For Eight days at the end of September, my wife, Joni and I traveled to Rome and Cinque Terre. The week was glorious– the food, the wine, the people, even the weather.
Walking through the streets of Rome, through museums and churches, The Vatican, the varied neighborhoods, we fell in love with the place all over again.
Filled with wonder and a renewed appreciation for history in our surroundings, we couldn’t help but recognize the underlying cruelty and suffering on which so much of this ancient world was built.
The more we walked, ate and chatted with locals themselves, the more their myriad underlying problems were revealed. Incredulously, Italy’s leadership has ignored its societal and economic problems and have promised even more of the same. Why?
Italy’s standard of living is the same as 20 years ago. Per capita income last year was barely above the 1998 level.(1)
Youth unemployment runs at 37% driving young people from the country.
Italy’s public debt level to GDP has risen to about 132 per cent.
One analyst has called this a dangerous “doom-loop” between the banks and the government.(2)
The new government against this spiraling debt load has proposed new programs such as Universal Basic Income, cutting taxes with no reduction in spending as well as rolling back pension reforms.
All this raises the real possibility that Italy (whose economy is 10X the size as Greece’s) is headed for another sovereign debt crisis.(2)
Referencing the classic Monty Python Parrot skit, one commentator quipped, “a turnaround can only begin by recognizing that this parrot is dead”!
So, while solutions (i.e., more economic reforms, better education and a leaner public sector to start) may be obvious to everyone else but Italy’s leadership and citizens, the spiraling debt with no growth continues.
For now, Italy remains a wonderful place to visit. Let’s hope the EU and Italy’s new leadership can make the hard choices and do what needs to be done before a collapse. The parrot is dead!
Please email me with your comments and thoughts.
(1),(2)This was written based upon my own research, and articles in Forbes, 20 years and Nothing to show for it: Italy’s broken economic model, April 14,2018
(1),(2)American Enterprise Institute, Desmond Lachman, August 29, 2018
WSJ, September 29-30,2018, page B11 Italian Assets pounded by Deficit Fears
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.