Excerpts from a Bloomberg article:
Italy is back in crisis, unsurprisingly.The political cycle that started with a populist earthquake in 2018, bringing together fringe forces of the left and right in an unusual coalition, has ended the same way it started — with a bitter shock to the system and market turbulence over the future of Italy. Along the way, it has fueled the rise of the far-right Brothers of Italy and the fall of Prime Minister Mario Draghi, who was ultimately unable to escape the machinations of Rome. It seems no one, not even the man credited with saving the euro, gets a clean exit from government, no matter how applauded or internationally revered they happen to be. Because in Italy, politics is personal...There is no denying that the legislature about to end has been beset by constant infighting, backstabbing and personal machinations of the same people that promised to put the nation’s interest before party politics in 2018. The past four years have seen huge ideological swings, enough to anger and confuse Italian voters at each turn...Meanwhile, the ECB has shown its willingness and ability to act vigorously to protect the single currency. For all its faults, Italy, a founding member of the euro and the bloc’s third-largest economy, will remain a key part of the monetary puzzle Frankfurt has to work with.
And this from John Authers:
But the critical problem for the euro is that its viability is once again in doubt. Ten years ago, it was the ECB that effectively ended the sovereign debt crisis as then-chief Mario Draghi promised to do “whatever it takes” to rescue the euro. This time, the problem is more focused, but unfortunately it’s focused on Italy, the eurozone's third-largest economy. And the market is still not convinced that the ECB can do what is needed to keep Italy in the eurozone...There is one critical difference with the first eurozone sovereign debt crisis. That one was truly existential and revolved around a group of countries on the area’s periphery known as the PIIGS (Portugal, Italy, Ireland, Greece and Spain), sometimes joined by Cyprus. This time, it’s about Italy...The pressure on the euro owes much to the awful coincidence that Draghi chose this of all times to depart as Italian prime minister. Markets were naturally more comfortable with a technocrat like him heading the government. More seriously, the current favorite to take the job next is Giorgia Meloni. She leads a party called the Brothers of Italy, which is directly descended from Benito Mussolini’s Fascist movement... And whoever gets the job faces intractable economic problems, from low growth to an aging population.
I was surprised three years ago to find out how backward Italy really is. The most striking thing was the lack of toilet seats. Other than in our Rome hotel (Courtyard by Marriot), every toilet was seatless. You just had to balance on the porcelain bowl, whether you were in the Vatican, Pompeii, a restaurant, or a truck stop. This was before supply chain issues (2019). If they can't afford toilet seats, then of course they have many more serious problems.
ReplyDeleteThe toilets in Pompeii were the worst. Missing seat aside, the walls were full of these claims about Novellia Primigenia giving the best "massages" in the district, but nobody could even tell me where to find her.
DeleteThe problem in Italy is that the political class is unable to execute the measures they commit themselves to. Italy is too big to fail, so it keeps getting help from the EU and ECB. In return, Italy then promises to restructure it's economy so the economy can become viable. Sadly, every time when it comes to executing these tough measures, the prime minister ends up resigning, and getting replaced by someone who opposed the measures and the cycle starts again.
ReplyDeleteNote that in contrast, Greece, Ireland, Spain and Portugal do get all those measures passed and that their economies are much more stable than Italy's. Also note that politics in Greece and Spain is also very unstable.
Note that I'm not passing judgement on the content of the measures, they are plenty controversial and often very unpleasant for the country. I'm just noting that while other countries get them done - often smartly adapted to spread the pain more, Italy can not. This is a problem of Italian politics.