Italians Fear Following Greece Into Debt Crisis
DAVID GREENE, Host:
NPR's Sylvia Poggioli has this report from Rome.
U: (Italian spoken)
SYLVIA POGGIOLI: Rome has a new speaker's corner, where experts come to explain Italy's economic crisis. A small group gathers to join the discussion. Will Italy end up like Greece?
M: I'm coming here to hear, to learn, and maybe to find a way to participate in the future.
POGGIOLI: Artilio Faviano says the government has not been honest about the crisi, the crisis.
M: The crisis is heavy. They're told the crisis light, that we can overcome without too many problems. But they will ask us for other sacrifice. This is not good. They're liars. All liars.
POGGIOLI: Today's speaker is financial journalist Roberto Petrini.
M: (Through translator) We still don't know the details of the spending cuts, but it's certain that pensioners and civil servants will be hardest hit.
POGGIOLI: Petrini says Italy is not in the same boat with Greece, not even with Spain or Portugal. Its annual deficit is 5.3 percent of GDP, nearly three times smaller than that of Greece. He cites Italians' high personal savings rates - 15 percent of incomes compared to less than one percent in Greece. Italy was spared the housing bubble. Its banking system weathered the global crisis. And more than 50 percent of Italian government bonds are owned by Italians themselves, compared to 90 percent of Greek bonds in foreign hands. That means Italy's financial system is less vulnerable to the whims of foreign investors.
POGGIOLI: What is worrisome about Italy is the lack of growth and the high debt.
POGGIOLI: Economist Francesco Giavazzi teaches at Milan's Bocconi University.
POGGIOLI: This is not something which is urgent as having a very large budget deficit, but still is a reason for concern, in particular the fact that this country has had virtually no growth since the beginning of the euro.
POGGIOLI: The economy now depends heavily on small and medium sized manufacturing firms in north and central Italy. And in 2009, GDP dropped a whopping 5.1 percent. Italy has other long-entrenched problems that hamper investments and growth. The audit court that oversees public spending says corruption cases are soaring, a 229 percent increase last year over 2008. And one-third of Italians evade taxes, costing the state many billions of dollars. In addition, organized crime turnover is estimated at seven percent of GDP. But the Berlusconi government always said all is well.
M: They said for years that Italy is not touched by the crisis, with stronger export market, with strong currency and with strong economy. That is not true.
POGGIOLI: But Feltri says Finance Minister Giulio Tremonti appears to be improvising, using Italian data that conflict with what's gathered by international organizations. He compares Tremonti's use of numbers to a strip-tease dancer peeling off her clothes.
M: Our finance minister, he is dancing the seven veil dance. Each time he speaks to financial markets in the European Union, he takes down some clothes. At the end, Italian finance will be naked.
POGGIOLI: Sylvia Poggioli, NPR News, Rome.
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