Could Italy collapse the euro?

Kermit.de.frog

johnp001 wrote: »

My interpretation of the cause of the loss of confidence in the Italian markets today was that the actions of the Italian president would be seen by League/5Star voters as overreach and harden their resolve for the next election.

Yep and the bigger "mistake" (on purpose) was the Lega leader coming out and openly calling the coming election a "referendum on the euro". I don't think anyone would be concerned about the election otherwise - that's been Italian politics since forever.

Kermit.de.frog

https://twitter.com/RiegertBernd/status/1001438844707835904


https://twitter.com/eucopresident/status/1001456134761472000

You are not suppose to actually say it out loud...

Kermit.de.frog

The ECB Vice President was asked today if the ECB might intervene:

“Italy knows the rules. They might want to read them again,” Vitor Constancio told Spiegel magazine in an interview, according to a pre-release, when asked if the central bank would intervene if needed and rescue Italy from insolvency.

VonZan

Despite some of the nonsense here the issue around stability is an enforcement issue by Germany and the refusal to have balance of payments system. Enforcing austerity isn't the solution. Too many dumb accountants and economists devoid of any critical thinking skills and maintaining the status quo at all costs.

hatrickpatrick

It's a shame, but I presume if the new elections (which apparently could be brought forward and held as soon as July) produce a similar result, there is only so many times the president can realistically refuse to go along with the result?

An Ciarraioch

hatrickpatrick wrote: »

It's a shame, but I presume if the new elections (which apparently could be brought forward and held as soon as July) produce a similar result, there is only so many times the president can realistically refuse to go along with the result?

Of course, if either Lega or Five Star declare in the election any outright plans to leave the euro, businesses will trigger emergency plans and ordinary citizens will begin a run on banks, so neither party can afford to do so - they can form a coalition, but would they still insist on Savona, or take a pragmatic approach?

listermint

An Ciarraioch wrote: »

Of course, if either Lega or Five Star declare in the election any outright plans to leave the euro, businesses will trigger emergency plans and ordinary citizens will begin a run on banks, so neither party can afford to do so - they can form a coalition, but would they still insist on Savona, or take a pragmatic approach?

tbh i dont think either party is making those sort of pronouncements because they are actively looking at whats going on in the UK at the moment heading towards recession .1% growth.

None of those parties are mad enough to make radical declarations in 2018. They may have done it with no issues in 2016 but the proof is in the pudding and the UK as acted as a what not to do to your Marketplace. Abandon it.

hatrickpatrick

listermint wrote: »

tbh i dont think either party is making those sort of pronouncements because they are actively looking at whats going on in the UK at the moment heading towards recession .1% growth.

None of those parties are mad enough to make radical declarations in 2018. They may have done it with no issues in 2016 but the proof is in the pudding and the UK as acted as a what not to do to your Marketplace. Abandon it.

You do realise that leaving the Euro and leaving the EU aren't the same thing? The idea of wanting to return to a sovereign currency whose monetary policy is fine-tuned to one's country's specific situation and not overseen by a centralised body which is completely uncaring about ordinary people isn't nearly in the same league as wanting to pull out of the EU altogether.

An Ciarraioch

hatrickpatrick wrote: »

listermint wrote: »

tbh i dont think either party is making those sort of pronouncements because they are actively looking at whats going on in the UK at the moment heading towards recession .1% growth.

None of those parties are mad enough to make radical declarations in 2018. They may have done it with no issues in 2016 but the proof is in the pudding and the UK as acted as a what not to do to your Marketplace. Abandon it.

You do realise that leaving the Euro and leaving the EU aren't the same thing? The idea of wanting to return to a sovereign currency whose monetary policy is fine-tuned to one's country's specific situation and not overseen by a centralised body which is completely uncaring about ordinary people isn't nearly in the same league as wanting to pull out of the EU altogether.

Which is all well and good, but Italy's economy has flatlined for 25 years, so regional economic disparities and the rapid turnover in political parties are more to blame for the present predicament than the Euro.

Wanderer78

An Ciarraioch wrote:

Which is all well and good, but Italy's economy has flatlined for 25 years, so regional economic disparities and the rapid turnover in political parties are more to blame for the present predicament than the Euro.

The issues of not having control of interest rates and the lack of ability to devalue ones currency does play a part though, these euro zone crisis are all linked, they are not solely problems of the individual countries economies

listermint

Wanderer78 wrote: »

The issues of not having control of interest rates and the lack of ability to devalue ones currency does play a part though, these euro zone crisis are all linked, they are not solely problems of the individual countries economies

What about regional corruption .

No let's not talk about that. Just like England it's easy to point over a magic wall at the foe than in your own garden at the weeds

Wanderer78

listermint wrote: »

What about regional corruption .

No let's not talk about that. Just like England it's easy to point over a magic wall at the foe than in your own garden at the weeds

its important to realise, elements of corruption exist in all economies, including our own, always has, and always will, but the common denominator of all individual euro zone countries is indeed, our common currency. our economies are all different, governed by different entities, having common institutions that control these entities such as the ecb is highly problematic, this has been noted long before the existence of our common currency.

Kermit.de.frog

https://twitter.com/YanniKouts/status/1001893852247191554


This gonna come to a head tomorrow.

From a market perspective and instability the single WORST option is elections in July.

Best option is the IMF man as economy minister.

Wanderer78

Kermit.de.frog wrote: »

Best option is the IMF man as economy minister.

maybe they can introduce that age old 'success' story, austerity!

KyussB

That the thread title is even a credible question - more than 10 years after the crisis hit - does not bode well for the future of Euro countries or the Euro itself.

When do people predict the Eurozone will actually stabilize, to the point that the economic conditions of individual countries, will not pose a threat to the Euro?

Enough time has passed now, to expect the next economic crisis to enter onto the horizon sometime in the not-far-off future - when many of the still-unstable Euro countries get hit with that, how do people expect the Euro to hold together?

If countries are still this unstable economically/politically, after a decade, do Euro proponents not view this as being something that is seriously wrong with the design of the single currency? These countries have been following the plan laid out for them, by EU treaties - and they are getting even worse.

How bad do things have to get, before the structure of the single currency and/or the EU, is altered to allow countries to recover in a timely fashion?

Kermit.de.frog

Wanderer78 wrote: »

maybe they can introduce that age old 'success' story, austerity!

The IMF would do a far better job managing Italy's fiscal affairs than it has managed to do itself for the last 30 years to be perfectly honest.

For the stability of the Eurozone they need someone credible and from a fiscally prudent standpoint he would be very credible for the market which would react positively which benefits Italians ultimately.

Wanderer78

Kermit.de.frog wrote: »

The IMF would do a far better job managing Italy's fiscal affairs than it has managed to do itself for the last 30 years to be perfectly honest.

For the stability of the Eurozone they need someone credible and from a fiscally prudent standpoint he would be very credible for the market which would react positively which benefits Italians ultimately.

id have to completely agree with other posters and economic experts such as joe stiglitz and yanis varoufakis, there is something fundamentally wrong with the design of the eu, in particular our common currency. theres no effect surplus recycling mechanism in place in the euro zone, lowering interest rates and imposing regressive policies such as austerity, is not working, the problems in italy are showing, very little has actually changed within the euro zone to address these problems.

Kermit.de.frog

Wanderer78 wrote: »

id have to completely agree with other posters and economic experts such as joe stiglitz and yanis varoufakis, there is something fundamentally wrong with the design of the eu, in particular our common currency. theres no effect surplus recycling mechanism in place in the euro zone, lowering interest rates and imposing regressive policies such as austerity, is not working, the problems in italy are showing, very little has actually changed within the euro zone to address these problems.

Italy's debt/GDP is 132%.

They have no other option.

If the ECB was not buying Italian bonds I doubt they could borrow freely on the open market. So in actual fact there is big support for Italy already.

The creditor nations are hardly going to tolerate some sort of subsidy regime to what they consider as the feckless countries on the periphery who seem almost perennially incapable of managing their affairs correctly.

Italy is at the very top of that list. I'd argue Italy is an even poorer governed country than Greece though that depends on one's perspective.

Neither should be in the euro but we are where we are.

All the creditor countries can really do is to force discipline on the periphery or the euro won't survive.

jimmycrackcorm

Wanderer78 wrote: »

maybe they can introduce that age old 'success' story, austerity!

It's been so successful for us that the parties named in it's honour have had to rename themselves.

Anti-Austerity theorists do point out correctly that in such times you actually need to spend money to improve the economy to avoid the depths, but that is predicated on either having savings or at least a reasonable debt profile to take on debt.

I doubt any anti-austerity proponent would still wish to still splash out on expensive holidays if they lost their job, yet seem to think their government should do the economic equivalent.

View

hatrickpatrick wrote: »

listermint wrote: »

tbh i dont think either party is making those sort of pronouncements because they are actively looking at whats going on in the UK at the moment heading towards recession .1% growth.

None of those parties are mad enough to make radical declarations in 2018. They may have done it with no issues in 2016 but the proof is in the pudding and the UK as acted as a what not to do to your Marketplace. Abandon it.

You do realise that leaving the Euro and leaving the EU aren't the same thing?

Leaving the Euro and leaving the EU are the same thing.

The use of the Euro throughout the EU is a fundamental aim of the EU on an equal footing with the old EEC FTA/CU stuff. And, just as an attempt to opt out of the old EEC FTA/CU stuff is completely incompatible with EU membership, so too is an attempt to opt out of the Euro.

oscarBravo

Wanderer78 wrote: »

...the common denominator of all individual euro zone countries is indeed, our common currency.

That's a deeply insightful truism. Did you know that the common denominator of all countries whose names start with 'B' is their first letter?

Wanderer78

jimmycrackcorm wrote: »

It's been so successful for us that the parties named in it's honour have had to rename themselves.

Anti-Austerity theorists do point out correctly that in such times you actually need to spend money to improve the economy to avoid the depths, but that is predicated on either having savings or at least a reasonable debt profile to take on debt.

I doubt any anti-austerity proponent would still wish to still splash out on expensive holidays if they lost their job, yet seem to think their government should do the economic equivalent.

mark blyth has done some great research into the dangers of imposing austerity, and the fact, it has never truly worked ever anywhere

View

Wanderer78 wrote: »

jimmycrackcorm wrote: »

It's been so successful for us that the parties named in it's honour have had to rename themselves.

Anti-Austerity theorists do point out correctly that in such times you actually need to spend money to improve the economy to avoid the depths, but that is predicated on either having savings or at least a reasonable debt profile to take on debt.

I doubt any anti-austerity proponent would still wish to still splash out on expensive holidays if they lost their job, yet seem to think their government should do the economic equivalent.

mark blyth has done some great research into the dangers of imposing austerity, and the fact, it has never truly worked ever anywhere

Mr Blyth seems to have missed the examples of Ireland and Portugal.

Wanderer78

View wrote: »

Mr Blyth seems to have missed the examples of Ireland and Portugal.

i believe he hasnt, and the disturbing thing is, many believe austerity has in fact worked in ireland

View

Wanderer78 wrote: »

Kermit.de.frog wrote: »

The IMF would do a far better job managing Italy's fiscal affairs than it has managed to do itself for the last 30 years to be perfectly honest.

For the stability of the Eurozone they need someone credible and from a fiscally prudent standpoint he would be very credible for the market which would react positively which benefits Italians ultimately.

id have to completely agree with other posters and economic experts such as joe stiglitz and yanis varoufakis, there is something fundamentally wrong with the design of the eu, in particular our common currency. theres no effect surplus recycling mechanism in place in the euro zone, lowering interest rates and imposing regressive policies such as austerity, is not working, the problems in italy are showing, very little has actually changed within the euro zone to address these problems.

The problems in Italy show that ignoring your problems doesn’t make them go away.

Italy it should be pointed out did start to tackle them in the years 2010-14 and had a rapidly falling debt:GDP ratio, but then changed tack and borrowed its way back to where it started. Had they stayed the course they would probably have a debt:GDP ratio of 80% or so by now and have a “snowball effect” going in reducing their debt. Instead they are back at square one and playing the victim card.

View

Wanderer78 wrote: »

View wrote: »

Mr Blyth seems to have missed the examples of Ireland and Portugal.

i believe he hasnt, and the disturbing thing is, many believe austerity has in fact worked in ireland

Let’s see - we have falling unemployment, a falling debt:GDP ratio and a high GDP growth rate. And that counts as “not working” in which parallel universe?

listermint

Wanderer78 wrote: »

i believe he hasnt, and the disturbing thing is, many believe austerity has in fact worked in ireland

I am interested in the particular points of it not working.

Specific to Ireland and Portugal

Wanderer78

View wrote: »

Let’s see - we have falling unemployment, a falling debt:GDP ratio and a high GDP growth rate. And that counts as “not working” in which parallel universe?

my point exactly, this is actually getting disturbing now! its important to realise that the creator of the modern method of measuring gdp, Simon Kuznets, even warned of the short comings of using such a metric to measure the well being of a society. this is explained very well in the work of english economist kate raworth. and again, our true debt burden is in fact our private debts, i.e. the metrics and metric systems we use to measure the well being of our societies are in fact no longer valid, the more we rely on these metrics and their systems to do so, the more disconnected society becomes to them

Wanderer78

listermint wrote: »

I am interested in the particular points of it not working.

Specific to Ireland and Portugal

and this is where it becomes even more disturbing, its clearly obvious!

listermint

Wanderer78 wrote: »

my point exactly, this is actually getting disturbing now! its important to realise that the creator of the modern method of measuring gdp, Simon Kuznets, even warned of the short comings of using such a metric to measure the well being of a society. this is explained very well in the work of english economist kate raworth. and again, our true debt burden is in fact our private debts, i.e. the metrics and metric systems we use to measure the well being of our societies are in fact no longer valid, the more we rely on these metrics and their systems to do so, the more disconnected society becomes to them

You actually haven't given any specifics as to how it hasn't worked .

Just quoted some economists about GDP measurements.

Specifics please.