors, while simultaneously make authors’ royalty payments tax free. The long-term plan is to eventually create a publishing tax-free industry, which would not only alleviate the local industry, but hopefully also attract foreign publishers to set up house in Malta and bring in foreign direct investment into our industry and our country.

As of now, the new post-Muscat government administration has refused to acknowledge the parliamentary bills. It is surprising how the government has taken this position notwithstanding the huge support of the industry’s stakeholders. The government should be reminded that it is the National Book Council’s legal obligation to adopt such positions publicly and push for the Government to act.

Additionally, the Ministry of Economy is not only ignoring the National Book Council’s position and requests (through which we represent the publishing industry stakeholders), but it is also forging ahead to arbitrarily impose the transposition of the EU Copyright Directive without our consultation.

Our position on this matter is clear. The Ministry for the Economy, with its politically appointed copyright board, does not have the legitimacy nor the expertise to arbitrarily impose any legal reforms on the publishing industry.

Instead, what should happen for the sake of the industry and the arts industry in general is very clear: the copyright board should be disbanded and the National Book Council should take the lead in transposing the EU Copyright Directive.

This is the only way to create the appropriate structures for the Directive to be implemented through our bureaucratic system.

It would be wise to avoid an approach similar to the conservative government in the UK where the art industries are treated with an unrealistic and detached approach. The government should be aware that the publishing industry is not only providing a net contribution to the economy, but it is crucial for the educational, intellectual and cultural development of our society.

Allowing legal reforms to be implemented by bureaucrats who have no expertise in the field will spell disaster not only for our industry, but ultimately for our society.

I sincerely hope the government comes to term with the necessity of taking the matter at hand with the serious approach it deserves.

We have made our demands in a diplomatic and amicable manner, so the government has no excuses or claims of being under fire by our industry. It is actually us who are currently under fire, without the government’s support and with no recognition whatsoever during the hardest-ever economic crisis in our industry’s history.

https://www.maltatoday.com.mt/comment/blogs/105385/reforming_the_book_industry_during_the_hardestever_economic_crisis_in_history#.X46_bNAzaDI

We are going through a wide-systematic reset where the current capitalist system is changing to the extent that a new world-order will be formed. Unfortunately, this won’t be like the previous resets in history. Previous systematic changes to the political-economic structure of the world were of great benefit to common people. When feudalism started collapsing in the 14th century, serfs were getting freed and the right to private property began to be shared by an increasing number of people. Capitalism had brought riches and opportunities, but eventually common people challenged the system once again to usher in socialism and build a society which is more just to them. We have seen since the Second World War in Western Europe the rise of socialist policies which had subdued the excesses of capitalism and created a fairer society thanks to free healthcare, free education, meritocracy, social mobility, decent working conditions, anti-rent-seeking measures etc…. Today we are experiencing a historical phenomenon in the other direction, that is a reset which will benefit the elite rather than the common people. This reset is effecting one of the greatest wealth transfer events from poor to rich in recorded history.

It’s all in the banks

The European Central Bank is following in the footsteps of the Federal Reserve in handling the economic crisis: quantitative easing. It’s the magical solution. Just like an intern in her first days of work, the European central banker, clueless, bewildered, and overwhelmed with the juggernaut of history, opted for the quick, copy and paste solution of the big boss. It’s what everyone does in the first days of a job after all. When in doubt, do the same thing your peers are doing. Then Merkel and Macron came up with their 750 billion Euro bazooka and the Euro broke its years-long downward trend and is now shooting up as if the sky is the limit. At face-value, everything seems to be working. Europe has made it.

But we know how this story ends because we’ve been here already. With the previous quantitative easing programmes initiated by Draghi “whatever it takes to save the Euro”, Europe did not lurch back into economic growth, on the contrary, the economic cycle upwards quickly ran out of steam and as of last year we were wondering whether Germany will remain an economic power-hub as its industry faltered and economic growth in Europe subsided. The peripheral countries such as Greece, Italy and Spain remained loaded in debt and austerity and their youths fled to other countries  scrambling for jobs. Only Eastern Europe which most of it had not yet joined the Euro was picking up some steam as factories and manufactures rushed there for the cheaper labour. Now, we add to the debt and artificially inflate stock prices higher while hoping that economic growth will surge organically given an increased money supply and higher liquidity in the financial system. The only thing missing from this equation is reality itself. If we would have had some empirical evidence which showed a strong correlation between job creation and quantitative easing then it would have been easier. But we will have the new Green Deal for that. Ok. So the jobs are coming with investments in energy and infrastructure which we will fund with more debt, and which we would then have to pay for with more jobs that are created by the multiplier effect. It’s like playing a poker game which never ends, given you can buy-in again every time you lose your money, hoping that one day you’ll get a royal flush and go home a total winner. Debts cancelled and austerity ended. We’ve won. The only snag in this game plan is that poker players who keep losing will probably keep losing even more.

Put it simply, Italy, Greece and Spain will not pay their debt. So if we can get a free buy-in, why can’t we take the money and stop playing, instead? This is exactly what private banks, central bankers, big corporations want to avoid. You’ve got to play the game with their rules. Small manufacturers who had their cash-flow dried up are getting 2.5% interest on their emergency loans delaying by default, any capital investment they would do in the future. Small businesses are stuck in a rut while the big boys get to play with free money. Subsidising a failed European banking system to keep a dysfunctional system afloat. Why would central bankers and government officials change the game-plan if there are no riots in the streets and everyone seems to be happy in the Euro’s gilded prison?

But at the end of the day, we Europeans will get the thinner end of the stick. Amazon has devoured the retail space and crushed the profit-margins of many. Google, and Facebook suck up the advertising revenue and the culture and press-publishing industry is decimated. Will manufacturing make a comeback? Maybe, but if the whole world is in tatters and their currencies are debased who will buy our stuff? But maybe we are asking the wrong questions because the problems are innate in a system. From seeking to build meritocracy and social mobility as prescribed in in the European Social charter of the 1960s, the system now feeds money to the rich and locks the masses in austerity and a jobless economy. So much for the overblown balance sheet of the Central Bank: small businesses still have no cash-flow. There’s no rabbit coming out of the hat. If we want an economy which creates jobs we have to make cheap capital available to small businesses, but we’re not doing that. Lower-interest rates come only if you are big enough and then we put all the risk on the ordinary mortals eventually suffering mos of the consequences of austerity and a slow-growth economy. So why don’t we change the game then?  Let’s play chess instead of poker. Drop the quantitative easing textbook, restructure the debt-spaghetti monster and unlock capital for a productive economy with 0.1% interest rate to small businesses and households.

Who will change the system?  

The left in Europe was mostly represented in the international media by Jeremy Corbyn. The new wave of millennials who were dejected by the capitalist machine with university fees and property prices too expensive to own and live in. Sadly, the millennials will not get a break. Corbyn’s project was a rotten failure and was as bad as to lose votes from core Labour constituents who had voted Labour on a generational basis. What a fucking mess. We knew how it would end up, but we were too hopeful and high on idealism to admit it. Corbyn was the left’s biggest disappointment after Tsipras. But the British left seems to have learnt nothing at all from this experience and remains stuck in this fantasy-reality of 1970s anti-US imperialism. So, now they’ve got Keir Starmer and they hate him because he is not an Israeli-basher. We’ll see how this plays out.

On the other hand, Macron represents the European’s left compromised status-quo version. France with its overly-bloated government-spending system can keep its population afloat in this very difficult economic period, the question is for how long? Macron has no interest to change the system as long as France will have its cake and eat it. Then there is Sanchez who is too busy wheeling and dealing the internal divisive shenanigans of Spanish politics and has little time on his hands to even think about broad change in Europe. So, there’s no one out there fighting to change the system, and the dejected Southerners are turning to the far-right and populist politicians. They want to change the system themselves and the left is nowhere to be found.  Fascism rears its ugly head once again.

The left needs to remake itself. The fact that there is no progressive force in Europe mobilising and fighting for the plight of the ordinary and the dejected is terrifying. After-all we’ve seen this happening in the US already. The Democrats failed to relate to the working-class and here comes Trump – the real-estate moghul who can speak to the working-class. Bring back jobs. Open those oil and gas taps and pump it full-speed ahead. People don’t want to think what is going to happen to the environment and to the world in ten or twenty years time, for fuck’s sake they need to pay their mortgage in thirty days. Get those jobs running. And the left keeps hounding on universal basic income as if that was going to be relatable to the working-class. Basic income you say? Sure. Let’s automate all the jobs, and ship the rest to India and give to the dejected a universal basic income doing an unproductive job. No wonder make America great again. The left is speaking discourse of the socialism of the early nineteenth century and Marx has become a mere symbol. Forget about complex economics and finance. And what happened to the philosophy of economy? Fundamentals, fundamentals and fundamentals. The main fundamental philosophical and economic point of Marx in all of his work was that humanity is intelligent enough to distribute natural resources in a way in which everyone can work and earn value for their work in a meritocratic manner. Isn’t this the European Social Charter speaking? Everyone should have the right to achieve one’s ambitions, to eventually work the job they desire and earn a just and decent amount of money for that job. And the social-mobility? Where is that? No, now, we have universal basic income. The economy is too broken to fix. People’s hopes are being diminished and they feel that their previous lucrative jobs are not coming back again. Then go to these people and explain about the privilege and importance of staying in the EU.

 Trump was right 

Trump reduced taxes to the rich and bloated government debt to astronomical proportions. The US has become the epicentre of quantitative easing, pulling all other central banks into its orbit. The fact that global trade is transacted in Dollars, gives the US carte-blanche to print as many Dollars as they like. Trump did in fact make America great again, but of course, it’s not ordinary Americans who are benefiting from the largess of the Federal Reserve. More automation, universal-basic income cheques, and low-paying jobs coming your way. The US has now become the unstoppable Dollar printing-machine sucking in all the foreign currencies into its fold and creating immense amount of wealth to a very small number of people. Outside the US, those who don’t have Dollars or at least Euros, will lose the game. China has lost the new Cold War before it even had the opportunity to rev-up its engine. Now, its bullishness and excessive authoritarian behaviour will only make China’s fate even worse. The debate now is not who will out-run the US, but who will out-run China. It seems that India has a very good chance to do this, but in a longer-time-frame, I think Mexico has also a very good chance of catching up.

So, Trump did actually fulfill his promise. He made America great again and broke China’s back. There was only one big snag in the whole plan – it ignored the basic fundamental economic reality and Trump now risks losing the votes of his constituent working-class base. Are the George Floyd riots a turning-point? Maybe, but literally no one knows what is going to happen and what comes next may be even worse than what we already have. I find Zizek’s theory of inertia quite irresponsible and reality shows this. Trump hasn’t opened the gates for progressive radical change in the US on the contrary – he has created an unequal society at home which is more solidified than before and internationally he has brought the whole world into an uncharted-territory which we Europeans tried to avoid for many years by creating stability mechanisms, single-currency, multi-national political institution promoting world peace etc… etc…. Now we are in the abyss of uncertainty and there are no leaders to look up to. Make America Great Again has come at the price of the whole international financial system.

And they are not going to let it collapse. They are going to Draghi it to whatever it takes.  And as long as they issue the UBI cheques, they will hope that the system will keep floating and people don’t take to the streets with the pitchforks.

Why Fight Club Matters 

As a historian, I see works of art in their historical context. Literary critiques give literary and aesthetic interpretations. Fight Club to me is a work of art which represents the contemporary struggle of the dejected in the times of hyper-finalised-capitalism. It’s not about the cult of Tyler Durden, but rather a struggle of the dejected who have no leaders, no ultimate plan, no ultimate end – just pull everything down and start from ground 0. Then we will see. Ins’t this the same spirit which lead people to vote for the far-right? Donald Trump is the real Tyler Durden, maybe a right-wing version of him.

So, if we are lost on a political level we have to start from ground 0 and that is why we have to start with ourselves. We have to take care of each other and build our communities. And we have to ask ourselves many questions. Do we want to live in a world where Amazon is the retail oligopoly of the world? Do we want to live in a world with UBI or with an economy which produces productive jobs and enables social mobility? Let’s cut to the chase. The left doesn’t seem to be a player in the political game. It’s either the quantitative-easing status-quo or the far-right which may bring the whole system down or make it even worse. We don’t have many options.

So, what’s next? No one knows, but it will only take a very small flame to light the huge powder-keg of social problems which we are accumulating over time. We’re not ready for that. One, new and unexpected black swan to wobble the ship once more.

So what’s next? 

I don’t know why you ask, I don’t know. I am just a slave like you. I can only write as a historian. And I may be totally wrong of course. I hope so.

What’s the point of paying taxes and interest payments on loans if the central banks can print unlimited amounts of money with supposedly no consequences at all?

When Lehman Brothers crashed in 2007, they told us that bailing out the banks was not an acceptable solution.

Then they did just that and bailed out the banks.

Then they told us that debts and deficits had to be sustainable. Quantitative easing was here only temporally and the central bank’s balance sheet would eventually contract. No one would have to be bailed-out ever again.

Then they did just what they had been warning against for many years on end and went full-on Zimbabwe with quantitative easing, this time round, even buying junk bonds of private corporations.

Small businesses are still paying their interests on their loans and ordinary workers are out of work or living on unemployment benefits.

Meanwhile private banks keep making a profit, corporations get free money, and government’s get loaded up on debt paving the way for the new austerity.

Next time round they will eventually admit that all this debt is unsustainable and can not be paid. Bonds, like oil may become a liability eventually. But, even in this hypothetical scenario, it won’t be ordinary people who would be receiving the debt-jubilees I suspect.

More than 200 years after Karl Marx’s birthday it is still outstanding to see how the financial and banking system is strongly biased towards the haves, while the have-nots are locked-out from the largesse of central banks.

There seems to be no in-depth discussion on what is actually going on with Malta’s economy, so Minister of Finance Edward Scicluna can count on the obliviousness of his cabinet colleagues to draw up schemes unilaterally.

Now, I have nothing personal against Scicluna, and this is not meant to offend him. This is simply my analysis and personal opinion of the situation. If you don’t like it, you can move on to the next thing. It should not be considered as financial advice and you should formulate your own opinion about the situation.

The biggest problem with Scicluna is that he comes from a very different world and background to my generation, the so called “millennials”.  Scicluna has lived in a world where the stock-market has always gone up, and where the gradual inter-connectedness of the global-economy increased market opportunities, capital and jobs. Back then, if you wanted to make money you could simply put unvest in a stock-market index fund like the S&P 500 and one fine day sell it at a hefty profit. The millennial generation has lived in a period where it witnessed this mega-capitalist edifice crumbling down, first with the 2008 crisis and with the current crisis today. The millennial  generation has also experienced significant challenges to get ahead in life, especially given the fact that they have been mostly excluded from the property market. So, it is obvious, that the millennial generation has a very different perspective of capitalism from Scicluna and the boomer generation. 

The generational perspective is probably why Scicluna genuinely believes that this economic rut is temporary and everything will get back to normal after the pandemic is over. It is also probably the reason why central bankers, most of them octogenarian males and baby boomers, keep pumping liquidity into the financial system in the form of quantitative easing genuinely believing that some day this liquidity may stick and things return to normal again. 

Scicluna has drawn up a liquidity package of bank guarantees for commercial credit, despite the fact that Maltese banks still charge high interests in a negative-rate environment. The aim of this package seems to be to provide local companies with loans to survive the economic rut. But the obvious questions is, why would companies take more loans at this stage if they don’t know when the economy will start picking up? Why would anyone want to take the risk right now, especially with Maltese banks still charging high interest rates? The biggest and obvious problem right now is that companies have no revenues, and if they have existing loans to pay, they are going to get crushed. 

I am not criticisng the liquidity-package either – it may actually be useful to many companies who need quick credit-lines to keep on going, but there seems to be one very common method shared by boomers in their solutions to economic problems: debt. Debt, debt, debt and more debt. 

The Central Banking system is incentivising and encouraging this debt with its quantitative easing and low interest-rates – governments can sell bonds easily with the easy credit provided to big banks – this system ensures that both government and banks are liquid. And who is paying for and sustaining this system? In Malta’s case, the ultimate payer is us, the companies and the working people who have to pay more than 3% over our loans. In this bizarre system, which sounds like a sophisticated Ponzi-scheme, the banks get a small profit and their shareholders get an insignificant dividend-payment as their stock price keeps crashing. Meanwhile, the Euro against the US Dollar is losing its value and some predict it may keep depreciating significantly.

Admittedly, Scicluna has to work in this environment and there seems to be very little he can do as Minister of Finance of a small EU nation-state, but that doesn’t mean we should be complacent and fail to look at the bigger picture. 

One obvious solution to our problems is to halt bank-loan payments and restructure the debt, and/or provide debt jubilees to companies and individuals excluding building companies which have been grossly irresponsible in their excessive speculation and irregular construction all over the islands. Now, this may require the government to step up its ownership in local banks and take a strategic lead. Such a strategy may be unimaginable to a baby boomer who has got so accustomed to a certain perspective on capitalism to the extent that’s an equivalent to a dogmatic and a religious approach: if we have problems in the economy, we’ll simply pump liquidity into the system by increasing debt, and which we will pay tomorrow. Another big risk we are ignoring is the exposure of the local banks to a highly-leveraged construction industry. We still don’t know the extent of bad debts our local banks have. Meanwhile, we have to think about vulnerable people and we need to quickly provide them with necessities: food and shelter. There is an unprecedented number of lay-offs going on at the moment and many workers have problems paying their loans and their bills. Instant relief in the form of debt-jubilees and direct social payments are needed to help these people. 

It is not I, an insignificant soul in a miserable rock (Napoleon’s description, not mine) that is asking for radical measures to be taken. At this point of our political process in the world, there is an inevitable discussion going on about the fundamental social and economic relationships of the economy’s participants. The Republicans have turned to socialist measures as they scurry to provide helicopter money in the form of 2,000 dollar cheques to every individual – a measure which had been derided by most of the liberal technicians and economists. So, right now, the Republicans and the Democrats have come to terms with the idea that one of the ways to help ordinary people during a time of crisis is to literally hand them over some cash to spend. 

There are many things we can do in Malta to redraw our economy to ensure that everyone is protected and build a more just economy in the process. We have to survive this pandemic and this economic lock-down, but we also run the risk of waking up tomorrow with an array of problems which would cost us even more money if the current structural problems are not addressed. Once again, it is also important to stress that it is delusional to believe things will ever be the same again. These are turbulent times of historic proportions and we will be waking up to a very different tomorrow after this pandemic is over. We still don’t know where we are heading.

 

 

 

 

 

 

We’re witnessing history in real-time with a world going into economic crisis. The idea of helicopter money, previously derided by the liberal technicians and academics is now mainstream politics. The global-economy is literally closing down as governments across the world try to contain the pandemic. Central banks are pumping endless supply of money into the financial system assuming all this liquidity will someday stick and stabilise the system. The Maltese government issued a liquidity mechanism providing new credit to commercial companies backed by government guarantees, tax deferrals and social payments such as quarantine leave subsidy to employers.

What’s going to happen?

No one knows. Eventually the pandemic will be contained and things will normalise but things won’t be the same again. Those who sell you the idea that things will be the same as they were before have absolutely no idea what they are talking about. The economic, monetary and financial implications of the current events are wide-ranging

What could happen?

There are various outcomes and scenarios which may probably happen. First of all, we have to assume that we are in uncharted waters. Although past historical experiences can have a lot of similarities to what we are experiencing today such as Spanish Flu and plague epidemics, debasement of currencies and increasing deflation, what we experience today has it own distinctive and particular features such as rapid economic shutdown accompanied with rapid stock market crash and despite monetary stimulus from the Federal Reserve and the European Central Bank.

One of the probable outcomes with regards to Malta is that property prices will go down significantly – this will be great for young couples who couldn’t afford to buy in the last couple of years when property prices sky-rocketed. It will also be good for renters. There is also another important aspect to this situation. How many building companies are over-leveraged and what is the exposure of the banks in case the building industry collapses? This, I think may be one of the risks ahead.

The other probable outcome is that jobs will not be as plentiful as previously and wages would go down as well. Before the pandemic broke out, the Maltese economy was by-far much more robust than it was in 2013, but we still don’t know the extent of the economic damage being done. Anecdotal evidence from foreign companies and foreign investors in Malta is very negative and they are trusted much more than the local business-class which has a strong tradition of rent-seeking and notorious for buying out both political parties with donations (disclaimer, there are also many good people in the same business-class as well, but facts can’t be denied). Anecdotal evidence from personnel of gaming companies may be different. I was once told by an igaming professional that 2008 was actually good for them since people gambled more during the crisis. Obviously, the tourism industry is devastated, as is retail, publishing and printing. Medical companies seem to be doing well. Any feedback with left in the comments are welcome.

What is happening?

There are many questions and arguments being made about government’s liquidity scheme. Some are arguing that the scheme ultimately benefits local banks. Maltese companies are claiming that the liquidity provided for new credit won’t be enough and need direct helicopter money. Social activists are arguing that helicopter money should be given directly to everyone to subsidise purchases of necessities: rent, food and other necessary expenses.

On the other hand, some argue that if the Maltese government is using the National Social Development Fund to guarantee bank loans when Maltese banks are still lending with rates of 3% and above, why doesn’t the government simply use the money from the said Fund to buy Bank of Valletta outright and issue the loans right away without having to build a complex leveraged-financial instrument? Maltese banks have given us big interest-rates compared to interest rates given in other European countries and as of now, nobody wants to own them any way.

What should happen?

Everyone wants money and people have to go on living even if the economy is shutdown. What is clear to everyone now is that the State has a very important role to protect society as a whole but especially to defend the vulnerable. The idea that Central Bankers can simply print more money to save the financial system is getting quickly outdated. Political leaders across the globe seem to be mostly incompetent in their handling of the crisis, starting from Trump who failed to recognise the gravity of the situation, to EU commissioner Ursual Von der Leyden who is completely clueless without any ideas to stem the potential ramifications of what is coming for the Euro-zone.

Clearly, the world is going into reset, but we lack strong and convincing political direction. It’s been quite a while since the world was in such a crossroads. Liberal technicians and academics have clearly failed us and their solutions will be suspicious given their track-record. There is also a very important factor which will determine the outcome of the reset. Generally, in history we see that when people were collectively experiencing a severe crisis, social solidarity increased – we’ve seen this taking place during the Second World War. It was only after the Second World War that the idea of socialism was then taken very seriously and universal health care was set up, the social and economic charter, strong pensions and minimum wage, social mobility, the right and possibility to own your own domicile, but also to do business in a free market without rent-seeking and the kleptocracy of oligarchs. Such a balanced outcome would have to be found yet again. I am rather skeptical on whether the Maltese government and the Labour Party right now is really interested in coming up with deep social and economic change, including the reforms we need to curb rent-seeking.

These are indeed interesting times. Government has recently announced a package of measures which will provide up to €1.8 billion in liquidity to the economy in what probably is the first of its kind in Maltese history. Funds for this guarantee will come from government’s piggy-bank, the National Development-Social Fund which has been funded by passport sales, and originally meant for investments, capital and social projects.

€1.6 billion will be provided to commercial companies in the form of €700 million tax deferrals and €900 million in bank guarantees over commercial loans guaranteeing a total of €4.5 billion in commercial credit. A further €210 million will be spent directly into the economy in the form of unemployment benefits, quarantine leave and further funding for the health-care system amongst other items.

It is yet unclear how the government is structuring this funding, but it seems that we will be borrowing to 1) sustain government’s recurrent revenue to offset tax deferrals and 2) and borrowing to fund commercial debt-payments in case companies default. It is unclear how many companies are currently at risk of missing their debt payments and also unclear who will be eligible for these guarantees. Government would have to borrow against capital from the NDSF to fund these guarantees. By 2019, government claimed that the Fund had acquired up to €544 million from passport sales of which €91 had been spent on capital and social projects while up to €200 million were spent on foreign securities and local shares such as BOV and Lombard Bank.

The package looks just a fraction of our total GDP which totaled around €13 billion last year, while government debt (mostly in bonds) amounts to €5.6 billion. It is unclear how much potential debt we will incur, but the bigger problem, even if we exclude this rescue package, is that we were previously sustaining debt-levels with significant economic growth, and it is of course not clear at what levels economic growth will come back. There are also many questions which the journalists at the press conference failed to ask, yet credit to Times of Malta and MaltaToday for asking the right questions on debt and interest rates. For example, will building companies who are already highly leveraged get these guarantees as well? Last thing we want in this country is for building magnates getting a bail-out.

The Minister of Health was then on national television explaining the pandemic and the measures being taken to contain it. Unsurprisingly he then got a little bit cocky and said that when in January Trump was still saying the situation was not serious, we in Malta were stocking up on ventilators. Trust the Maltese with survival and health-care. We have been surviving epidemics, famine and wars for most of our history now, so it may be no coincidence we appreciate some good health-care. Probably we have survivor genes too.

Now, some news from where I come from. Publishers have postponed the launch of their new books so basically they have stopped printing books. Book-shop sales have completely dried up and they are running on thin ice just with online orders. For the publishing industry the situation was already bad in the best of times, but now it’s a disaster. Over-all the situation seems and feels worse than 2008.

The Chairman’s Message

2019 was an eventful and challenging year in which the Council kept growing, receiving as much as an 80 per cent increase in its public funding for its recurrent expenditure over the previous year totalling €910,000, and an additional €600,000 in capital funds for the restoration of its newly acquired government premises in 8, Old Mint Street, Valletta.

We closed the year with a national crisis of historic proportions, which has deeply affected all aspects of the Maltese society, including its economy – and the book industry. The National Book Council cancelled its National Book Prize ceremony at the Auberge de Castille, the seat of the Prime Minister, where the ceremony has been traditionally held. The decision was made after officials in the Office of the Prime Minister were implicated in the investigations of the murder of Daphne Caruana Galizia. The decision by the Book Council was unanimously supported by the book industry stakeholders, despite its potential negative economic repercussions. The National Book Council was  also the first public entity to formally celebrate the legacy of Daphne Caruana Galizia in an event at the 2018 Malta Book Festival.

One of our main aims is to increase the industry stakeholders’ revenue, mainly when it comes to publishers and authors. Last year’s substantial increase in funding allowed us to further invest in marketing and audiovisual productions, as well as to increase the value of the National Book Prize prize money – which will have been disbursed by the time this report is published. The execution of our strategy is progressing very well thanks to sustained public funding support. Admittedly, I had strong qualms about some decisions made by newly-appointed bureaucrats in the finance department of the Ministry of Education. My qualms were made public in order to strengthen the autonomous position of the National Book Council. I can confirm that the disagreements have since been resolved.

For a few years now, the book industry has been struggling with a drop in sales in brick-and-mortar stores. The increasing sales at the Malta Book Festival along with purchases of books for schools made by the Literacy Agency have been offsetting these losses.

The Malta Book Festival has sustained an exponential increase in book sales ever since 2014. Sales during the 2019 Malta Book Festival matched those in 2018, partly due to reduced exhibition space in Sacra Infermeria Hall as a result of emergency restoration works. Restrictions notwithstanding, we adjusted by utilizing the MCC Republic Hall (that has a capacity of about 1,200 people) for the main school shows. We also organized shorter visits as compared to previous years.

The Malta Book Festival may face further challenges in the next few years. The Republic Hall, which usually hosts big theatrical shows, will be taken up by Cirque de Soleil – an event publicly subsidised by the former Ministry for Tourism, under the direction of the now disgraced Minister Konrad Mizzi. Our position is very clear on this matter. The National Book Council has been the most regular and consistent client to the MCC along the years, even during times of severe recession. For this reason, we expect the MCC to remain loyal to the National Book Council and provide access to all halls at the MCC during the first two weeks of November, during which the Malta Book Festival has traditionally taken place. The Malta Book Festival is an event of national importance and the government should support it further by enacting a subsidiary legislation to allow for these dates to be permanently booked on an exclusive basis. These particular dates – right after the mid-term school holidays – have been set following many years of market analysis. Our aim is to keep them secure on a permanent basis. We also have informal agreement with Żigużajg, in order not to clash with their shows on the same dates.

2019 was increasingly busy for us in terms of our legislative and policy work. For the first time ever, we have convened a National Writers’ Congress and presented a charter of authors’ rights which was unanimously approved by at the congress. During the writers’ congress we have promised publishers to introduce tax-incentives so as to incentivize royalty payments. Our promise is in the process of being fulfilled: the legislation for the tax-incentives has been drafted and we are awaiting its publication by the Ministry of Finance.

The National Book Council has also been trusted by the government to redraft Malta’s copyright laws to bring them into line with the recent European Union Directive on copyright and related rights in the Digital Single Market. This EU directive will significantly impact on the book industry, and it is in our interest to ensure that the transposition of the Directive is beneficial to our industry. There is already an informal agreement between publishers and the Ministry of Education over the Education Exception, as brokered by the National Book Council, and the agreement between both parties and the National Book Council is set to be signed in 2020.

In 2019 the National Book Council has also received the first capital allocation to restore its newly acquired premises in Valletta, the 16th century baroque building. We have successfully prevented the further deterioration of the building (the timber beams supporting the upper roof were giving way and as a consequence stone slabs were collapsing on the building). The restoration of the roof is progressing quickly and is due be completed by early 2020. One of our biggest constraints with the project is a bureaucratic lag in the Contracts Department and the Procurement Department of the Ministry. We are also challenged by the fact that two small basement level rooms of the building are still to be transferred to the Ministry of Education. The Lands Department and the Housing Authority are currently coordinating this process (an old lady lives in one of those rooms is to be provided with alternative accommodation). We hope that the said departments keep cooperating with us to ensure that the process is finalized. Our ultimate aim is to turn the palazzo into a new point of sale with a culturally-oriented bookshop, a literature museum and the National Book Council offices: a functional book centre in a beautiful historical building.

We have retained our momentum in other operations such as literary exports and translation. Maltese literature is ever-spreading across borders. Lou Drofenik has been one of the most promoted authors in 2019, together with other National Book Prize winning authors. Further public funding will enable us to expand our export work, a field where we are experiencing ever increasing success. Additionally, for the first-time ever, the National Book Council has commissioned its first-ever feature film based on a prize-winning Maltese novel.

I am also proud to say that in 2019 I have consolidated the final stages in building a strong team of employees and associates who are highly skilled and can guarantee continuity and growth. Further investment in human resources will be made in 2020 so as to keep consolidating and developing our team.

Looking back from 2013, I am incredibly proud we have come this far. The National Book Council has grown from a minuscule entity with hardly any funds, into a strong and influential organization which sustains the book industry, and protects the interests of publishers and authors. We will keep implementing our vision by expanding our stakeholders’ revenue opportunities through our public projects, and by ensuring that the book industry keeps growing and sustaining itself. We look forward to 2020. We will be working on the required and significant legal reforms, to keep sustaining growth  for the book industry despite the challenges we face.

Annual Report for 2019