Post_9 Italy

After the financial earthquake that hit the United States, due to the subprime mortgage crisis and that, due to the globalization markets, it has spread around the world, including in Italy where there are today strong signs of economic crisis.

Everything stems from three major problems: the state debt, the slowdown in economic growth and the government's credibility.

This is not a new fact. Are few decades that our country is going through hard economic times, mainly due the considerable public debt accumulated since the seventies and eighties of the last century. And yet, the current situation seems to have worsened.

Our main problem, as it is known and has been repeated for many years and even more since the beginning of the crisis, is the public debt. One of the famous Maastricht criteria, which regulated the entry of European countries in the single currency, fixed the ceiling of 60 per cent of the ratio of debt to gross domestic product (GDP), a report that Italy joined in 1982. Since then, our national debt has grown dramatically within a few years: between 1982 and 1994, in a range of twelve years, has grown from 60 per cent to 121 per cent of gross domestic product. Very few countries in the world have higher rates.

Insecurity, layoffs, layoffs, unemployment, families in need are now daily experience for millions of Italians. Of course, the economy and, consequently, lifestyles are changing and the Italians are serving the greater competitiveness of countries where labour is cheaper.

Were released by Istat a provisional data on employment reported in March 2012. There are an increase of unemployment  especially referred to young people where the unemployment rate is  28.6 per cent of people aged between 15 and 30 years. In the third quarter of 2012 gross domestic product fell by 0.2% from the previous quarter and 2.4% over the third quarter of 2011[1]. 

Italy is a country in recession.
In Italy, business are closing continually and the fault is due to the international economic crisis. Since 2008, banks and financial institutions have collapsed and they created a domino effect across the globe. In Italy, businesses close for other reasons: lack sudden liquidity, tax questions, suffocating bureaucracy.
The sudden lack of liquidity is linked to the banks’ problems. Banks feel the crisis and do not finance the businesses, which find themselves without cash to pay suppliers and salaries and after they are forced to close. If the banks do not pay, business close down.

Another problem is the oppressive tax burden.
The suffocating tax burden and Italian bureaucracy are a large ballast that prevents growth.
Then we have to consider the lack of infrastructure: it is difficult to open a company in areas where trains do not even.
The subprime mortgage crisis and the credit crunch are not the only concerns to disturb the slumbers of the Europeans. The price of oil reached a new record for the continued demand from emerging economies of China and India. This has affected consumers in North America and Europe in two ways. They are forced to pay exorbitant prices for their cars and for home heating; rising prices have also squirt the commodity prices of feed, and this has created an endless spiral. The food has become so expensive that in some cases there have been riots in countries in the developing world.
The economic crisis is the result of wrong human choices in the United States and the natural development of the Eastern economies. Oil prices will never return to the levels of the past and the world must learn to accept this new reality and act accordingly. Similarly, the credit crisis, which began in the United States, can only be resolved by the United States. There is not much to do for Europe, which must try to weather the storm as best he can. 

According to many, the recovery cannot be separated from escaping from euro for the weaker countries, for others need to strengthen the common European politic but what are the best solutions to cope with and overcome the crisis? Some economists argue that we should introduce a soft austerity: state finances must be redesigned in order to have a lighter tax, which corresponds to a lower public spending but efficient. That's what they're doing Poland and some Baltic states, but it takes a strong leadership, is necessary, at the same time, encourage cooperation between strong states and weak states.

A key priority for Italy is to restore credibility of the political class. Strong measures must be taken against corruption, bad governance, and everything that affects our country. The policy cannot be a business, but a commitment that must be carried out without fraud and theft. We think that this is the first step to give justice to a country that thrives on scandals and deceit.

References:
De Masi D., "Development without employment", Rome, Labour, 1994.
Schumpeter J.A., "Capitalism, Socialism and Democracy", London, Etas, 2001.

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[1] La Repubblica, November 14th 2012