The oft cited domino effect looks completely different than what is always being told to us. Just as soon as a new candidate creeps under the €uro umbrella of financial rescue, another one topples. No trace of stabilization. Of course, Italy is still making a little bit of a fuss, just like the case was with Spain.
The Managermagazin, however, doesn’t give the Italians – the third largest economy in the Eurozone – a favorable prognosis:
The bad economic situation: In no other Euro land was the economic performance so terribly broken down in the first quarter as it was in Italy. The GDP fell to 0.8 percent – almost three times as bad as in Spain and already the third quarter in succession. Also the outlooks aren’t good. In 2012, the economy shrunk to 1.4 percent; the unemployment rate rose more than a point to 9.5 percent. (…) Tax hikes and the increasing unemployment are putting pressure on incomes, for which private consumption is shrinking. Furthermore, this is causing revenue deficits and placing a burden on the rehabilitation of the national economy.
The high national debt: The mountain of debt will further increase this year. According to prognosis by the EU Commission, it will make up 123.5 percent of the annual economic performance. 2008 it was right at 106 percent. (…) Italy, therefore, is the fourth greatest debt creator worldwide.
The zeal for reform is fading away: The closer the scheduled 2013 parliamentary election gets, the less the desire for reform by the parties. Prime Minister Mario Monti has to make increasing compromises in order to get laws through both houses of parliament. Unions as well as labor associations pushed changes through amid the recently passed labor market reform.
The same picture will present itself in France as well because the signs are showing for almost absolute majority conditions for the socialists. In case there is someone in the German government who can still count backwards from 3 to 0, now is the time for an order to be made with DeLaRue.
Posted by PI / Translation: Anders Denken