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What's up, Europe? Small talk turns to finance in Italy
A general view of the church of San Giuseppe in Taormina, Italy on the island of Sicily.
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Tess Vigeland: The news out of Europe -- well you already know it isn't good, right? The credit rating agency Moody's changed it's outlook for Germany to negative yesterday. Yes, Germany -- the EU's strongest economy and bankroller of everybody else's debt. So you can bet it's even worse in Italy. A number of Southern Italian cities, including the entire province of Sicily, are on the verge of bankruptcy.
And so to Rome today -- as we ask: What’s up, Europe? And to Francesco Semprini, reporter for La Stampa. Good to have you with us.
Francesco Semprini: Thank you, thank you for having me.
Vigeland: How much are these economic woes on the minds of average Italians? The country is a bit bifurcated in how bad things are, so especially in Rome and the North where it might not be so bad, are people not really thinking about it as much?
Semprini: No, no, everybody feels this issue. People in the cafe, people in the bar, everybody in the street, they are not willing to talk about soccer, they are not willing to talk about the Olympic games, everybody talks about the future. Everybody fears about, you know, savings. Everybody fears about bank accounts. I can hear people saying that we will be the next after Greece, the next after Spain -- what will be the situation with my pension? What will be the Italian future?
Vigeland: You know, back in 2008 when the U.S. was plunged into an economic crisis even at dinner parties people were talking about mortgage backed securities and credit default swaps. Is the language changing there for, you know, the water cooler conversation?
Semprini: Right now we have this institution here, everybody talks about the spread, everybody talks about bonds, everybody talks about public debt because, you know, finance is something that is in the life of normal people now. Finance is a kind of bad word here in Italy.
Vigeland: Reporter Francesco Semprini of La Stampa in Rome, thank you so much for your time.
Semprini: Thank you, my pleasure.
Ms. Vigeland,
Sicily is not a province, but an independent Region of Italy - It contains provinces.
Also, this story is not truly representative of the conditions in the country, especially the South, and asking a journalist who is from Rome is not a good way to get the true story.
Italy is not Greece or Spain. It is in much better condition - if it can be properly analyzed by the rating agencies and obtain decent interest rates.
Southern Italy has been in a crisis state ever since the agricultural sector of the country (concentrated in the South) was sacrificed on the alter of the European Community in 1993 and cheap Oranges and other produce from Morocco and Spain flooded the market and killed the small farming in the south - the North and Rome made out relatively well, there they have an industrial sector.
As a result of this crisis Southern Italians suffered and eventually learned to deal with it - moving abroad or to the North to find work or "decoupling" their local economy from the central one - i.e. doing business without paying tax, and hiding the profits.
The Italians call this working in BLACK (nero) and it is an institution throughout the country. In addition to this everyone is adept at avoiding to pay tax in general (this is why gas is so expensive here - you can't scam the government when you need to fill-up everyday) and the system that is supposed to correct this is ineffective at best.
It is this "Black" part of the Italian Economy that I want to point out to you. I have read that it can be as much as 60% of the national economy!! This means bad news from Italy is only half as bad as it seems - joking aside, conventional analysis does not work here because the numbers (GDP, unemployment etc) are incorrect and therefore the tools economists use for the US, UK, Germany and other nations are not useful for gaining a picture of what is going on here......
.....Berlusconi said something like "there is no economic crisis in a country where the restaurants are full every night" and I have to say that this is an interesting comment. When we watch TV news here in Italy we see Greeks complaining that they have no money for food and other basic necessities, but when Italians are interviewed they only complain about not being able to buy a new car or go abroad for the entire month of August.
I am in Puglia now and I can say the restaurants are full on this Wednesday, and I am going to Catania (a city in Sicily) Friday and I'll let you know what I see.
Please fell free to contact me about this issue, I like your program and am a regular listener.
Very Respectfully,
LT Jeffrey Frost, USN
