Captain Rick: Center-left Prime Minister Enrico Letta was sworn in Sunday to head a broad coalition of ministers from his own party and members of Silvio Berlusconi’s center-right party. The big question is … can he correct Italy’s current course of economic destruction?
In a speech to parliament Monday, Letta stressed the need to stimulate growth and create jobs, but said Italy couldn’t borrow its way out of trouble. “After more than a decade without growth, we can’t wait any longer for a policy of recovery,” he said. “Without growth and without cohesion, Italy is lost.”
Letta’s appointment ends two months of political stalemate with hope of economic stability, but many doubts remain about the coalition’s durability and uncertainty over how it will achieve its economic goals.
The priorities for Letta’s government mirror those of 87-year old Italian President Giorgio Napolitano, who was persuaded to accept a second term after parliament failed to agree on an alternative. Napolitano established two expert committees to work on overhauling Italy’s convoluted electoral system and political institutions, and making structural reforms to restore competitiveness, boost growth and make a dent in the debt mountain.
Debt Crisis in Italy is severe
Government borrowing totals about two trillion euros, equal to around 127% of gross domestic product, a ratio surpassed in the eurozone only by Greece. The economy hasn’t grown for years, unemployment is near 12% and rising, and living standards for many are tumbling.
The eurozone’s third-biggest economy was brought to the brink of collapse in late 2011 when yields on its huge debt pile climbed to unsustainable levels around 7%. Tax increases and spending cuts by a technocrat government led by Mario Monti reassured investors. But they led to a backlash against austerity in February’s elections, boosting support for comedian Beppe Grillo’s protest movement and leaving no party able to form a government on its own.
Letta wants to adjust Italy’s unpopular austerity drive, and Berlusconi has campaigned for a tax on property to be reversed, but it is unclear how the new government would make up for the revenue shortfall as the economic situation continues to deteriorate.
Captain Rick wishes ‘Best of Luck’ to Enrico Letta, new Prime Minister of Italy
Enrico, I wish you luck in turning around the massive debt problem in Italy. Social greed for welfare is a sure invitation for economic destruction. Italy is one of the largest consumers of welfare spending in Europe. The party you represent loves welfare. I equate it to the Democratic Party in the U.S.
The U.S. debt has not yet reached the percentage of GDP as in Italy, but I see it as just a matter of time before it does. Americans will be watching what happens in Italy … perhaps as a ‘crystal ball’ vision of what awaits America.
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Info from previous reports:
European Debt Crisis: https://atridim.wordpress.com/category/european-debt-crisis/
U.S. Debt Crisis: https://atridim.wordpress.com/category/u-s-debt-crisis/
Fiscal Cliff 101: https://atridim.wordpress.com/category/fiscal-cliff-course-101/