1055 Italian Economy

Zillah, click on the search button on the top of this screen, there's been loads of chat on the forum

Funny you should say that…

There’s an interesting article in yesterday’s Times which discusses Italy’s current dilemma: to stay or not to stay with the euro

The issue of whether to ease monetary policy and ditch the euro (not forgetting the recent scandal concerning the Bank of Italy’s boss Antonio Fazio’s alleged violation of security laws) not only seems to be at the forefront of Italy’s political and economic agenda, but also subject to intense examination by some of the world's leading legal and financial professionals.

What I find interesting above all, is the fact that before Romano Prodi and the Socialist Party took Italy into the euro, Italy was Europe’s leading and fastest growing economy. So what really happened to reverse this position? More importantly, what should Italy now do?

Charles, the answer is obvious, it's August, Italy will go to the beach for a month, then spend a month talking about the beach, then think about it for a while...
Concerned of Francavilla.

[QUOTE=Charles Joseph] More importantly, what should Italy now do?[/QUOTE]

I should imagine they will take all necessary steps - as long as it doesn't affect them.

I have been visiting Italy for many years, and am amazed at some of the things that go on, such as;-

Paying staff 15 months salary a year [a friend of mine has just gone onto 15 months]
Heavily subsidising firms that should be bankrupt, to prevent loss of jobs
Very generous pension provisions
Still having a labour intensive 'economy' - petrol pump attendants are a simple example

I suppose that if they want to put things straight they would have to go through a period of upheaval, like we did with the Miners Strike etc, and then move quickly towards a market economy, with all the problems that gives [lots of traditional jobs being 'lost' etc]

But that would make things in Italy like the UK - and those things are the ones we most want to get away from [even if only for long breaks].

[QUOTE=alan haynes]But that would make things in Italy like the UK - and those things are the ones we most want to get away from [even if only for long breaks].[/QUOTE]

Hurrah, well said!

I know that this is not the thrust of the thread, but I note that the rating given to the Italian economy by Standard and Poor's Ratings Service (they rate companies on how credit worthy they are) downgraded its outlook on the Italian economy to negative (from stable).

They stated that "The outlook revision reflects the increasing downside risks to Italy's public finances in an environment of low growth and weakening peer pressure through the diluted European Stability and Growth Pact.

"A general election must be held by May 2006 and neither of the two main political groupings has presented a cohesive strategy to address budgetary imbalances."

[QUOTE=alan haynes]I should imagine they will take all necessary steps - as long as it doesn't affect them.

I have been visiting Italy for many years, and am amazed at some of the things that go on, such as;-

Paying staff 15 months salary a year [a friend of mine has just gone onto 15 months]
Heavily subsidising firms that should be bankrupt, to prevent loss of jobs
Very generous pension provisions
Still having a labour intensive 'economy' - petrol pump attendants are a simple example

I suppose that if they want to put things straight they would have to go through a period of upheaval, like we did with the Miners Strike etc, and then move quickly towards a market economy, with all the problems that gives [lots of traditional jobs being 'lost' etc]

But that would make things in Italy like the UK - and those things are the ones we most want to get away from [even if only for long breaks].[/QUOTE]

I live in the USA and by all accounts this country is the economic leader of the world. Is it really? The US is not doing any of the things you mention, and yet our economy is on a progressive negative slope. The US is exporting jobs, large companies steal the pensions of their employees, there is gross corporate fraud, there are massive lay-offs, to meet the bean-counters head-count requirements, and the list goes on.

Americans struggle just to keep a roof over their heads, their nutrition sucks and their obesity tells all, what they eat is cheap and fattening, but that is all most of them can only afford. The american worker has no loyalty towards the company; and why should he/she? They are nothing but a commodity, just like brick and mortar, no more no less.

The rest of the world who are exporting their goods to the USA will have to face very shortly that the Americans (USA) will no longer be able to pay for these goods. The American middle-class no longer exists, they exist only due to their high credit debts most of them have, only to go bankrupt periodically, which is no longer a shameful act, but a necessity. What a country?

I would leave Italia alone, at least they still have respect for human dignity; America has lost it a long time ago. As example, I saw on CNN yesterday, where a mother with two children is suffering economic hardship because her husband is serving in Iraq; his salary as a welder was substantially more than what the army pays him now. She even lost her home! I pray she will not lose her husband as well. I could go on forever.

[QUOTE=FrancisM] I would leave Italia alone [/QUOTE]

Problem is, Italia needs to secure its economic and industrial future. With one of the lowest birthrates in the world, and one of the highest proportions of retired people, Italy's much-discussed pensions timebomb makes the UK's look like a damp sparkler. Will Italians be forced to work harder for longer?

And on the industrial front - look at Fiat. Carmakers worldwide have forced unions to accept longer working weeks and redundancies. Families who thought they had "jobs for life" (remember that quaint old phrase?) in Turin and the surrounding areas have had to think again.

Italy may be a fantastic place to buy a house in or retire to - but it's not a museum piece - it's a living, breathing country which needs to fight for its prosperity.

[I]Can[/I] Italia be left alone? That's a question which seems to be occupying the minds of a lot of Italians I speak to right now.

[QUOTE=johnsm13]Italy may be a fantastic place to buy a house in or retire to - but it's not a museum piece - it's a living, breathing country which needs to fight for its prosperity.QUOTE]

It is well known that in any country the economy is not driven by the mega corporations, who rarely pay their fair share of taxes, but by the consumer at large. People in the unemployment line will not add significantly to the economy, they are lucky if they can afford to sleep under a roof and eat. I agree, some of the benefits could be reduced, but lay-offs seldom solve a company's problems. Recent studies suggest the opposite is the case. Somewhere along this road the customer starts to suffer, due to inadequate service. And, we all know, the customer is a fickle thing with little or no loyalty.

The most prominent problem world-wide seems to be the fact that businesses demand much higher profit margins, than was the case in the past. Someone once said, "you can judge the morals of a society by looking at the interest rate the charge for loans." The same holds true for unreasonable profit margin expectations. I know of some large firms, who expect ROI's in the 27% plus.

Also, look at the gross overpayments of executives. One such fellow was in the news of late, getting 144 million dollars in severance pay, after working less than two years with the firm.

[QUOTE=FrancisM][QUOTE=johnsm13]......It is well known that in any country the economy is not driven by the mega corporations.......[/QUOTE]

Then this thread goes full-circle to another thread about Italian kitchens the micro-micro-economy; shop locally, support local manufacturers & use the corporations with caution!

.
Many of my neighbours work long hours-on top of formal work they grow their food,make their wine and cut their wood for winter
The rate of pay around here is low but the social problems are minimal-people all count here.Most people continue being active despite suffering from illnesses which usually bring out the cotton wool and cuddles in the uk
Apparently during the 2nd world war people still ate well in our village-rabbit,pigeon chicken and song-birds.
I recall seeing a programme about the dutch economy in which they realised unemployment was set to reach levels at which social problems could be expected to begin.The solution they tried was to cut the number of hours people could work and employ more people.The programme showed families having more time together and an increase in hobbies such as camping.People had more time to do exercise and to look after their gardens.
I don"t know whether this system has persisted but it certainly seemed to have massive benefits for ordinary people.
From my experience it is awful to have insufficient money to live a reasonable lifestyle but there is no one I know of in the uk who would not be considered incredibly lucky for their lifestyle compared to 50 years ago.
Perhaps the fact that I will have to work until the day I die might make me look at what is truly important to me-maybe I can live on half the money I thought was essential
Maybe the man was right when he said the problem with money is that we live in a time when it is over-valued
SO if you want to unburden yourselves of this terrible burden please send excess cash to me at.....I promise to spend it wisely!!!

Ah ah! We now see the pieces of a somewhat complex puzzle being assembled.

Johnsm, I think you are right. It is difficult to dispute that Italy’s industrial and economic assets need (among other things) strengthening. Moreover, we can ill afford to ignore the difficulties. But one of the biggest drawbacks I think is the political system suffering from fundamental weaknesses that intensify the problems with Italy’s public services and public administration. These weaknesses unquestionably fuel public doubt! But this is not new and certainly not just specific to Italy.

Italy has had a long history of endless turmoil and struggle, as well as dynamic changes in the economy. When you think of how before 1815 the country had not seen political union for centuries, is it any wonder that we are experiencing problems? Our politicians expect to create monetary union before achieving political union, something that (for many reasons) I believe to be impractical.

Those of us who live, work, visit and love Italy all know how cumbersome slow and unpredictable it can be. But we learn to adapt. Equally, I would say that it is too simplistic and incorrect to focus simply on these issues. Italy has a lot to offer. I once heard it described not as a country but as an emotion.

Furthermore, I think that most Italians have the ability, entrepreneurial flair, dynamism, innovation and the will to succeed and providing they are given a fair chance, there’s no reason why they couldn’t once again turn their country into one of Europe’s leading economies. The trick of course is how to sustain this position once it has been reached.

Francis, your valid point about executive pay raises some fundamental questions about over-generous benefits and golden pay-offs, especially when companies fail. When large corporations collapse the repercussions in terms of social and emotional costs are just too numerous to contemplate. Again, these problems are not unique to the US.

If anyone has seen Avanti, a film that offers a superb parody of Italian, American and British styles, there’s a wonderful scene in which a US Navy helicopter lands on Ischia carrying a member of the US state Department. The heliport manager is enraged and coming out of his office clutching a plate of spaghetti tells the official to go away and that he cannot land here. “It is lunch time. Come back later!”

It may be lunchtime to our politicians…but sooner or later someone is going to have to return to work and put the daily bread back on the table. Perhaps ci vuole un bel caffé!

[QUOTE=FrancisM]The economy is not driven by the mega corporations, but by the consumer at large. [/QUOTE]

If jobs are cut... unemployment rises, people reduce their spending, and the economy slows down to recession (which is where Italy is now).

Although, I guess it's true, Italy is less driven by mega corporations than perhaps other countries.

Mike

Perhaps the situation in Italy is starting to recover?

From the BBC website today:

EUROZONE GROWTH NEAR STANDSTILL

High unemployment is hurting many eurozone economies European growth has flagged as several of the continent's biggest economies hit a rough patch. The 12-nation eurozone saw growth of just 0.3% in the three months to June, down from 0.5% the previous quarter, for an annual rate of 1.2%. Germany was a key culprit, registering zero growth for the period. But the performance was slightly better than feared, and Brussels said a weakening euro should help produce a turnaround by the end of the year.

It is the domestic picture which has proved to be one of the eurozone's key weaknesses. Among the economies in trouble is Germany, where 0% growth is partly due to high unemployment as well as high energy costs. Two countries in the 12-nation eurozone actually saw their economies contract during the period: Greece, by 0.5%, and Finland by 1.2%. In contrast, Italy - whose 0.5% contraction in the first three months of the year helped pull down growth during that period, recovered to grow 0.7%.