Cover of MoneyWeek magazine issue no 792, Friday 6 May 2016

Why the oil price is set to rise

5 May 2016 / Issue 792

Saudi Arabia is hoping to break free from its dependence on oil. But diversification is easier said than done. Matthew Partridge looks at what it will mean for the rest of us – and for the oil price – and picks the best bets in the sector. Read this week's cover story here.

• Five lessons businesses can learn from Leicester City’s victory
• How Venezuela collapsed into hyperinflation
• It’s time to get back into bitcoin

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Merryn Somerset WebbEDITOR'S LETTER

Merryn Somerset Webb

What £3 of sausage tells us about Europe

Earlier this week the Italian Supreme Court of Cassation (Italy’s highest court of appeal) ruled that theft is not always a crime. In 2015, Roman Ostriakov tried to steal around £3-worth of food from a shop in Genoa. He was convicted and fined €100. The court has overturned that conviction on the basis that the crime was one of absolute necessity: the food was taken in “the face of immediate and essential need for nourishment”.

Interesting? Shocking? There will be a range of reactions to this, for a range of different reasons. But the key point to take away is one made by another Italian paper, Corriere Della Sera: that there are a lot of hungry people in today’s Italy – and they can’t all go to prison. This ruling simply reflects the courts adjusting to what is now “reality”.

This matters, because it gives us a hint of how things might develop from here. Last week, Mervyn King and I talked about the miseries building inside the euro area as governments try to hold the currency together via internal devaluation (wages are down 6%-15% across the weaker eurozone countries since the crisis).

In this week’s issue, you will see the second part of the interview. We agree that governments are not stepping up to the plate to solve the problems resulting from the financial crisis – and that means that other, unelected, bodies are increasingly stepping in.

Up until now, that has meant the big central banks. King reckons the Bank of England has so far been careful not to stray beyond its mandate (although you can argue that all quantitative easing is effectively fiscal policy, in the way in which it redistributes wealth to those with assets already). But he concedes that there is concern that the Federal Reserve, the American central bank, went “way beyond its mandate” in the crisis – and that should the European Central Bank buy private-sector assets as well as government bonds, it will “become a political actor”.

It’s also worth worrying about what happens when the central banks decide to go for full-scale monetisation of the debt on their balance sheets or for helicopter money (which they surely will in the end). That would make them all very serious political actors, in that they choose who gains from these policies and who does not.

However, what the Italian court case over £3-worth of cheese and sausage suggests is that there are new players in the game of stepping into the yawning gap left by political failure – Italy’s courts, noting that the elected government is apparently incapable of distributing wealth effectively, has taken a step towards doing it for them.

For anyone who thought that the eurozone was either “strong and successful” (as its politicians like to say) or made up of what we like to think of as democracies, the story of Ostriakov, and how a court chose what they saw as his basic survival rights over someone else’s property rights, should be a wake-up call.