Sunday, April 18, 2010
Still Tottering
The government may pretend otherwise, but Italy's economy has deep structural problems that undermine much chance of growth. But with much of the worlds attention squarely fixed on Greece and their remarkable economic troubles, Italy has been able to fly under the radar. Although it should be noted that Italy has the EU's second highest public debt, second only to Greece. However, more importantly is the fact that Italy's rising debt has caused unbelievable amounts of strain on the countries economic stability. It is clear that Italy must increase its GDP and cut back on spending, yet, vested political interests have not allowed this to occur. Is Italy leaning towards potential troubles or simple in need of some minor adjustments?
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3 comments:
Both Italy and Greece should definitely cut back on spending and have a tighter budget constraint. The article "Greece Says No New Austerity Measures Demanded" discusses Germany's concern for giving aid to countries in large deficits. They fear that it will give an impression of easy bailouts for any country that is economically weak. Instead of asking for money to bailout, perhaps they should cut back spending instead.
It seems that both Italy and Greece should definitely cut spending. If countries like these keep relying on bailouts from the E.U. The E.U.'s reputation will come under even more scrutiny.
I agree, I dont think that they should keep relying on the EU to bail them out, as we have learned having a soft budget does not benefit anyone.
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