8424 Beyond the rosy glow........

Thats bringing up a blank page for me..

Mmm! Thank you. Sobering thoughts at Christmastime.
Must remember to thank our lucky stars for the good things we have.
And be nice to [U]everyone[/U]!:yes:

Alas this is so true. Many families are at their wits end and this article explains many of the problems.

I know several families who for decades have worked hard, paid their dues and thier debts and tried hard to owe nothing to anyone. It was a question of honour - but since the arrival of the €uro and the way it was (allowed to be) introduced here, the average Italian found that their savings [U]and[/U] earnings had [I][U]literally halved[/U][/I] overnight...

Many professionals these days earn little more than €1200 per month and they're the lucky ones. "Jo Average" will be lucky to take home €700 or €800 pm... So many who have had their own little businesses now have their own customers unable to pay them on time - if ever... that is the problem that many face.

This is also happening in other European countries and it seems as if the introduction of the Euro has a lot to do with it. In Italy and Spain, Caritas is having hard times feeding so many people. In France "Les Restos du Coeur" is also doing a great job. But these are no solutions and the impoverishment of the lower middle-class families, the New Poor, has dramatic social and economic consequences. Is there a real solution?

I find it too easy simply to blame the € for all Italy's woes. Yes, at the point of introduction, there was a one off "hit" to the value of savings/liquid assets and there was a step change in the cost of living as all staples experienced an opportunistic price hike due to "rounding up".

I don't deny that this reduced peoples effective standard of living by an appreciable amount (maybe as much as 10%) overnight and that this has placed more people on the edge of some arbitrary poverty line than would otherwise have been case. I also understand that an economic downturn now will therefore push more people OVER that arbitrary line & into relative poverty - [B]if[/B] we assume that there has been [B]no[/B] beneficial economic effect due to the € in the intervening 5-7 years.

The wider impact of the common currency should have been to stabilise member states' economies; to force governments to moderate imprudent fiscal management and stay within the accepted limits for inflation, trade balances etc. The idea being that removing the barriers to trade in the common market would stiumulate economic growth to the benefit of all.

Tenenval's article highlights low wages, rising interest rates, falling birth rates, an aging population and lack of employment/prospects in Italy. Basically, Italy's economy and society is stagnating, and more so than comparable EU states. I still though fail to see how the € alone is to blame ... it's (at worst) a small symptom of an ongoing problem, not the root cause?

Yes, the European Central Bank will set base interest rates with a view to managing pan-European inflation, and keeping the currency's value stable relative to the other major world currencies. That may cause some pain in member states whose economies are out of phase and/or badly managed ... but that's kind of the point of the central control; to align economic cycles & to prevent bad government from being able to print money as a short term political expedient. Anyway, the EU interest rates are still low and have not risen substantially in relative terms.

I'm not belittling the problem - I realise it is real and painful for those living/working within Italy (and I personally can see a tangible difference with central Spain, where even though people regularly moan about the economy, there IS enterprise, growth & opportunity evident).

The Italian state stifles enterprise via excessive bureaucracy & taxation. Political instability, corruption, nepotism, archaic labour laws & an institutionalised black economy all underpin this. The € actually provides a platform for efficient trade - it is the inefficiency of the traditional Italian industrial/manufacturing sector, vested interests, and the lack of political vision & will to address long term problems that is making Italy suffer more than other similar countries in the current economic environment.

Leaving aside the one off "hit" that the euro caused on introduction, do we really think it is to blame or is it just a convenient scapegoat for internal incompetence?

However, widening this discussion slightly, I DO think that Italian politicians will continue to blame the € (to avoid taking any responsibility themselves), and I'm starting to wonder how long before we again hear calls for Italy to leave the single currency?

Well said, Pigro.

My wife and I arrived here nine months ago intending to start a business and make a real contribution. Having looked at the bureaucracy and the taxation, we have decided not to bother. What I find miraculous is that anyone sets up in business at all, and it's no wonder that many only work in the black economy.

What Italy needs is a new kind of "social contract", where the government reduces taxes substantially and cuts out all the bureaucracy, the "studi di settore", etc, but at the same time enforces the rules stringently and fairly. But it would need some visionary leadership to achieve it, and that is sadly lacking.

Agreed pigro and gradese. And I'd add the widespread Italian version of the "old boy network" as a particular bar to ambitious youngsters without the right connections. Its the small family business or nothing for so many - which whilst picturesque means the brightest and best can't make a go of it. At least one Italian friend of mine has gone abroad to avoid the fate of joining his father's shoe factory.

I was talking recently to a lady in her mid 40s who has a small but rather nice shop in my town in Abruzzo, selling household items/tableware. It was originally her mother's. She has two children, one a 16year old daughter that I subsequently met. I asked she would take the business over. She had bigger plans so no. Sad I thought though at the same time understood why she might want to leave the town.

Yet at the same time whennever I go to my house, a couple of new shops or ristorante have opened in the centro storico.

I wonder what will eventually happen to that household shop and indeed other small family run businesses. I wonder if that makes for younger foreigners including British or indeed more chinese to snap them up. Okay you might not make a fortune but people need plates etc and you would enjoy a steady income without the fears and pitfalls of being employed in a large company.

As has been mentioned on the Forums here, it is of course difficult for a foreigner to set up a business, but I wonder if it is less so taking a small famuly one over.

Errata - whenever

I think the problem with that is that the foreigner would need to pay something for the 'goodwill' and obviously buy the property itself (assuming it was owned not rented currently).

If the current owners have had the property & business in their family for years, they are probably eking out a basic living from the turnover because they don't have any debt in the business. For a 3rd party to finance the purchase of the business he'd need to put in capital & that would badly skew the profitability?

The goodwill is an integral financial part of buying a business in the UK of course, but maybe it's intrinsic in Italy and not something you have to pay for??? No idea but I hope someone can answer that.

The scenario you present in you last paragraph makes it all sound even bleaker, Pigro, alas.

I don't think think that the problem of corruption and the other issues discussed is particularly isolated to Italy. We live in the US and there are now more and more people who are falling into the category of "the working poor." Granted, we have much lower taxes than it Italy but we have millions of Americans who have no health insurance and the cost of a college education is staggering. We live in the Northeast and with the spike in oil prices, many families are having a very difficult time paying to heat their homes or putting food on the table. I was listening to a program yesterday on public radio interviewing an elderly couple who had to decide between heating their mobile home or paying the bills. This is becoming more and more common. Our town of approximately 9,000 has had its food bank (which gives food out weekly to needy families) depleted and has ads in all of the local papers and at the supermarket for its citizens to please donate as much food as possible. The shelves were actually bare for a week or so and more and more people are availing themselves of their services.

[quote=turtle;79046]The goodwill is an integral financial part of buying a business in the UK of course, but maybe it's intrinsic in Italy and not something you have to pay for??? No idea but I hope someone can answer that.
[/quote]

whether intrinsic or explicit, I guess if someone is selling a business which has an established client base that generates the business' main turnover, the seller will factor in the value of that turnover (usually by using a standard multiple for the business sector) on top of the book value of assets (stock/property) when determining the asking price. Likewise the buyer will want to see the books for proof of turnover and will perform a similar calculation to decide if the asking price is fair. It may not be called 'goodwill' in Italy, but I'd imagine it works that way regardless, otherwise the worth of a business would simply be the sum of its assets which makes no sense unless its a 'fire sale'.

As usual, thats all just speculation on my part as I have no experience of buying or running a business in Italy - so happy to be enlightened if I'm wrong.

Considering the article at least makes passing reference to non-Euro countries it's about more then just the Euro.

I'm sorry but it's 2007 if you can't handle a studio sector audit then your record keeping isn't up to modern standards. The sort of audit isn't an Italian invention. It's hardly new. If you're honest and keeping half decent books it won't be a serious issue. Audits are no fun but it's not like the average Italian doesn't employ a commericialista to run interferenced for them.

What the article doesn't cover is how the "average" wage hikes are being skewed around the world by the top 10-20% of wage earners. If you're at the bottom 80% and the worst you have had is flat earnings you've done fairly well the last decade. Plenty have seen serious wage cuts.

[quote=pigro;79035]

However, widening this discussion slightly, I DO think that Italian politicians will continue to blame the € (to avoid taking any responsibility themselves), and I'm starting to wonder how long before we again hear calls for Italy to leave the single currency?[/quote]

I want to know when Italy will start standing up to the EU. Why is Italy paying to support countries like Ireland? Countries that then take the money and keep their own taxes at artificaly low rates. Italy has paid billions out in. For what?

[quote=turtle;79043] Okay you might not make a fortune but people need plates etc and you would enjoy a steady income without the fears and pitfalls of being employed in a large company.
[/quote]

No just the fears that your latest purchase won't sell. That Ikea will open down the street. That the supermarket starts giving away plates to encourage people to buy groceries. That 's a good week. :eeeek:

Obviously plates were a bad example, though quality plates you will never find in a supermarket. Try tobacco. Supermarkets in my town don't sell these but that I would never sell either.

I have aa friend there who is a Pharmacist and he says he's worried about the decline of chemists as now the supermarkets stock standard drugs.

[quote=pigro;79035]The Italian state stifles enterprise via excessive bureaucracy & taxation. Political instability, corruption, nepotism, archaic labour laws & an institutionalised black economy all underpin this.[/quote]
It continues to amaze me how many transactions here are done "in the black".

Saw a doctor yesterday (privately). When it came time to pay the bill, her receptionist asked if we wanted a receipt: €100 if we did, €80 if not. Tradesmen in the UK who do jobs for less without a receipt are not hard to find, but I find it difficult to believe that there are many UK professionals who would do that. Yet in Italy, that sort of tax evasion is so casual that it seems the norm for everyone.

I assume the only reason I'm ever [I]asked[/I] the receipt question is because I'm clearly a straniero; if I was an Italian, I'd know just what phrase to use to delicately indicate that I'd be happy to conspire to break the law.

I also suspect that the habit of handing over cash for services and goods supplied might help to explain how it's possible for people to survive on the (official) incomes stated earlier in this thread.

Economics have always been a mystery to me, but I remain baffled by how this country works at all.

[quote=turtle;79035]...a Pharmacist and he says he's worried about the decline of chemists as now the supermarkets stock standard drugs.[/quote]
This would be one of those lovely, public-spirited chaps who sells 20 aspirin for something like €5? :eerr: ...Or at leasts offers to sell such stuff at outrageous profit margins during the few hours of the day that he deigns to open his doors to the public.

It must be difficult for someone in his position to accept that he doesn't have the right either to customers or to rip them off.

My heart bleeds. :nah:

Al

Didn't Italy have to join the Euro after they ran out of zeros to put after the Lira signs? :bigergrin:

As someone still resident in the UK I am surprised at this since Italy clearly has a manufacturing base, something that has 'died' in the UK (Italy, for example, still has a car industry). I know the UK makes its money in invisible earnings finance and commerec but everytime I look at the diversituy of Italian products for sale over here e.g from domestic white goods, small appliances, to tail lifts on lorries, I am amazed how much of it originates in Italy. This seems to partly support Pigro's argument of bureaucracy stifling commerce. I believe though the biggest culprit are medium size companies who seem to have little idea of customer service. An example is we ordered windows for our house from a company rather than a small local joiner as the features suited what we wanted. 10 months on having paid a large deposit we are still awaiting delivery although they did fit the counterframes 2 months ago! It seems they usually provid3e windows for larger projects and in spite of our order being 15k euros we are seen as small fry and end up at the back of the queue whenvere a larger order comes in.
Companies should treat all customers as of value as we would have recommended them to others renvating property but not now.