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Is Italy Too Far Gone?

Posted by: Ben Vickers on October 27, 2011


What is wrong with Italy? In a few short months it has taken the place of Spain as the country that in many minds may spark the dreaded contagion from the Greek debt crisis. But it’s not as if Italy has taken on a massive amount of debt in recent years. On the face of it, not much has changed of late: the country’s debt to GDP has been above 100% for twenty years.


So where is the rot? Prime Minister Silvio Berlusconi, who looks deceptively young for his 75 years after benefiting from plastic surgery and a hair transplant, offers a curious parallel to the state of the nation. Economic growth has topped 2 percent in only three of the past 20 years - at a time when Italy needed to take German productivity as its benchmark. This week Berlusconi pushed through a pension reform that raises the retirement age to 67 from 65 - however, Italy will need to do a lot more than this. The country is aging too fast. In 1971 there were four people under the age of fifteen for every pensioner. This year there are almost 1.5 pensioners for every youth. No amount of cosmetics can disguise the fact that the country is unlikely to grow its way out of debt.

Reader Comments

hate the pensioners

October 27, 2011 1:15 PM

Well in Italy you have 300 bln of welfare expenditure for 16.733.031 pensioners (9 bln for 500000 "baby retirees") (340bln in 2014)

120 bln for healthcare and 170 bln for state employers

they are all official data

there is a lot to do but gdp will crash

D Brook

October 28, 2011 6:39 AM

One would have thought that the Germans would have learnt from WW2 that having the Italians on their side was a definite looser situation


October 31, 2011 5:57 PM

It's time for a change in Italy. The first step would be to work on the biggest problem of Italy, the Prime Minister Silvio Berlusconi. Same as he is faking his appearance, he is doing some fake changes in order to work against the downfall of the Italian economy. It's time for some serious changes in the Italian financial policy. Reforms like the higher retirement age are a good first step to gaining a lasting and strong competitive economy in the EU.

Thomas Bau

November 5, 2011 1:08 PM

Italy is a geronto craty, empire of the old men. The president is 84, the pope is 85, Berlusconi is 75. Maybe this has to do with the retardedness of Italian sons and doughters who live in the Hotel della Mamma until well byond their 30s.

I once worked in Milan in 1998, I went back recently, there is still the same barkeeper in the bar Marchesi, no change at all. This is Italy - a, country in complete stagnation - so reforms will be indispensable to cut off the dead wood and revive an economy that could be more dynamic.

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Financial markets are on the edge as investors await a solution to the European debt crisis. This blog examines the banks that hold billions of euros worth of Greek, Italian, and other sovereign debt; the governments that must pay off or refinance that debt; and the implications for the worldwide financial system if they can't.

Analyses or commentary in this blog are the views of the author and or commentators, and do not necessarily reflect the views of Bloomberg News.

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