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Both Italy and Spain are experiencing the same problems. Austerity alone, although welcome, will not help to improve thesituation. And the current political crisis in Italy is damaging further the economy, which urgently needs incentives. As you said, the current struggle that small and medium businesses, generally run by families, is heartbreaking. I have also seen how many of these businesses have been forced to close their doors in Tuscany. Unless something is done quickly, the future of those families looks very bleak.

I can't see an easy answer or indeed any answer to the problem, but I'm no economist.

Italy has always been out of step with France, Germany, UK etc because ��������s don't do credit to the same extent. Italy has been left behind in economic growth terms because the other countries' economic growth has been based on credit. Is that real growth? I suspect no. Which means that Italy could enjoy similar economic growth only if ��������s would be happy to accept a level of personal indebtedness similar to the French, Germans and British. Does anybody in Italy want that? - I suspect no.

The country has loads of debt though, so if you shared it around ..

This is a very distrubing idea that may cause widespread reaction in Italy with the large amount of savers. I cannot see the logic behind it.  

Cyprus is a special case and their economy cannot be compared with other countries. On the other hand, the public debt of some countries, such as Italy or Spain is becoming a real burden. Italy has a low level of personal debt according to EU statistics But in the long run, people, no matter how indebted they privately are will have to pay the public debt through increased taxes, charges, etc. It is as simple as that.

Steve, I'm not sure I agree. The difference is the French, Germans, British all bought stuff on credit, which made their economies grow. The ��������s didn't buy on credit so they could only achieve economic survival through Government spending on things that people may or may not have chosen for themselves. Of course the Government had no money to pay for that spending, so they borrowed it. Hence Italy has huge Government borrowing because the people wouldn't borrow for themselves i.e. live on credit, whereas people in other European countries did - and continue to do so. As I asked earlier, would it be a good thing for ��������s to launch themselves into personal debt? I still think no. Which probably means Italy is out of kilter with Europe, and should probably not be part of it. Similar to UK really, though UK still try to pretend it's in their best interests.

And why would it be healthier or wiser to live on credit? It does not make much sense. Credit may be necessary for certain companies or individuals to develop projects but it is dangerous to buy on credit things that you can't really afford.

"As I asked earlier, would it be a good thing for ��������s to launch themselves into personal debt? I still think no. Which probably means Italy is out of kilter with Europe, and should probably not be part of it. Similar to UK really, though UK still try to pretend it's in their best interests.'' Gala, you really need to read right through to the end before shooting from the hip.

SirTk, I am not "shooting from the hip!. Simply stating my opinion. I cannot see the advantage of copying bad examples. ��������s take a more conservative approach than other nations and try not to get burdened by personal debt. A huge public debt is what they have to endure courtesy of their governments. Taking up credits will only make the banks richer. Other macroeconomic reforms are needed. As I said before, austerity alone is a recipe for disasters.

What a total waste of time trying to nicely educate some people. 

Gala, if you troubled to read and understand, that's exactly the point I'm making - your posts make it look like I'm saying the exact opposite. I didn't ever think I'd agree with "Esme" but her last post hits the nail on the head!

Sir TK, look at the original text and its contradictions:   The difference is the French, Germans, British all bought stuff on credit, which made their economies grow. The ��������s didn't buy on credit so they could only achieve economic survival through Government spending on things that people may or may not have chosen for themselves. Of course the Government had no money to pay for that spending, so they borrowed it. Hence Italy has huge Government borrowing because the people wouldn't borrow for themselves i.e. live on credit, whereas people in other European countries did - and continue to do so. As I asked earlier, would it be a good thing for ��������s to launch themselves into personal debt? I still think no. Which probably means Italy is out of kilter with Europe, and should probably not be part of it. Similar to UK really, though UK still try to pretend it's in their best interests. Sorry, but it sounds more like a sophism than a real argument. You clearly say that the cause of Italy's problem is the limited personal borrowing which has then to be compensated by government borrowing. Yes, you suspect that ��������s will not agree to get personal loans, but this will still be the cause of their woes according to your earlier reasoning. Then, you say that it "probably" means that Italy is out of kilter with Europe, and that it should withdraw from the EU. Followed by a statement indicating that the UK (which has a high level of personal debt according to your own earlier statement) is in a similar predicament (although it would appear as it is for different causes) and should also withdraw. Difficult to follow in any language.

A story book would be needed to explain it all Gala. You need to spend to develop, Italy has little private (read "private company") investment in the required infrastructure. The UK differs to the others (including Italy) by the nature of still having the pound. I don't have a clue about the rights and wrongs of credit (never had any myself apart from a mortgage at one point, which it killed me to have to pay all that interest...). But then again I don't think any of the so called professional financial experts have a clue either and that's our main problem. We are in rapid decline in the West and need very good people who have the vision to see a way forward. To me, as a simpleton, I would suggest we retain the only things we have left to sell, that is technology and quality goods.... 

I would agree with you Steve, in that the so called "financial experts" haven't got a clue. Otherwise, we would not be in the mess we are in and that would apply to most economies. Oh yes! Brazil is doing very well after decades of stagnation and highway robbery, but then, Brazil is an extremely rich country that was mismanaged for a very long time.  Personally, I am very much against personal debt and, as it is your case, I have not purchased anything on credit for such a number of years now that I can't remember. My philosophy has always been, if I can't pay for it, I can't afford it. I think that the last time we had a mortgage was some 30 years ago. Consequently, after working very hard, we are not rich, but we can confortably live the rest of our lives, providing that the "financial experts" will not create such a crisis that will but the whole world upside down. On the other hand, I do agree that companies may need money to expand and to invest on renewal of infrastructure, necessary to their survival; however, this should also be done with care and this is the area where governments should help, as this assistance should normally guarantee that the economy will progress. My worry is that, in the case of the �������� government, the public debt is gone to finance the overspending of the state itself, which simply has become a monster. Add to this the phantom of corruption, which is always there, and there is a huge problem with very difficult resolution. I do not think that blaming the Euro or the EU is the answer. And I am not completely sure about whether the UK made the right decision by maintaining the pound. Time will tell. I further agree with you in that the EU cannot compete with emerging markets when it comes to manufacturing as our costs are high and perhaps it would be wise to concentrate on high technology and quality goods. And should write QUALITY in capitals. Here, I would give you a recent example of something that happened in Spain, which is the largest producer of toys in the world. Some years ago, one of the largest firms in the sector transferred its production to China because of labor costs. They had so many problems with quality and safety, something vital when you are dealing with children, that their costs escalated dramatically instead of going down. They had their quality control headquarters in Spain and they were forced to send back so many toys that the savings evaporated and they could no longer trust their Chinese providers. Consequently, they reopened their factories in Spain. Perhaps, this will happen in many other countries and production areas as well. One example for Italy is the total loss of their once buoyant textile industry. And like this, many other industries. There is still hope, but we need reform. And quite possibly new financial advisers who are not punters and know what they are talking about. Also, banks that follow a code of ethics... if that word is still in use.

I think you'll find Gala that China is still the Worlds largest toy Producer, both manufacturing and Export, well anyway it was last year when I did work for the Middle East Toy Fair.

This has happened with a number of companies in the UK recently, who have transferred their operations back to Britain from China.  'Pot Noodles' (yuk!) in Yorkshire for example!

It was bound to happen sooner or later. In actuality the ��������s along with the Spanish and the Greeks have been very lucky that it has taken so many years for the you know what to hit the fan. It's their sense of entitlement that has contributed to their present malaise and their refusal to change their ways will not help for the future. Compound this with a political government that is the laughing stock of the world. Furthermore add to this and underground economy that contributes little or no taxes to the coffers, corrupt officials, (try to get a job in Italy without paying someone off) and you have a Dolce Vita that is hardly dolce but definitely sour. Now the average �������� is being told to tighten his/her belt, while the �������� government is inflated with fat, bureaucratic individuals that are over compensated, are lazy, and don't really give a damn, but wait the poor �������� than turns around and votes for... Berlusconi. There's no hope. Italy is a beautiful country and it's too bad it's full of ��������s. The true �������� immigrated to other countries years ago (like myself and my father before me) and what is left has reduced the country to this sorry state of affairs. VERGOGNATEVI!

Its called capitalism.  Rampant, banker based capitalism that has completely bug($ed up the world economy. Whether you are in UK or Italy or Spain , we are all stuffed and served.  a few people will be much richer and be able to by a penthouse which will look out over the consequent devastation of our cities, and they will be happy, before they are mauled by a screaming mob when they leave the front door.  Politics has nothing to do with it, - ask the Bilderburg group.  We are far beyond democratic politics - or that which gives the appearance of democracy.  We are in the hands of the Fed, the IMF and various shady characters.   But strangely Italy is better placed, having low credit levels - they are less in the pockets of the movers and shakers.   

Ram, I would agree that having lower rates of debt makes both countries and individuals less vulnerable and that this is good, also that the finance world are the ones who are currently setting up the rules while politicians seem to blindly follow what they say. On the other hand, there is another factor which cannot be ignored and that is that the job market has changed a lot in the past decade or so and that jobs, particularly the unqualified ones are becoming very scarce. I think that unemployment will tend to increase and there is nothing that will solve that problem. So, the outlook is not very bright. As for the financial system, they are playing "roulette" with our money. Let's hope that it will not turn into Russian roulette...

Not a source I would normally cite (and I have one or two issues with the article)  but this is a pretty brilliant introduction to the current �������� political scene. Definitely worth reading! 

Letta came to Madrid to meet with Rajoy and the meeting has been very successful. Spain and Italy share many problems and the current austerity rules imposed by Merkel and others is not helping to solve the economic problems that both nations face. Unemployment, in particular, is a major issue. The now demoted Strauss-Khan had warned about the consequences of too much austerity and how counterproductive it could become. Christine Lagarde did not seem to share his views although she is now changing her views. The new alliance may include France as Hollande is facing similar problems. Looks like Merkel is in big trouble and she has an election coming... Interesting times.....

Notwithstanding the global situatuion, the European situation, and all the other situations - ITaly will do what Italy does best - befuddle and procrastinate without DOING anytihng.   We will now have a limbo while they chat over coffee about keeping M5S out of power, and give the appearance of doing something - then Berlusconi will pull theplug on the gov to claim legitimate impediment again and not get the Cassazzione ruling against him.  IMU is just being used as a tool in all htis to give him a means of bringing down the government.  What GErmany, or Europe says makes no difference.  Italy is now at a point where it cant realistically do anything - it has no money, it has no means to changing the consitution, it has no working politics willing to make the changes necessary - its just sitting there waiting for the sky to fall in, but in a decorous way.   In the meantime the arrangement for civil unrest are being tightened and upgraded - (nothing like  a war for helping the economy - someone mention N Korea?)  - and when the folks spill out onto the streets - they can do what they do best.  

Ram, I am an optimist, I think that we will all survive... Well, I can always pray and light candles...