Skip to comments.Berlusconi's just as bad -- not worse -- than the rest
Posted on 11/12/2011 11:45:20 AM PST by SunkenCiv
May Bunga Bunga boy go out with a smile on his face, for his reputation as the destroyer of the world's seventh largest economy is undeserved...
Mr. Berlusconi's biggest sin was taking a bad situation -- the sclerotic Italian economy -- and not improving it, even though his 2008 election victory handed him a large majority, one that he could have exploited to make Italy competitive...
But it's a stretch to say the aging Lothario wrecked the economy. That's the common view in "wealthy northern Europe (read: Germany), which is no doubt thrilled that Mr. Berlusconi will seek permanent refuge in his luxury villas, where he can do no harm. There is even some evidence that Germany accelerated his political demise. Note that the European Central Bank, still haunted by old Bundesbankers, was hardly an enthusiastic buyer of Italian bonds in recent weeks. The yields duly soared, breaching the 7-per-cent red-line level that had snuffed the life out of Greek, Irish and Portuguese debt markets. Suddenly it was arrivederci Silvio, felled not by the ladies but by the liabilities.
Italy's expected 2011 budget deficit, at 4 per cent of gross domestic product, is one of the lowest in Europe and about a third less than the average of the 34 OECD countries (the rich countries' club). It is expected to fall to 2.2 per cent next year, according to Deutsche Bank. That's not bad compared to the expected 2012 deficit in the United States of 6.2 per cent, 6.9 per cent in Britain and 5 per cent in France and Spain.
(Excerpt) Read more at theglobeandmail.com ...
This file picture taken on October 22, 2010 during a press conference in Rome's Palazzo Chigi shows Italian Prime Minister Silvio Berlusconi. Italian Prime Minister Silvio Berlusconi said in an interview published on November 9, 2011 that he will not run for office at the next election and will step down by the end of the month. [Filippo Monteforte]
Have a great day, all! If I’m lucky and industrious, I’ll get the GGG Digest done today.
Italy’s economy is not in bad shape. The problem isn’t that. The problem is that today there are too many bonds in the market, and Italy’s (or Spain’s) are uncompetitive.
That is, all those politicians in Italy and Spain thought they could have a high level of debt, but they miscalculated in the sense that the crisis would spread to whealthier nations, which will issue lots of bonds making theirs uncompetitive.