Italians have low personal debt, the second biggest manufacturing economy in Europe and Berlusconi claims the restaurants in Rome are full. So why is Italy now at the centre of the euro zone crisis? -- I say: could it be that according to the Ribbentrop -Molotov pact of 1939, the time has come for Germany to take over Europe after the Russians became the owners of the European energy capacities? It certainly looks this way !!There is an "implanted fake problem" in the Italian business environment that prevents growth. Italy scores low in the World Bank indicator of how easy it is to do business – 80th place . The problem is bureaucracy and sluggishness of the justice system in courts to clear financial and business matters. People say: despite all the problems Berlusconi made a fortune and built a big business. The state and tax system never helps business; they are an obstacle to be overcome. It's remarkable that despite all of this Italian firms still do so well. There are also entrenched special interests that hold a monopoly over certain services, such as lawyers, notaries and all services that business need to operate and the state and Italy has no independent state service like France, there is too much vested interest. If Italy fails to repay its debts the impact would be far worse than if Greece defaults as it has a much greater overall level of debt, meaning its creditors, mostly European banks, would be in serious trouble. The immediate problem for Italy is in the bond market. The bond markets are essentially the trade in government debts and Italy's is among the largest at around €1.9tn. The yield on the price of government Italian bonds has risen sharply – this is equivalent to the interest rate charged to the Italian government to borrow money.
5 comments:
But what has the Italian Government been spending all this money on? Bunga Bunga parties? It's certainly not the railways.
There has been very detailed analysis on what the Greek Governments have been funding over the last few decades. How about a similar overview for Italy. Yes, it might now be mostly trying to cover the interest repayments but what was the original intention for the government's borrowing?
So, if Italy is a solvent country then "investors" should be ok , in the long/medium term, but "speculators" should be worried about their short term profits.
Who is in control here?
Are we in danger of putting the needs of speculators above those of investors?
If rumours of a prime minister's resignation boost the market and his denials of any resignation cause it to falter, surely the game is up for him. And surely, too, that is an indication that Italy's current woes are associated with its current government, and are temporary - or at least fixable - rather than ingrained and unavoidable.
Why is Italy in trouble?
Well they have an ageing squad, which as we saw in South Africa was not up to scratch. There are a few reasons for this but the influx of expensive foreign players to clubs like AC Milan means that youngsters don't get a chance in the first team. Ultimately then we have to blame the owner of said club.
Why is Italy in trouble?
Well they have an ageing squad, which as we saw in South Africa was not up to scratch. There are a few reasons for this but the influx of expensive foreign players to clubs like AC Milan means that youngsters don't get a chance in the first team. Ultimately then we have to blame the owner of said club.
Post a Comment