The last time I was in Rome I hired a Vespa. What a way to see the city. Zooming around magisterial, imperial Rome gives you a false impression of the stalled Italian economy. The view from the Tiber is one of a booming, bustling, important capital of a large, dynamic country. The reality is very different, and this came home to me on a recent off-season trip from Rimini to Rome. Italy is in big trouble.
Rimini off season has that down-at-heel, seaside town, Ballybunion-with-better-architecture feel to it. I stayed in the Grand Hotel in Rimini. This place has real significance for Italian culture buffs because this was base camp for Federico Fellini.
Not only did Fellini use the Grand Hotel in Rimini as his set, but he died there too, in the suite upstairs that all his life he used as his office.
Fellini loved the absurd, the ridiculous. His movies, with their outrageous cast of Italian eccentrics, captured the booming, confident Italy of the 1950s, 1960s, 1970s and 1980s. Fellini was postwar Italy’s scriptwriter. But Fellini’s Italy is gone.
Italians are naturally nostalgic for that booming postwar period of nearly 50 years’ growth when Italy was rich, when mass immigration and unemployment weren’t issues and when Italian produce was sold all around the world.
Sometimes it is not appreciated quite how industrial Italy is. It has long been Europe’s second-biggest manufacturing power, beaten only by Germany. Italy is far more industrial than France or the UK. In some areas of design and high-quality manufacturing, Italy is still without peer.
However, since it gave up the lira and adopted the euro – in effect Germany’s currency – things have gone pear-shaped. This economic calamity is driving Italian politics, leading many to question the euro and Italy’s membership of it.
Devaluation
From 1945 to 1995 there was an understanding that Italy would devalue the lira. This is what Italy did. Traditionally, it devalued the lira every few years. This kept Italian industry competitive.
For example, when Italy joined the European Monetary System, in 1979, the exchange rate was 443 lire per Deutschmark. By 1990, the year of German reunification, the rate was 750 lire to the Deutschmark. By 1995 it was 1,000 lire to the Deutschmark.
In the 1992 currency crisis the lira fell to a low of 1,250 against the Deutschmark before recovering a bit.
The gradual fall in the value of the lira was a price that the Italians were prepared to pay for industrial success. Contrary to the dogma spouted by Europe’s central bankers, Italian devaluations worked particularly well.
From 1979 to 1998, Italian industrial production outpaced that of Germany by more than 10 per cent. Italian equities outperformed German equivalents by 16 per cent – after having taken into account the devaluations.
So not only was Italian industry growing faster than German industry, aided by lira devaluations, but also the return on capital in Italy was higher than in Germany.
This is because if the stock market of a country is outperforming another country’s, it implies that the capital that is deployed in the faster-growing country is being deployed more efficiently. Therefore, not only was Italy growing more quickly than Germany, but it was more efficient too.
Then came the euro.
Since Italy joined the single currency, almost to the day, its industry has gone backwards. Having outperformed German stocks during the period of the lira, Italian stocks have underperformed German stocks by a whopping, bankruptcy-inducing 65 per cent.
During the half-century when Fellini was writing the story of postwar Italian success, the Italian stock market almost always returned more than the German stock market. Once Italy joined the euro that stopped almost overnight.
Deep in the economy, the strictures imposed by the euro have destroyed much of Italian industry. For example, having outgrown Germany’s industrial output in the 1980s and 1990s by 10 per cent, Italian factory output since Italy joined the euro has lagged Germany’s by 40 per cent.
This is an extraordinary reversal of the previous 50 years.
While German industrial might has solidified in the euro, Italy has become enfeebled. For example, almost one Italian manufacturing firm in five shut down between 2009 and 2012.
Production is now 26 per cent below 2007’s peak.
In short, Italian competitiveness has been decimated by the euro. Without devaluations, Italian industry has floundered. Either a country’s currency adjusts if it is not as competitive as its neighbour, or it goes out of business. Italy is gradually going out of business.
Social contract
The 9.55am train from Rimini to Rome pulls in bang on time.
As we head inland, even the smallest of villages have municipal football pitches. This reflects not only the centrality of soccer in Italian culture but also the postwar social contract, when years of strong growth threw off enough money to finance good public services, railways, health, education and, of course, municipal amenities for the citizens.
If there wasn’t enough tax money in any year, Italy could always borrow to fund its lifestyle. Today Italy has the largest national debt in Europe.
But Italy’s free-spending days are over.
Since 2008, as the rest of the OECD recovered following the crash, the Italian economy has shrunk by 11 per cent – personal income by more. Italian household spending is 12 per cent below where it was in 2008.
Unemployment for the under-30s is running at a staggering 35 per cent. Seven out of 10 Italians under the age of 36 live with their parents, and 100,000 educated Italians left the country in search of work last year.
But for Italy the really big issue is whether the Italian state can remain solvent. By joining the euro and abandoning the tool of regular devaluations Italy has imperilled itself. It is profoundly uncompetitive. When a country becomes uncompetitive it eventually becomes insolvent, because it has no way of paying its debts.
Italy will become insolvent at some stage. This is a big deal for Europe and the euro. Italy is not Greece. It is far more important. This is Italy’s euro paradox. It has joined a currency that was supposed to make it rich but is actually making it poor. How to escape?
This time Italy needs Houdini more than Fellini.
The Italian economy was a commodity based economy for a long time, mainly exporting textiles and some cars etc. The problem isn’t the euro as such, but is competition from lower cost producers like China. The issue for Italy is that they have not moved up the value chain and they are still trying to compete in low margin highly competitive industries. They won’t get rich from this, whether they use the lira or the euro. Their education system is a joke in poor taste. Listen to an Italian speak English compared to a German and you’ll quickly realise there… Read more »
“It has joined a currency that was supposed to make it rich but is actually making it poor”
An excellent tell it like it is article. Italian politicians however signed italy up not to make Italy rich but because they saw as we did all the gravy flowing from Europe and irrespective of whether the euro was good for the country or not.
The Elephants in the Italian Room are NOT discussed ;
And, the world is increasingly privy to them thanks to the internet
I am surprised the recent, and noted as legally dubious, move by the Italian President to install an ex-IMF apparatchik as Prime Minister while ignoring the expressed will of the people doesn´t get a mention. That one will roll on a bit.
A “philosophical”, & “practical” & “sharp” reflection upon Lire, Euro, … Bitcoin >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> TITLE ; “Money” as Occult Spell June 6, 2018 oz2.jpg (Left, Rothschild Money Power plant. The curtain is media and education.) PREAMBLE ; Money’s function is not just economic. Satanists conjure it to enslave us spiritually. by Henry Makow THE ARTICLE ; When we think of money, we usually think of the coupon form, the official looking paper slips of various denominations. This is deceiving. Money is really an abstraction denoting material value. There are hundreds of millions of transactions every day. Do you really think paper… Read more »
This is just 1 of the Elephants in the Italian Room which the Italian electorate voted in the new government to defeat ; MAMMOTH ATTACKER OF THE NUCLEAR FAMILY And, here is example of the species in Britain ; >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.. Tue Jun 5, 2018 UK’s top family judge: ‘Collapse of the nuclear family should be welcomed and applauded’ June 5, 2018 (LifeSiteNews) – INTRO ; A few of you might remember a horrific case in the United Kingdom a few years ago, where a Family Court judge ordered what amounted to a medical rape, sending a “mentally incompetent” teenage girl… Read more »
Crazy Italian Politics ? “Shaddup a ur Face !” At least, Italy’s politics is not as crazy as British Politics ; Jeremy Thorpe was visitor to Kincora Boys Home, Belfast too. From the Spook operation that Kincora was, we get : Total lockdown of North East of Ireland workers’ strike under command of Presbyterian Rev. Dr.Ian Paisley, Leader of DUP Miami Showband Massacre Success for British Spooks in getting the Provo. IRA to break their ceasefire ; A ceasefire which was gaining much positive propaganda for Provo IRA. Chaos in Britain Rampant Worker Strikes Installation of Margaret Thatcher as Prime… Read more »
HEADING ;
Intel Is To Portugal, As Microsoft Is To Switzerland…
But It’s Not A Tech Bubble
by Tyler Durden
06/07/2018
INTRO ;
While Goldman Sachs, in a new report, goes out of its way to ‘prove’ that the current bubble in big tech is not a bubble at all, it has a funny way of showing it… by highlighting just how extreme valuations and market caps have become.
For instance, Amazon, Apple and Microsoft have a combined market capitalisation greater than the annual GDP of Africa (54 countries).
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>.
https://www.zerohedge.com/news/2018-06-06/intel-portugal-microsoft-switzerland-its-not-tech-bubble
We are lucky that on this site there is freedom of speech??
https://www.therebel.media/the_rebel_live_2018_free_speech_panel_lindsay_shepherd_katie_hopkins_ezra_levant_joe_warmington_and_sheila_gunn_reid
Constantly devaluing a currency in order to remain “competitive” is a complete affirmation that the country is not competitive. imports are more and more expensive for the domestic population and thus inflation is increased. Vacations abroad are more and more expensive while tourism increases as foreigners take advantage of low prices (in their own currency). Joining the Euro just exposed this to full view. Italy was going broke anyway no matter what currency it used. To be competitive requires savings(capital), investment, research and development, innovation and hard work. A chain is said to be as strong as its weakest link,… Read more »
Max Keiser´s take on Italy´s current predicament – https://www.youtube.com/watch?v=KZeLJXsiJKU
1 of the Elephants in the Italian Room not mentioned in David’s “Good — Italian — Room” Article ;
INFLUX OF SUB-SAHARAN AFRICANS INTO ITALY
And, it’s gonna escalate ;
Here, have a look ;
https://needtoknow.news/2018/06/un-plans-deal-african-population-explosion-forcing-mass-migration-west/
When in Rome walking the streets & they ever so dangerous with intrepid desperadoes about, u cannot risk playing with ur smart-phone ;
And, here is a reason not to play with ur smart-phone full stop
The Master with his Apprentice
Italy needs its own currency back so that it can happily impose inflation and annual devalue the currency. However the bankers cabal will not allow Italaleave, to be Quitaly. Once you are an economic serf you are expected to do as you are told. Austerity rulus and asset stipping is the rule. Italy has 2500 tonnes of gold and the bankers will insist on debt payments. The gold will be gone if Italy stays in the Euro. ————————————————————————————————————————— https://goldswitzerland.com/italy-hyperinflation-and-gold/ ONE CURRENCY DOES NOT FIT ALL The consequence of one currency fits all is a disaster for the weaker Eurozone countries… Read more »
Some Houdinis slipped through the screening chains to challenge the Fellonis Hence, we have the new government which vows to oust the grip that the Freemasons have on Italy ; And, never forget ; The Mafiosi work for The Freemasons of Italy >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> HOW THE SCREENING CHAINS ARE MEANT TO SAFEGUARD THE STATUS QUO Bertrand Russell wrote along these lines in his long winded wet dream of the Fabian Utopia in “The Scientific Outlook”, 1931 “On those rare occasions, when a boy or girl who has passed the age at which it is usual to determine social status shows such… Read more »
Ref. The Bankster Family who control the Finances of The Vatican, Italy TITLE ; The Rothschild They Murdered June 10, 2018 Apparently, the Illuminati are not immune to lethal attack, when they administer it themselves. I am reminded of this murder because of Anthony Bourdain’s “suicide.” Both men strangled themselves in a French hotel using the belt from their bathrobe. Last week, Kate Spade also “committed suicide” by strangling herself with a scarf. We must compliment the Iluminati on their originality. from August 13, 2011 by Henry Makow Ph.D. People used the word “gentle” to describe Amschel Mayor James Rothschild.… Read more »
https://www.youtube.com/watch?v=ca-C3voZwpM @ Grzegorz, & other posters too ITALY IS VERY VULNERABLE ON THIS FRONT WERE IT TO SAY “NO” TO THE BANKSTERS DITTO THE IRISH NATION IN IRISH STATE, & ALSO IN NORTH EAST OF IRELAND DITTO POLAND Apropos of the click-bait to approve modernization of Irish State’s infrastructure, & the industry in the country [ e.g. chemical plants, & pharmaceutical plants ], & all the way down to ur home’s technology, & even ur car, please give this article & youtube.com video ur serious consideration ; >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> THIS NASTY DEVELOPMENT CONCERNS U, … P-E-R-S-O-N-A-L-L-Y ! INTRO ; Unit 8200,… Read more »
DO NOT FORGET THAT THE CIA + ITALY’S HIDDEN STATE / DEEP STATE BEHIND THE SCENES CONDUCTED “OPERATION GLADIO” UPON THE POPULACE OF ITALY SO AS TO MANIPULATE POLITICS & THE POPULACE.
e.g.
BOLOGNA BOMBING
https://en.wikipedia.org/wiki/Bologna_massacre
” … a terrorist bombing of the Central Station at Bologna, Italy, on the morning of 2 August 1980, which killed 85 people and wounded more than 200. …”
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
And, here is an example of False Flag attack ;
Boston Marathon Bombing ;
IT IS COMPLICATED ; THERE IS THIS Henry Makow ?@HenryMakow Reader:” Video points out how Bourdain banned white people from attending his show in Houston. He also shows a clip where he calls for white genocide saying ; “It’s our only hope out of this.” (3:30) The video compares Bourdain to Barbara Spector.” https://twitter.com/HenryMakow/status/1005883066877964288 >>>>>>>>>>>>>>>>>>>>>>>>>>>>> AND, THEN, THERE IS THIS ; After Trip to Gaza, Anthony Bourdain Accused World of Robbing Palestinians of Their Basic Humanity http://ow.ly/d0dO30kpfE3 >>>>>>>>>>>>>>>>>>>>>>>>>>> AND, THIS Philistine Ayad ?????? ????? Thank you, Anthony Bourdain. You recognized the humanity of Palestinians in a world where we are… Read more »
AND, OF COURSE THERE IS THIS WHICH BOURDAIN TWEETED ;
Ladies & Gentlemen,
what has happened to our country in the last 4 weeks, the amount of murders is frightening???
The latest this morning in a suburb of Cork, a polish man killed by machete???
Who uses machetes???
Is there now an institutional culture of death in Ireland?
@ Tony Brogan primarily, My commiserations ; I was not aware of this issue coming before the Swiss people in a referendum Direct Democracy Ireland style. The proposal was rejected thus ; approx 75 % No approx 25 % Yes But, I think that this proposal will return to gain much higher Yes votes ; Because, it takes a lot of time for people to really understand the horrendous implications of abiding with the No votes. >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>. Business World 11 June 2018 HEADING ; Swiss voters reject ‘real money’ plan SUB-HEADING ; The so-called sovereign money initiative, or ‘Vollgeld’, would… Read more »
Lumber and steel prices are soaring in the US What is the real rate of inflation? What happens when interest rates reflect the real inflation? The chart below shows the rates based on 1990 norms but if the norm for 1980 is used the current rate of inflation is between 8-10%. Based on my personal experience with insurance , food, and energy cost I would suggest inflation is a lot closer to 10% than 2% as claimed by governments The Daily Economist Instead of simply a quarter point rate hike this week by the Fed, they better look at whole… Read more »
The changing of the guard is taking place in broad daylight but few take notice. Too many are distracted by the noisy fake news media. No commentary by notable economists. yadayadayda.
This essay comments on most of my observations on this blog over the last ten years. The end of the USD as the world reserve currency is unfolding in front of our eyes!!!
http://arcadiaeconomics.com/cryptos/new-reserve-currency-to-be-discussed-at-meeting/
[…] still is. From 1979 to 1998, Italian industrial production actually outpaced that Germany’s by more than ten per cent, and most of that was in the North. But when the crisis struck businesses similar to the one I had […]