Italy at the Grim Edge of a Global Problem

This trend is not your friend.

By Don Quijones, Spain & Mexico, editor at WOLF STREET.

To be young, gifted, educated and Italian is no guarantee of financial security these days. As a new report by the Bruno Visentini Foundation shows, the average 20-year-old will have 18 years to wait before living independently — meaning, among other things, having a home, a steady income, and the ability to support a family. That’s almost twice as long as it took Italians who turned 20 in 2004.

A Worsening Trend

Eurostat statistics in October 2016 showed that less than a third of under-35s in Italy had left their parental home, a figure 20 percentage points lower than the European average. The trend is expected to worsen as the economy continues to struggle. Researchers said that for Italians who turn 20 in 2030, it will take an average of 28 years to be able to live independently. In other words, many of Italy’s children today won’t have “grown up” until they’re nearing their 50s.

That raises an obvious question: if Italy’s future generation of workers are expected to struggle to support themselves and their children until they’re well into their forties, how will they possibly be able to support the burgeoning ranks of baby boomers reaching retirement age (66 years and seven months for men and 65 years and one month for women), let alone service the over €2 trillion of public debt the Italian government has accumulated (and which doesn’t include the untold billions it hopes to splash out on saving the banks)?

The trend could also have major implications for Italy’s huge stock of non-performing loans, which, unless resolved soon, threatens to overwhelm the country’s banking system. If most young Italians are not financially independent, who will buy the foreclosed homes and other properties that will flood the market once the soured loans and mortgages are finally removed from banks’ balance sheets?

As happened in Spain and other crisis-hit countries, global private equity funds will probably pick up much of the slack by buying up huge tranches of foreclosed or unoccupied properties, as well as occupied social housing units, at knock-down prices, but whether they’ll actually be able to rent the properties they buy or unload them at a profit is a whole other matter, what with most young Italians forced (or choosing) to stay at home with their parents.




At the Grim Edge of a Global Problem

Youth unemployment is a global problem that is already having a major impact on societies and their ability to finance their needs. Youth unemployment is a staggering 54% in Southern Africa. In Greece, it’s 46%, in Spain, 42%, in Italy, 40%, and Iran, 30%.

Averaged across OECD countries, 14.6% of all youth (some 40 million people) were so-called NEETs (Not in Education, Employment, or Training) in 2015. In Southern Europe the share was sharply higher, with between one-quarter and one-fifth of all young people out of work and not in education in Greece, Italy, and Spain.

In Italy the main reason why so few young Italians are financially independent is they can’t afford it. Of the 15 western European nations ranked in the 2016 Global 50 Remuneration Planning Report, Italy boasted the lowest average salary for full-time jobs aimed at recent graduates: €27,400 a year. That compares to €83,600 in top-placed Switzerland, €51,400 a year in second-ranked Denmark, and €45,800 a year in Germany and Norway.

Even in Spain, a country that has broken the 20% unemployment barrier three times in the last 30 years and which has been described by one Spanish economics professor as the “worst labor market on Earth,” recent graduates can expect to take home €3,000 more a year than their Italian counterparts.

The €1,000-a-month Dream

For unskilled workers, in Spain, Italy and Greece, the jobs reality is even bleaker. In Spain ten years ago, “mileurista” — a term to denote someone earning €1,000 a month — was coined to highlight the plight of young workers with low-paid jobs that could never dream of owning their own flat. Today, with a youth unemployment rate of over 40%, becoming a “milleurista” has become something to aspire to.

The alternative is the eternal internship carousel. In the complete absence of any kind of inspection regime, young workers are being shifted from one internship contract to another where they put in full-time shifts day after day in exchange for little more than their lunch money and bus fare home. Few of them will ever get hired full-time, and those that are, are invariably given a short-term contract that, once expired, is replaced by yet another. According to the Spanish daily ABC; of the 1.7 million job contracts signed in December last year, over 92% were for temporary jobs.

Yet somehow Spain’s new generation of unemployed, underemployed, badly paid, or “ni-nis” (NEETs) will soon be expected to maintain over eight million pensioners, who are living longer than ever and are used to earning an average state pension of €906 a month, the second highest (as a percentage of final salary) in Europe after Greece. As Spanish economist Juan Torres López writes, the idea that Spain’s youngest workers will be able to support the country’s swelling ranks of pensioners is risible, especially with Spain’s government pilfering the Social Security fund for other purposes like there’s no tomorrow.

The same goes for Italy whose crisis, in many ways, has barely begun. As in Spain, many of the country’s most gifted young workers will continue to migrate to better performing economies such as Germany, Switzerland, and the UK. With the many programs offering study and work opportunities to young people abroad, such as Erasmus+, “the choice is not so much whether to leave, but whether to stay,” according to a report by Fondazione Migrantes.

For companies in Northern Europe, the mass exodus of young talent from the South means cheaper labor while the governments pick up the income tax. But for countries like Italy and Spain it represents a hemorrhage of talent and skill, much of which was developed with public funds, with no corresponding return. And in that manner, the fiscal health of economies in Europe’s South, already pushed to the limit, will continue to decline. By Don Quijones.

Italy’s predicament is a multi-headed Hydra that the Eurozone tries to ignore. Read…  Eurozone Whistles Past its Biggest Threat




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  53 comments for “Italy at the Grim Edge of a Global Problem

  1. Quite Likely
    Mar 25, 2017 at 3:18 pm

    Capitalism just can’t help itself. People are down to vote for it if they can get a cut of the spoils, but the system is just incapable of letting them keep that cut when it can drain them of every bit of wealth they have and force them down to subsistence levels of income, desperate for any job they can get. Hopefully whatever comes next will be better, because it sure is coming.

    • FluffyGato
      Mar 25, 2017 at 8:03 pm

      Italy is socialist/crony capitalist, and this is the inevitable endgame of both.

      • Anony
        Mar 26, 2017 at 10:38 am

        Fluffy, is “socialist/crony capitalist” code for organized crime?

        • Intosh
          Mar 27, 2017 at 2:35 pm

          There is nothing more capitalist than organized crime — law of the jungle, survival of the fittest.

      • RDE
        Mar 26, 2017 at 9:32 pm

        Exactly how does the statistical fact of wealth in Italy fit into the picture of “Italy as a (failed) socialist/crony capitialist” (country) and “Italy at the grim edge of a Global problem”?

        Median net worth per person 2014:

        USA $53,352
        Italy $142,296

        And then there is Greece, the basket case of Europe:

        Greece $53,375 — just ahead of the USA.

        Source: Mid 2014 list of countries by wealth
        https://en.wikipedia.org/wiki/List_of_countries_by_wealth_per_adult

        Of course if you choose to use average wealth instead of median wealth– that is to say you add my wealth to that of Bill Gates and then divide by 2 you get an entirely different picture. Suddenly the USA becomes the wealthiest country in the world, with an average of $344,692 for every college PHD waitress and permanently unemployed ex factory worker. Starting to get the picture of what happens in the final stages of kleptocracy when a handfull of individuals own everything?

        • JC
          Apr 6, 2017 at 8:39 am

          RDE, the citizens of southern European countries have a horror of debt, even to buy a house. If the median net worth that you quoted is assets minus debt, there will be little or nothing to subtract for Italy and Greece. Sadly the financial prudence of these people is under threat as lenders are targeting these countries with a barrage of advertising and trying to convince them to borrow more.

    • bev kennedy
      Mar 29, 2017 at 5:14 pm

      Canada is also struggling to keep a1a) ferom a similar precipice. *sofr aging demographics huge level of government denial and lipservice re financial well being of seniors a,d middle class while allowing our big ba,ks to continue doing what they do well with regulatory oversight turning a blind eye. And yes we did have a 114 billion dollar bailout aided in part by the US fed reserve of our big bad banks. Because…..the whole set up is out of control

    • Beard681
      Mar 30, 2017 at 11:12 am

      Nonsense. Without consumers there can be no economic activity. Wealth is concentrated due to monetary shenanigans of central banks, and the fact that governments intervene to save entities like Goldman who should have been on the slab next to Lehman Brothers back in 2008. Instead they persist to inflate the next bubble, concentrating even more wealth.

      Greece should have defaulted (lender beware) and the mostly German and French banks (also Goldman) taken a haircut in 2008. Instead the EU bludgeoned them into submissions with threats of penalties and sending home Greek migrants. The result is a shrinking economy with a generation condemned to poverty.

  2. Heinrich Leopold
    Mar 25, 2017 at 3:23 pm

    So how does this report fit into the media hype of companies desperately searching for workers? Companies are so desperate that we have to let immigrate millions of workers, who even cannot speak any of the European languages. It must be the most humiliating event for all the unemployed people in Europe to read in the press, that there is a shortage of workers.

    • Dave
      Mar 28, 2017 at 7:20 am

      What they mean is there is a shortage of people willing to work for free and no benefits. There are lots of workers available but just not for free!

  3. cdr
    Mar 25, 2017 at 3:38 pm

    “Italy’s predicament is a multi-headed Hydra that the Eurozone tries to ignore.”

    Do or don’t do. Not try.

    They do well.

  4. Petunia
    Mar 25, 2017 at 3:44 pm

    I read this past week that almost half of 18-30 year olds in South Florida still live at home. Miami is so unaffordable and wages are so low that there is a net migration of locals moving away. I left Florida last year for those reasons and I’m glad I did.

  5. michael Engel
    Mar 25, 2017 at 3:45 pm

    Did you mean : Gianluigi Buffon retiring at age 58 ?
    No. I think that’s too young.

  6. unit472
    Mar 25, 2017 at 4:13 pm

    Its starting to look like the third of a century from the mid sixties to the millennium was something of the Golden Age for those who lived in Europe, North America and Japan. Baby boomers used it all up and left only the echo of their sex, drugs and rock n roll lifestyle to their children and grandchildren. Worse still, we allowed our societies to become flooded with third world migrants competing for the few jobs we still have.

    • Otto Maddox
      Mar 25, 2017 at 5:02 pm

      I’d say it was the socialist, vote-buying, welfare states that “used it all up.”

      • d
        Mar 26, 2017 at 1:19 am

        “I’d say it was the socialist, vote-buying, welfare states that “used it all up.””

        That is exactly what used it all u,p and is also what is wrong with democracy in its current from.

        Untill the left is prevented from buying the electorate, with long term financially untenable promises, democracy is in big trouble.

    • TJ Martin
      Mar 25, 2017 at 5:14 pm

      Ahhh …. not hardly . Don’t go blaming us for reality finally rearing its ugly head with the Piper now demanding his Due because the world went on a 40 + year quest for conspicuous consumption … more is never enough .. and following the gospel of Ayn Rand in lock step like lemmings to the cliff to the exclusion of all morality and common sense . We tried to warn your predecessor’s . Tried to tell them time and time again that enough really is more than enough . Rang the warning bells left and right to the point of deafness in fact . Problem was just as sense was beginning to take hold … just as Carter was finally on the verge of getting his unpopular message across that we were on the precipice of going a step too far beyond sustainability ..

      … along came King Ronnie and his Iron Lady cohort across the pond with the message that Greed Was Good .. Trickle Down would work … and enough is never enough .. setting the stage for our eventual decline

      So ;

      1) Place the blame firmly where it belongs .. but more importantly ..

      2) Time for your generation to get out from behind your screens taking up the mantle and finally finding the cost of freedom for yourselves .

      We’ll be glad to help .. aid in any way we can … but its your turn .. question is .. y’all up for it ?

      • unit472
        Mar 25, 2017 at 5:46 pm

        Er… I am 65 and relatively affluent. Still I get social security and medical care from the government now. Neither Ronald Reagan or Margaret Thatcher had anything to do with those two hugely expensive welfare programs. I get a ( small ) defined benefit pension from my final employer ( a municipal government that closed it to new employees in 2006) and a better private health plan that cost me more than what the government plan now does ( a lot more if you add my employer’s contribution) but ended when I turned 65.

        The reality is western governmental debt is 90% based on entitlement programs not defense spending. The fact that European governments are as fiscally constrained as the US despite spending almost nothing on defense shows the problem is even worse there.

        • QQQBall
          Mar 26, 2017 at 8:33 pm

          How is paying 12% of you wages for 1/2 a century welfare? How about tax cuts for the rich and borrowing rsulting budget shortfalls from the SS “lockbox.” IF you think SS is welfare, donate it to the church. Or you could consider your overly generous muni pension as the result of muni unions bribing politicos for their pensions. For example, Gray Davis did it for the prison guards. The muni pensions are killing budgets – why does a landscaper, receptionist, sec’y get a pension from City, State of say UC at Wherever?

      • number1gi
        Mar 25, 2017 at 6:19 pm

        You must mean Billy Carter, correct? Billy Beer was an “unpopular message” back in the day. However, it does have collector value today.

      • Jerry
        Mar 26, 2017 at 8:54 am

        We wouldn’t be in this mess if we had followed the teaching of Ayn Rand and Maggie Thatcher. Any Rand believed that the state only had three roles in society, the Police to protect us against criminals, a justice department to sort out disputes amongst men and enforce contracts and a military to protect us against foreign invaders. She advocated men should trade amongst themselves through their voluntary consent.

        Maggie Thatcher had drawn up plans to make major cuts to the NHS but could not get them through her weak spineless cabinet. It was Maggie Thatcher that said, “the trouble with socialism is that eventually to run out of other peoples money”.

        I am in my fifties now but I realised very young that the wests socialist system was eventually going to fail and that is what we are witnessing right now. Most European nations will default on their sovereign debt. The baby boomers have taken part in the biggest intergeneration theft in world history. Why would ANY body think its ok for one generation to borrow money for consumption and then hand that debt on to their own children, its a form of cannibalization. They have destroyed their own children’s future, they have turned them into debt slaves. This situation will continue until the system eventually collapses on its self like the USSR did and that time is near.

        Here in the UK it is easy to see, roads are not being repaired, suppliers to the state are handing back their contracts because there is no money to be made supplying the service, street lighting being switched off at night, rubbish collection pushed from once a week to once a fortnight and some councils are now discussing pushing it out to three weeks now. Our justice system is failing and is definitely not about justice. They are now talking about raising the retirement age to 70.

        Folks here in the UK are stupid. They have run this campaign here on TV called “I’m In” where they have nearly made it compulsory to take out a pension. I’m like hold on, I have been in since I started working so they are trying to get people to pay twice for their pension. I opted out because I don’t think you will ever get your money back again. Most pension schemes were modelled on a 6 to 8% interest rate but because of ZIRP & NIRP many are taking on water. It is estimated that UK pension schemes are short by about 800 billion but the problem is world wide. Also in the west it is compulsory for pension funds to own a % in government bonds so some folks are going to find their futures to be very poor. This process has already begun with municipalities going broke.

        What is heading down the turnpike will make 2008 look like a Sunday picnic.

        • Paulo
          Mar 26, 2017 at 9:54 am

          I think the “I’m all right, Jack” philosophy ended awhile ago.

          from urban dictionary:

          (originally: “Fuck you, Jack, I’m all right!!” – described the bitter dismay of sailors (“jacks”) returning home after wartime in the Navy to find themselves not treated as patriots or heroes, but ignored / sneered at by a selfish, complacent, get-ahead society – phrase was subsequently toned down for acceptable general use.)
          Attitude of “every man for himself, survival of the fittest, devil take the hindmost”, … but also, that all the possible advantages (however gained), success (however won) and satisfaction (whatever the cost to others) belong to me first!” Narrow-focus, narrow-gauge pseudo-Darwinian selfishness glorified as a sensible philosophy of society and life.

        • Dan Romig
          Mar 27, 2017 at 6:15 am

          Accurately stated Jerry.

          The USA had a huge national debt after WW II, but that was the price paid to win the war. Since then, much of our debts have been incurred from wars based on lies such as Vietnam and Iraq.

          At the current rate of debt increase versus GDP growth, it does not seem likely or possible for Uncle Sam to keeps its books balanced. We now have more debt than GDP, and within a decade the debt to GDP ratio will likely be at 140%.

          As long as we have extremely low interest rates it is possible to carry the burden of the debt, but as you say, the pensions cannot be funded in this environment, and if/when the 1 & 2 year T-Notes’ interest rate goes up, we’re screwed. Ten years ago, on 2 January, the 1 year T-Note was 5%! That equates to $1 trillion per year to carry today’s national debt. The snowball just keeps rolling downhill and getting bigger, eh?

        • Dipping into the well
          Mar 27, 2017 at 8:53 am

          The government can’t have it both ways. They can’t regulate every single means of income production, every single need fulfillment and every single social process without having impossibly huge payouts to the people. People turning to the government for all their health needs are foolish; all the government or corporate entities know how to do is take – profits- from the process. They have no mechanism for feeling anything.

          Italy’s problem is everywhere, since the globalist corporations have infiltrated the world and attempt to control all the process of life, including water, health, air, food, etc. We all have the same problem. It’s not a generational situation.

          Personal action is the only solution.

        • joanrn
          Mar 28, 2017 at 2:08 pm

          Jerry – ann rand and maggie thatcher were before we knew that environmental toxins cause cancer and other health issues, and that water is not a renewable resource. Industry can cause wide spread toxins that pollute our water causing lead poisoning and mental defects among children. These are illnesses that can’t wait for the justice department to route out cause and effect because the litigants would die first, or suffer from more exposure and more severe mental defects. Who is going to be responsible for the widow(er)s, orphans, and disabled? Life is more complex, and we have more knowledge of the damage we do to the environment and our health, than during those bygone times.

          I agree that I do not want my tax dollars to pay for the damages that cause these health problems. However until we can require these health issues are paid by those that cause them and in a timely fashion, i can’t think of any other way to solve these competing injustices.

    • Jonathan
      Mar 26, 2017 at 9:48 pm

      Yup, talk to an average baby boomer and it’s easy to see how much of self-absorbed overly entitled pricks they are. They always whine about how much the later generations have life good when the latter is paying several times on nearly everything than they did. Such as my mom.

      They are easily the most ungrateful generation ever.

  7. Sound of the Suburbs
    Mar 25, 2017 at 4:37 pm

    I knew it was bad but the more you read the worse it gets.

  8. michael Engel
    Mar 25, 2017 at 5:02 pm

    Future global growth industry, in the next few decades, is the Slavery business.
    Der Spiegel estimate that there are currently about 800 millions slaves worldwide. Most of them in India, China and some African nations. This business sector will flourish !
    Many young, in poor countries, are trying to become a Messi,
    or Ronaldo. Instead, they should acquire some knowledge in finance
    and trading. As an insurance. A redundancy. Weather they have a job or not. A new skill for life. Might protect them if their pension will be gone. Kind of self employed, on the side line. IF THEY CAN !!
    For those apprentices, who rotate from one boss to the next, for a
    sandwich, the next phase might be, for a roof over their head, when
    take a wife and have a baby.
    At that point, the boss will be kind enough to allocate some small
    space, with others, in the basement, or his warehouse.
    Now they work for sandwich and roof over their head. They feed their
    family. When the baby have to see a doctor, they enter the world of debt.
    With interest rate slightly higher than Drugie rates.

  9. John Doyle
    Mar 25, 2017 at 6:47 pm

    Very disturbing facts here. Men are suffering as their traditional roles, as breadwinners etc are eroded away everywhere in the West, losing their mojo. A whole generation lost.
    Italy has to regain its monetary sovereignty. The whole saga of the EU is failing because such disparate nations sold out on their MS. MS nations can at least pay their bills and avoid having unfunded liabilities. Now they are like households and have to get Euros, a foreign currency. So they can and will go bankrupt.

  10. mark
    Mar 25, 2017 at 8:49 pm

    The youth unemployment stats for Europe you posted are high, but is that because they use a different standard than the USA? Doesn’t each country have its own survey standards?

    Are they more or less realistic than the US figures? Since you didn’t differentiate between ‘household survey type numbers’ and ‘headline, establishment type numbers’ I’m a bit confused.

    • Mar 25, 2017 at 8:54 pm

      EU numbers are “harmonized” among member states. In other words, they’re reported based on the same set of formulas and rules and should be comparable to the numbers from other EU member sates, but they might not be that comparable to, for example, US numbers or Chinese numbers.

  11. NotSoSure
    Mar 25, 2017 at 9:59 pm

    My thesis remains the same. Next year we’ll be at the same exact spot. Dejavu will be really strong then. The 5 star movement would just be a bad dream.

  12. ian
    Mar 26, 2017 at 3:49 am

    Young people from Southern Europe flowing to better performing economies like the UK. Hmmm. Well yes, it would certainly be difficult to be worse than Southern Europe these days but the UK is no basket of roses. My son has a first class masters in Physics, upstanding, clean cut – couldn’t get a job. Couldn’t even get to push trolleys in the supermarket due to so much competition for even crap work, and of course new migrants are favoured as ‘it is the right thing to do’. Now doing masters in software and we are praying. His fellow students are from all over the world predominantly Europe and low and behold a Greek girl has got a job and will be staying on here. Marvellous. Nothing against the Greeks but their problems should not be made into our problems. Can’t wait to get out of this albatross EU.

    • QQQBall
      Mar 26, 2017 at 8:41 pm

      Ian,

      My SIL left France for London to work an architect. Many of his friends are from other EU countries & also work in London His old architectural firm in Paris folded. That said, the wages in London are weak as a result of the in-migration of very well-educated and hardworking professionals. He is top shelf architect and his salary is crappy, particularly living in London. My daughter who is in Law School in London picked up an internship in US last summer and earned more per week than her husband.

      When the debt blows up, it has to be deflationary which will be even worse for workers everywhere. Looking from coastal USA, real estate pries in southern Europe and reasonable consider strength of USD.

  13. Charles Reese
    Mar 26, 2017 at 8:33 am

    All this seems a bit insane to me. We have skilled people, we still have abundant natural resources, we have advanced technology, our (US) industry is running at 25% capacity and yet we can’t seem to put it all together. My own opinion is the is in large part due to income inequality, our economy is based on consumption and if the bulk of consumers don’t have money they can’t consume enough to demand the products needed to keep the economy healthy.

    • d
      Mar 26, 2017 at 10:15 am

      American corporates allied with china exported all those reasonable paying jobs to china. Those workers are now on Mcjobs topped up by food stamp’s, or unemployed. All the new well-paying manufacturing job’s are deliberately being created in china.

      You have to much un an under employment and to much debt.

      Your corporations who own your duopoly political system have destroyed your economy, for china’s and their own gain.

      You still regard GM as an American company, and buy its product’s.

      After loosing I forget how may billion’s of tax payer dollars in the GM bail-out, so GM can make buick’s in china and import them at a profit to America for American’s to buy. And the UAW made sure their members voted P44 who allowed that to happen.

      Americans are demanding china give back their job’s .

      Wont happen.

      Americans want jobs, and want their economy to recover, they will have to make it happen.

      By not buying GM product, any product made in china, or by a company with chinese shareholding.

      Americans need to start looking at where something is made, and who owns the company, not how much it costs.

      And stop shopping at wall mart.

      Next time you look at the 2 or 10 $ made in china clothing item, think about the hidden economic and social cost to your country of buying it.

      Personally I don’t buy anything made in china, unless it is clear the retailer is loosing money on it. But thats just me.

      The American middle class was the global consumption engine.

      The Globalised Vampire Corporates, based in America allied with china ,helped every step of the way.
      Problem being they did not have a replacement for the American golden goose, before they helped kill it.

      The American and global economy at the bottom isn’t coming back in 2,4,10 Years, if ever. Every-time YOU buy something made in china or made by a chinese owned company, you make sure any recovery outside china, takes longer, if ever.

      Thats before we look at the numbers of unskilled illegal and skilled HB1 legal immigrants that are still moving into America every day.

      America still insists on importing, everyday, large numbers of people, it simply does not need, and to give employment to, has to make an American unemployed.

      The whole American economy dosent benifit from these policy’s, certain small sectors do.

      Perhaps America ultimately would be better off, without those sectors.

      I guarantee you when the choice becomes, pay American rates, or move to china or india, they will pay American rates, as their IP is simply not secure in india, china, or even Vietnam.

      Unfortunately the American union movement cant help, it is part of the corrupt extortive crony capitalist system, and has sold out its members.

      Probably time to form the American workers party and dont let any democrats or Comrade sanders supporters near it.

      Probably in the Michigan great lakes region, once they realise P45 is not the way.

      Because tear it all down, guns and ropes, isn’t the way either.

    • Job
      Mar 26, 2017 at 10:42 am

      We almost always have had a parasitic class of rentiers. But economics gave that class the power to use its pseudo scientific jargon as a means to justify self enrichment. Inequality has resulted.

      Corporations, modern banks, etc were created to serve peoples basic needs. But the horse has escaped from the cart, and people are serving the needs of corporations and banks.

      Economics is at best descriptive, a mish-mash of sociology and measurement. It is not a formula to create a just and equal society. There is no Nobel Prize in economics, as that award was endowed by banks in the 1960s to give the field credibility.

      Unfortunately you have to study economics to find out it’s mostly reading tea leaves. Would you base your life on tea leaves?

      http://michael-hudson.com/2010/07/from-marx-to-goldman-sachs-the-fictions-of-fictitious-capital1/

    • BonBillBon
      Mar 26, 2017 at 1:49 pm

      It’s the system.

  14. Nick
    Mar 26, 2017 at 9:11 am

    The extension of this argument is that, if there is an ability to migrate, young people will go where there is work. This reduces the tax base where they leave, and increases the tax burden on those who do have jobs (particularly to support the elderly), creating more incentive to leave. A reinforcing spiral between demographics and fiscal policy easily develops.

    People have speculated that this dynamic could conceivably lead to some countries being literally abandoned, or experiencing dramatic demographic change from opening themselves up to immigrants. Ukraine and Serbia are examples — Italy isn’t even the most advanced, it has advantages that a lot of Eastern Europe doesn’t.

    Personally, I think that sooner or later the Euro will break, the countries that leave will experience a terrible economic collapse, but following that, will likely manage to right their ships somewhat. It’s not the absolute size of their economies that causes this problem, but the lack of growth.

    • d
      Mar 26, 2017 at 10:31 am

      “Personally, I think that sooner or later the Euro will break, the countries that leave will experience a terrible economic collapse, but following that, will likely manage to right their ships somewhat. It’s not the absolute size of their economies that causes this problem, but the lack of growth.”

      As long as the wright countries leave, the euro and those countries will be better off.

      P45 is accusing Germany of holding down euro value

      He is wrong. greece, italy, spain, and france, are holding down Euro value and Germany cant do much about that.

      And also there is a big problem with leaving the Euro.

      As it stands they believe the only way to do that, is to also leave the Eu.

      greece nearly tested that, but the people wouldn’t let dippy do it.

      Now greece is slowly going through the internal process of forcing the people to believe leaving the euro is better than staying. It will take another government and much more austerity before the people will bow to the inevitable.

      Then we find out how a nation leaves the Euro in practice.

      • Beard681
        Mar 30, 2017 at 11:30 am

        Wikileaks release documents showing how the IMF violated their own standards at the insistence of Merkel to make Greece pay back debt more than is sustainable by their economic potential.

        The Euro is nothing but a monetary scam to keep Germany ( and to a lesser extent France) exports flowing. Just as they refuse to meet their NATO obligations they also fail to reign in their trade surpluses down to the required maximum.

        The EU is the Fourth Reich – a European superstate dominated by Germany.

        • d
          Mar 31, 2017 at 2:56 am

          “The EU is the Fourth Reich – a European superstate dominated by Germany.”

          If it was france and club-med would never have been allowed to develop or continue their banking fraud’s.

          If you look at the first greek bail out all private lenders took Haircut its why bank’s in Cyprus (until its bail in) Portugal’ Spain, and to some extent italy, still have the huge under capitalisation issues they do.

          Only State/Central banks were protected from the Haircut.

          And greece lied to get into the euro club.

          No matter what you say or do, the problems in greece, still stem from the greek fraud’s including the Fraud to enter the Euro.

          No greek lies, no greek problems. Big greek lies, big greek problem’s. Simple.

        • John Doyle
          Mar 31, 2017 at 2:20 pm

          Greece lied to get into the Eurozone. They did that after seeing Italy do the same thing. Apparently even Germany lied. Seems every country pulled that stunt.
          The Euro was built on lies, at least false ideals. The Euro is not a viable currency. It has no monetary sovereignty. It is not permitted to issue currency debt free as can central banks in sovereign nations. The whole eurozone is just a State. Like a State, Kansas say. It has to trade for its money or borrow it. This is why Germany has the drop on other nations with its strong export sector.
          The only way forward, if the EU is to survive, is a total rewriting of the articles and treaties that underpin it. Get rid of the neo-liberal bias within it. Curtains otherwise. Countries that were never in the hunt to compete need their monetary sovereignty restored.

        • d
          Apr 1, 2017 at 3:18 am

          “. It has no monetary sovereignty.”

          Currency union without Fiscal union is long term unworkable.

          Due to the MASSIVE greek fraudulent entry to the Euro, not little white lies like italy, but MASSIVE fraudulent entry.

          Revealed to all by the 2008 american correction which the greek frauds caused to go global and become a GFC we are still in.

          The Fiscal union project, which is necessary to the long term stability and viability of the Eur stalled.

          You may have note the mention, in the “Multi speed Eu” talk, talk of Fiscal union in some states, very quietly.

          Germany, Austria, and other like minded states, know what has to be. Others will not be allowed into their “Fiscal Union ” unless they play by “The Rules” In the “fiscal union” 100% which france and club-med have never done in the Euro.

          So I wouldn’t completely write off the Euro, yet.

          Although the Eur as it stands today is doomed by greece and italy.

        • bkennedy
          Apr 1, 2017 at 10:45 am

          My understanding was that Greece was strongly encouraged to fib. And thus the price of tomatoes went up overnight by a factor of four or eight. Similarly prices doubled overnight in Italy. Extremely inflationary effect on the cost of living for locals

        • d
          Apr 1, 2017 at 12:15 pm

          “My understanding was that Greece was strongly encouraged to fib.”

          greece was indirectly told, like some others “Little white lie’s” can be accepted.

          NOT the monsters greece told. Which were far outside the bound’s of “little white lies” and clearly a huge FRAUD at an international level EUtaxpayers are still bearing the cost of.

          The continuing greek theatre is much lower key this time, every round athens capitulates to more and more Austerity and will continue to. Until the people give athens what it wants, a demand too leave the Euro.
          Barring a financial miracle, it is when greece leaves the Euro, not if.

          The greek public know the Euro gives them advantages over Athen’s hence they would not vote to leave it.

          So athens will have to make the Euro hurt them then they will vote to leave it.

          Which will be good for both parties.

          Every step one closer to fiscall union.

          The other Euro issues, not greece is what needs to be looked at.

          The Austrian model economic states, understand the Euro zone got to big to fast, and some must change their ways or leave.

          New things are being tried in the EU, Cyprus was the first bail in, Brexit, and how does a country leave the euro.

          Remember the euro came about the way it did as the countries of Europe will never unite UNLESS FORCED TO.

          The Euro is a major weapon in that force thats why it was done the way it was. Everybody knows. Currency union with out fiscal union can not work long term.

          And fiscal union, effectively means giving up Sovereignty. As regional governments, no longer have full power of the purse.

        • John Doyle
          Apr 1, 2017 at 5:32 pm

          Massive Greek fraud?? Greece is under 2% of the eurozone economy. A bit of hyperbole there. The Greeks are actually prepared to put up with their straightened circumstances. Because their politicians are held in such contempt, this is preferable. I read it all stems back to the Colonels’ misrule, setting the stage for what followed, a very lax government.

          Anyway The Euro could survive if the whole edifice was cleaned out of neo-liberal doctrine. Since I doubt that will be voluntary. It’s ‘s future is bleak.

        • d
          Apr 1, 2017 at 11:03 pm

          “Massive Greek fraud?? Greece is under 2% of the eurozone economy. A bit of hyperbole there”

          The Massive greek fraud, .

          Which there was, with out any doubt. No hyperbole at all.

          That MASSIVE greek fraud, when it unravelled, combined with the US subprime event, which was containable in the US, and turned it into the GFC and a global recession/depression event, we are still stuck in 9 years later. It also created theEuro crisis which at a different level we still have.

          The size of the greek economy, compared to the EZ is irrelevant , its the size of the fraud, and the effects it had when it unravelled.

          That greek fraud almost took out the entire Euro banking system. In the end it will, as the banking systems in Italy spain and Portugal in particular simply can not sustain the capital loss caused by the greek fraud’s to enter the Euro.

          The loses in Cyprus that caused the Cyprus bail in events, were the losses incurred by the greek fraud’s. No matter how they tried, the bank’s could not absorb the capital losses, long term, from the greek fraud’s to enter the Euro.

          Sure the banking system in Club-med was on walking sticks.
          The greek frauds to enter the Euro, broke both those sticks, and stuck a knife in its back.

          Now is on its hands and knees, and slowly bleeding to death.

          Its not a blame game, it’s facts. Aid’s came from Africa.

          The Lethal financial poison, that created the GFC, and the Euro crisis which is part of it, came from the MASSIVE greek fraud’s, to enter the Euro Zone. Simple.

          Germany is not going to allow a massive write off of the greek debt to the EU, as the German taxpayer will not allow it to be funded, from Germany.

          The only way greece can again default on its debt (which it has done so may times before (Athen invented western sovereign default)) is to leave Euro zone.

          The EZ is simply trying to resolve various issues so its entire system does not collapse when that happens.

          Cyprus resolved. Portugal, spain, Italy, and greece, to go.

    • John S
      Mar 26, 2017 at 1:38 pm

      Prior to Euro economic project southern and eastern European countries had reasonable economies with certain well developed industrial sectors. The products that were produced were often not as advanced as the West but they were sufficient. The economies were largely self-sufficient and provided adequate employment prospects.

      The Euro project hollowed out southern and eastern European economies, often times entire companies and industries had to be closed or sold in order to gain entry. The people were placated with cheap credit, for a while everything worked and everyone was happy. Then the really set in, southern and eastern European countries were turned into colonies for French agricultural goods and German industrial goods.

      My point is that France and Germany can’t allow the break up to happen, they would suffer more by loosing their export markets. On the other hand southern and eastern European countries would be freed of the stranglehold that is EU laws and currency so that it is actually possible for them to produce goods again.

      • Chillbro
        Mar 27, 2017 at 8:09 am

        I don’t know which ee countries you are talking about because Poland, Slovakia, and Czechia seem to be doing well within eu. Baltics are fine too.

  15. disc_writes
    Mar 27, 2017 at 1:52 pm

    “Eurostat statistics in October 2016 showed that less than a third of under-35s in Italy had left their parental home, a figure 20 percentage points higher than the European average. ”

    This sentence needs rewriting. You make it sound as 33-20% = 13% of under-35s in Europe has left their parental home.

    • Mar 27, 2017 at 3:01 pm

      Yes, there was typo in it. DQ told me it should be (and is now) “lower” instead of “higher.” Which makes more sense. It would put the EU average at around 53%.

  16. Alessio Calcagno
    Mar 27, 2017 at 5:52 pm

    As an Italian living in Dublin (Ireland) I must say everything in this article is true. The Italian 2.3 trillion euro of public debt will break the Euro. It’s just a matter of months.

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