Fri Aug 22nd, 2014 at 04:42:03 PM EST
For those who notice, the bad pun is intentional...
From Pieria - an alarming piece that suggests Italian is basically doomed:
Anyone with an interest in government finances and public spending must, by now, have developed a morbid fascination with Italy.
The country slid into recession again this month, wiping out not only its post-recession growth but much of its growth since it joined the Euro.
Chart via Matt O'Brien at the Washington Post.
The pattern of Italy's GDP growth has become detached from that of the rest of the G7. Since the crash, all the other major economies have grown, albeit at different rates. Italy, though, is on a severe downward slide.
Chart via Ben Chu.
Some people blame the Euro for this but Italy was in trouble before it joined the single currency. Both Italy and the UK crashed out of the ERM in 1992. For the UK, this was the start of a decade of high growth but Italy's economy stalled in the years after and grew much more slowly for the rest of the decade. Briefly, in 1991, Italy overtook Britain and France to become the world's 4th largest economy. Since then, though, it has been a tale of slow decline.
The Italian government had borrowed heavily during the boom years and the slowdown saw its debt-to-GDP levels steadily rise.
Chart via Paul Krugman
This excellent piece by Economics Help explains the story in detail. The upshot, though, was that by the start of the recession, Italy's debt was way ahead of most of the other major economies.
Source: IMF World Economic Outlook 2014
But here's the twist. Italy reduced its deficits drastically in the 1990s. For many years now, it has run a primary surplus. This means that, before debt interest, its government revenue is higher than its public spending. Unlike many other countries, including Britain and the USA, it is not borrowing to fund public services and social security.
Chart via Igor Di Giovanni
It is, however, having to borrow to fund the debt repayments on its historic borrowing which is why, despite its primary surplus, it is still running a deficit and its debt is still going up.
Well worth reading to get the key points on the weakness of investment etc.