If you look at a combination of articles about Italy in newspapers and magazines over the past few days it seems as if the country is about to fall apart. A dear friend wrote to me with concern over this article in Newsweek. I had read about the scandal when I was in Italy two weeks ago and spoken to a lot of friends about it.
They are all very concerned of course but they have that fatalistic attitude that what will be will be. At times I have found this irritating and at others very practical.
The take away from reading the papers was that there will likely be new elections in the not too distant future. What combination of forces will lead is hard to predict. The Lega Nord and Berlusconi will surely stay together and Gianfranco Fini who broke with Berlusconi earlier this year will likely come back into the fold, perhaps with some promise of a stronger or leading role.
I was a financial correspondent in Italy 10 years ago and although it was early on in the Berlusconi era, he first went into politics in 1993, not so much has changed. At that time, the left was weak and now, it is weaker unfortunately except for the very charismatic Regional Governor of Apulia, Vendola. All my friends are quite disillusioned with the left although everyone likes Bersani, no one feels he is a strong enough leader.
What is equally worrisome is the level of debt to GDP as today’s article in the New York Times illustrates. To be fair, when I was a journalist in 1999 in Milan, the debt level was 116% of GDP. Today it is 118%. At that time, Italy couldn’t devalue its currency either because conversion levels had been set to peg it to the Euro. Today as we all know, Italy is a founding member of the Euro and it’s third largest economy after Germany and France. Surely Italy will not default. I doubt that Spain or Portugal will either. I believe in the Euro although I do suspect there will be changes made in the future.
For now, Italy will continue in this fashion. I always hope to see her blossom with a booming economy and a forward looking government. Thus far that hasn’t happened but I refuse to give up hope. Demographics aren’t good but certainly Italy doesn’t lack for creativity and entrepreneurial spirit. Plus ca change, plus le meme chose….