3298 Italy leaving the Euro

[QUOTE=neilmcn]More and more of the international press are covering the (distant) possibility of Italy being forced to leave the Euro within the next few years because of the poor economy and recent election stalemate.
For example, from today's Times Online:

Italy is now in the economic condition that normally preceded devaluation of the lira in the years before the single currency. So long as Italy remains in the euro system it will be impossible to devalue, yet it would be equally impossible for a weak left-of-centre coalition, with no real majority, to take the tough economic decisions that might, or might not, restabilise the economy.

Does this not worry anyone with dreams of selling up and moving over to Italy? I for one (with no assets to speak of in Italy) would be happy as larry as I could snap up a couple of lovely devalued properties during the economic turmoil that would follow Italy leaving the Euro!
However if I already had my cash tied up in Italian property, and I was suddenly having to find extra money to pay for my imported Baked Beans and Guardian Weekly I would not be best pleased.[/QUOTE]

Since i've been in this country around 30 years i've NEVER seen ANY,good realistic British journalism on this country .IF the so called journalists spent less time at the British embassy soiree's and stopped drinking for a moment they might actually understand more of whats going on.There is more possibility of me going to LA than Italy leaving the Euro In fact i pubblicly offer Euro 1.000,00 bet STARTING NOW to whoever.Hopethat clarifies the lack of hope in the economic collapse of italy despite current difficulties.

[QUOTE=Sebastiano]Since i've been in this country around 30 years i've NEVER seen ANY,good realistic British journalism on this country .IF the so called journalists spent less time at the British embassy soiree's and stopped drinking for a moment they might actually understand more of whats going on.There is more possibility of me going to LA than Italy leaving the Euro In fact i pubblicly offer Euro 1.000,00 bet STARTING NOW to whoever.Hopethat clarifies the lack of hope in the economic collapse of italy despite current difficulties.[/QUOTE]

Funny then that the Daily Telegraph won an award in Italy for its coverage of things Italian. Bruce Johnston used to get around and report on a wide range of interesting topics, like the archaeological dig in Pisa that unearthed 24 Roman boats, the village in the Dolomites that is made up almost completely of people with the same surname, and more recently (with Hilary Armstrong now the DT Italy correspondent) a look at the Pope Benedict's first year in office. These are just 3 examples; there have been plenty other stories.

We've had good coverage of the recent election - the run-up to it and the potential ramifications of the result - including an appraisal of the possibility of Italy leaving the eurozone. The conclusion was that it would not be in the country's best interests to do so.

I think, therefore, that you are being a tad unfair in your criticism. The general, accepted consensus in the responsible British press is that Italy needs a strong government and a strong economy. It really has had neither at the same time since it became a unified country in the 19th century.

A nice bit of educated debate. I like it.

I must say that it does look to be a problem. I'm not sure what will happen. Certainly the old tricks that were played cannot be this time. I don't think there will be a withdrawl from the euro though, much as I would love to see it collapse as I told my students in italy it would be trouble.

Then again that is harsh for the italian people

I think we, in Italy, can make too much of this. Certainly if you are quoting The Times!
Tonight on TG2 they were "bannering" an FT article (which I would take more seriously than a Times article) - but I cannot track anything hysterical on the FT site.
I know that Brits imagine themselves to be world traders - but do they remember what (lack of) heartache they suffered when the UK Sterling was forced out of "the snake" (along with the Lire) back in Lamont's time??
I would take more seriously a post on this issue from a person living in the Euro zone, and with the committment to European Union - something seriously lacking in the UK.
I also would like to take issue with the idea that choosing to have a home in Italy is a financially determined decision - perhaps some of us just value quality of life above profit??
Provocative - moi? What does money matter!!

I hate to say it but I think that this time the FT is working as a tool of the UK establishment that would like to see a weaker Europe in general. Why did they choose to raise the issue now when in goverment there is Prodi who is more than likely to form a strong alliance with France and Germany and marginalise the UK on EU issues.

The scenario of Italy leaving the Euro as the EU commission has already said is so far-fetched that it is unimaginable.

I wish people would give the new govemrnet a chance to do something before blasting it. Not that I think that miracles will happen but sometimes just a change in mood and tone can set off a positive chain of reactions.

50% will give the government a chance the other 50% will continue to go against it.
They could come up with the most fabulous idea ever thought of on the face of the earth but unfortunately Italian politics means that if it comes from the other side-----go against it. Sad but true I'm afraid.
I am playing safe and some savings will be heading out!!!

[quote=Relaxed]I think we, in Italy, can make too much of this. Certainly if you are quoting The Times!
Tonight on TG2 they were "bannering" an FT article (which I would take more seriously than a Times article) - but I cannot track anything hysterical on the FT site.
I know that Brits imagine themselves to be world traders - but do they remember what (lack of) heartache they suffered when the UK Sterling was forced out of "the snake" (along with the Lire) back in Lamont's time??
I would take more seriously a post on this issue from a person living in the Euro zone, and with the committment to European Union - something seriously lacking in the UK.
I also would like to take issue with the idea that choosing to have a home in Italy is a financially determined decision - perhaps some of us just value quality of life above profit??
Provocative - moi? What does money matter!![/quote]

Relaxed. A valid point about owning a home in Italy.

The Italian property market has undoubted appeal for overseas buyers; but the real seductive power of Italy lies in the beauty of its landscapes, architecture, culture, artistic heritage and culinary traditions to name but a few. Most speculators and investors appear to be moving in on Eastern Europe.

With regards to the Euro, I don’t think that withdrawal is the answer. The Euro is just one of a number of complex symptoms affecting Italy at the moment. It is not the cause of Italy’s current economic malaise.

The inference that there is a casual connection between the Euro and Italy’s problems may be attractive and convenient, but it fails to acknowledge that inherent weaknesses in Italy’s public and private sectors already preceded the introduction of the Euro.

I don’t know what the answer is, but a poor and inadequate system of governance; both in the private and public arenas must shoulder some of the responsibility. If we exclude SME’s for the moment, clientilism and protectionism prevail throughout many of Italy’s industrial organisations. These practices do not create competitive advantage. They destroy it.

I think that Italy needs to wake up and rid itself of the primitive and antiquated structures and systems that are dragging it down. But this is going to require some very bold reforms.

[QUOTE=Relaxed]I also would like to take issue with the idea that choosing to have a home in Italy is a financially determined decision - perhaps some of us just value quality of life above profit??[/QUOTE]

If I could buy the same property for 25% less in two years time, the money I saved would certainly increase the quality of my life in Italy.

I think that to purchase a house in Italy purely in order to make a profit by selling it on in a couple of years is very foolish and almost certain to lead to disappointment. However, selling up everything in one country, leaving contacts, family and friends behind, and quitting a job in order to move to a foreign country (Italy) to buy a home and try and to try and establish a new life there is a financially determined decision - but, "Can we afford it?" rather than "Can we make a profit doing so?".

[QUOTE=Relaxed]What does money matter!![/QUOTE]
Having initially lived and worked as an English teacher in Naples, Italy, I can assure you that after living for months on biscuits, bread, and boxed red wine I began to realise how much money does matter and affect quality of life.

[QUOTE=Charles Joseph].... clientilism.....[/QUOTE]

An interesting thesis Charles & one that I believe has a very great deal of truth in it. I'm not sure that Prodi has the guts (or mandate) for such a radical approach, however & I can't see an easy way forward as the governement lack the necessary mandate, the population don't seem to be over anamored with such a hard-line approach & there seem to be a load of cultural issues that impact the approach to business.

Having worked in Milan, I found that city (& the investment bank I was working for) felt very 'foreign' & that there was a distinct difference in outlook; within that culture, I'd have expected to have a lot more similarity with the UK's outlook in business.

BTW, what's clientilism?

Interestingly enough, [b]The Economist[/b] contained a gloomy outlook recently when it noted that:

[i]They are two seemingly unconnected events, but they yield a common, depressing conclusion. The events were the decision by France's government to tear up its controversial law creating a more flexible job contract for the young, and the razor-edge outcome of Italy's rancorous election. The conclusion: the core countries of Europe are not ready to make the economic reforms they so desperately need—and that change, alas, will come only after a diabolic economic crisis[/i]

[quote=tuscanhills]An interesting thesis Charles & one that I believe has a very great deal of truth in it. I'm not sure that Prodi has the guts (or mandate) for such a radical approach, however & I can't see an easy way forward as the governement lack the necessary mandate, the population don't seem to be over anamored with such a hard-line approach & there seem to be a load of cultural issues that impact the approach to business.

Having worked in Milan, I found that city (& the investment bank I was working for) felt very 'foreign' & that there was a distinct difference in outlook; within that culture, I'd have expected to have a lot more similarity with the UK's outlook in business.

BTW, what's clientilism?

Interestingly enough, [B]The Economist[/B] contained a gloomy outlook recently when it noted that:

[I]They are two seemingly unconnected events, but they yield a common, depressing conclusion. The events were the decision by France's government to tear up its controversial law creating a more flexible job contract for the young, and the razor-edge outcome of Italy's rancorous election. The conclusion: the core countries of Europe are not ready to make the economic reforms they so desperately need—and that change, alas, will come only after a diabolic economic crisis[/I][/quote]

Clientilismo is a system in which jobs, favours and protection are exchanged for support and loyalty.

I used to work in the defence industry, operating from Rome, Latina, Genova and Florence. The organisational culture was absolutely full of this sort of thing. When the parent company tried to introduce change across each division, it met with great resistance. The old guard kept their positions due to clientilism. Some of my friends who still work in the company regularly tell me that nothing has changed.

[QUOTE=Charles Joseph].....The old guard kept their positions due to clientilism. Some of my friends who still work in the company regularly tell me that nothing has changed.[/QUOTE]

Heheheh, that sounds universal across the defence industry!

Thanks for the clarification.

As a resident in Italy for the past 2 years and a small business owner both here in Italy and previously in the UK for over 5 years I can say for sure that one of the major forces holding my business back here and probably the main reason for the high (declared) unemployment rate and high tax evasion is the v.high business tax rates and bureaucratic labour laws here which force many businesses and individuals alike to work in the black market just to survive.

If the government was to lower business tax rates like IVA (VAT) (Or ideally abolish it for businesses earning under 100k euros like in the uk), cut employer taxes and remove some of the fixed costs placed on small businesses by the government (Which don't exist in the UK) then things would certainly improve not just for me but for the additional employees I would be able to employ and the extra income tax that would be paid by those new employees. Not to mention the lower prices I could offer to other businesses (More cash for them to spend on employing more workers) etc etc

Another thing would be offer more incentives or just make it easier for startups in there first year which is always the hardest and made harder by the government.

In my opinion it would have a snowball effect for the economy. the government would actually gain rather than loose tax revenue due to the higher (legal) employment rate. The small businesses would have more money to invest in themselves to grow into big companies and more work by being able to offer better prices.

How ever much I used to hate the British tax system when I was in it, the Italians could certainly learn a thing or fifty from it for sure.

One of the delights of travelling in Italy is that you can safely use a guide book of 1900 - the monuments will all still be there. It is appropriate to quote from my Baedeker, 1900 - I hope it amuses!!
"The cost of a tour in Italy....need not exceed that incurred in the more frequented parts of the Continent. The average expenditure of a single traveller may be estimated at 20-25 francs per day....but persons acquainted with the language and customs of the country may easily restrict their expenditure to still narrower limits.....When ladies are of the party the expenses are generally greater."
"The French monetary system is now in use throughout the whole of Italy. The franc, (lira or franco) contains 100 centesimi. 1fr 25centesimi = 1 shilling = 1 German Mark = 20 US cents."
I think that brings this thread into a historical perspective!

As a PR professional dealing with the FT, I am always interested in your views on what they say. Ronald, any chance you could provide the link to the comment that you think shows "the FT is working as a tool of the UK establishment".

thanks from GuyParry's wife.

Probably "mea culpa". I brought the FT into this thread because Italian Rai 2 Telegiornale (news) were running at the bottom of the screen on Monday night some "FT says Italy will leave the Euro" comment. So, being a bit of an habitual cynic, I thought I'd better see what the FT was actually saying - zilch, effectively!
However - I'm pretty intrigued to see how what could become a bit of a FT versus Economist bunfight pans out!!
Italian politics is "cats in a bag stuff" - and it will get worse.
Ronald favours the Economist's point of view on Berlusconi (or so I suspect - Peace Ronald if I'm misinterpreting your views!!)