The pain of leaving will be traumatic and immense, the country will eat bread and onions for a few years until freedom from the Euro-yoke is complete, but then its ability to re-flower its economy will be by its own merit, not because a generation of sleazy politicians wasted zillions on boondoggle vanity projects financed by cheaper interest rate loans than they were used to, indebting the country up to its eyeballs.

This is exactly what the Brexiteers in the UK are saying, (although they are downplaying the bread and onions bit...).

I think you are right that globalisation has hurt Italy badly. Many of the industries, products and designs it pioneered are now produced in Asia and eastern Europe. The UK handled that by my switching to financial services, brand building, and some high tech industries. Germany had greater economies of scale and simply excelled at manufacturing and with robots making labour costs less important. Other than tourism, I'm not sure what the Italian strategy is, but I doubt ongoing devaluations will be a long term solution.

You are also right that the 3% and 60% rules were arbitrary and ignored when it suited Germany's or France's purposes. They should never have been enshrined in a Treaty. But the problem with them is that they limit the scope a government has implement counter-cyclical policies to deal with asymmetric shocks or sudden down-turns. Ongoing borrowing in the long term simply increases interests costs which creates a cycle of ever increasing debt and impoverishment. Unless your strategy is to default on debt every now and again, in which case virtually no one will lend to you.

AFAIK most of Italy's debt is held by the ECB as a result of QE and by Italians themselves, so any default would be devastating for Italian bond-holders, some of which may be wealthy but many of which are ultimately funding pensions. The ECB QE policy was primarily to get highly indebted countries like Italy, Greece and Ireland out of a hole by buying up government debt when private debt markets won't do so except at exorbitant rates to reflect what they say as default risk.  This has helped the Eurozone economy generally to recover to the extent that large government deficits should no longer be needed and debt burdens as a % of GDP should be being reduced in any case.

So at the moment I don't see the Euro (or even its stupid rules) being a problem for Italy. Globalisation is, but you would have to leave the EU (not just the euro) if you wanted to introduce protectionist policies. And while you say the EU is facilitating globalisation, in fact third countries will tell you that the EU is a very protected market - particularly for agricultural produce. World prices for many goods are much lower than European ones, and European farmers get CAP payments to compensate.

If I were Italian, I would be waiting to see how Brexit works out before going down that road.

Index of Frank's Diaries