Thursday, June 18, 2009

The Italian Economy: Day 11

Today was largely a recap of other things we have been discussing throughout the semester... featherbedding is a huge phenomenon throughout Italy, the South lags behind the North, and it's really hard to get a dependent contract that assures you the big pension and nice retirement. I think this quote sums up Italy very nicely:

"Cake goes to those groups who have trade unions representing them."

Another interesting note: Italy pays about 5% of GDP each year as interest on its national debt. The debt is expected to grow to about 120% of GDP by the end of 2010, which puts it at close to double American debt. However, Italy actually has a primary balance surplus. Primary balance is the revenues less expenditures, excluding interest on national debt. That won't happen this year with the recession, but most years this has been the saving grace of the government that allows it to continue borrowing. However, until Italy gets the actual budget into surplus, it will not be able to pay down its debt, making it the American homeowner borrowing from one credit card to pay for another.

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