Italian Tragedy

Who's going to provide the investment to grow Italy's economy again? Its private sector is dominated by small firms who are traditionally reluctant to invest, its state running a primary surplus just to keep up with its debt and its educated people are leaving the country.

It's difficult to see how Italy will get out of this mess. Some say it should leave the Euro but to do so would be a de facto default with horrendous consequences for the rest of Europe. In any case, the country's other structural problems would still be there if it left the Eurozone. It could even speed up the brain-drain as rich Italians pick up their Euros and run.

More austerity is unlikely to help either. Italy's public sector finances have been running a surplus for over a decade. As Edward Hugh says, it would need to run a 6.6 percent surplus for another decade just to get its debt down to 60 percent of GDP. With a shrinking economy, falling tax revenues and a fleeing intelligentsia, this looks improbable.

The speed of Italy's decline is astonishing. Italians once celebrated displacing Britain and France as the world's 4th largest economy. Now, a mere twenty or so years later, a knackered state, with hardening arteries and on ECB medication, is trying to outrun a rising tide of debt, and losing. It is a depressing and rather frightening story.

Italy was one of the most enthusiastic supporters of the Euro. It was hoped joining the Euro, would tie the Italian economy to the fortunes of the stronger northern nations. However, with bond yields rising and austerity measures failing to solve debt crisis - whilst simultaneously angering the electorate, people are now starting to talk of leaving the Euro (once considered a form of economic blasphemy) in Italy.

The tragedy is that Italy is not Greece.

• Combined public and private debt is 260pc of GDP, similar to Germany and much lower than France, Spain, or the UK (UK total debt). With private wealth of €8.6 trillion, Italians are richer per capita than Germans.
• Italy scores top on the IMF's long-term debt sustainability indicator at 4.1, ahead of Germany 4.6, France 7.9, the UK 13.3, Japan 14.3, and the US 17.
• Italy has a primary budget deficit of 4% - something the UK is no where near. The fact that Italy is in debt crisis is partly a reflection of long standing debt problems, but more significantly it is a result of the Euro straight jacket which Italy finds itself in.

If Italy could devalue it would help boost exports and improve economic growth.

If Italy has an independent Central Bank to print money to buy bonds, Italy wouldn't be seeing crippling bond yields. This might give it the opportunity to grow out of the debt. But, instead they are being forced into policies of austerity which are exacerbating the crisis rather than solving it.

Too many thieves at the trough for 40 years, Italians strangely passive or gullible, the mob installing itself at the heart of everything remunerative during the Andreotti years, followed by Berlusconi era of football, trash TV and bridges to nowhere, The Church sitting on its shoulder blocking women's and gay's rights, welcome to the museum of beauty and majesty, administrated by a pack of howler monkeys while its wealth is plundered and stashed offshore.

Opening a business is a nightmare, taxes on business are cruel, and taxes on the average Joe even crueller.

The media is completely 'in the bag', the people have been dumbed down to almost American levels.

Scoundrels and mountebanks, crooks and liars...

The only glimmer of hope for Italy=✩✩✩✩✩

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

are there significant different differences between regions?  are there some that are doing well, while are others are doing particularly badly?

Point n'est besoin d'espérer pour entreprendre, ni de réussir pour persévérer. - Charles le Téméraire

For those who notice, the bad pun is intentional...

Some people blame the Euro for this but Italy was in trouble before it joined the single currency.