Wednesday, 9 November 2011

Now Italy too?

Greece, Spain, Portugal and now Italy? Well, as bonds go beyond 7% it seems inevitable that they will need bailing out - if that is even possible, which many economists doubt.

What is so interesting about the downfall of the Italian economy is that it is one of the world's largest economies, and it has demonstrated just what a nasty machine the Euro is when it can take down a giant as big as Italy.

Certainly some responsibility lies at the feet of Berlusconi and his party - especially as it was under him that Italy went into the European project with a full throated cry - but it also shows just how false the promises of the New Europe were.

The idea was one enormous superstate with layers of government, "fair" taxes paying for more and more government projects, and a united currency encouraging everyone to, you know, just get along. How did that work out for you?

The result has been a continent submerged in debt, with too many free-lunchers and not enough people paying into the system. It is no coincidence that Italy is borrowing at 120% of GDP and is the third biggest borrower behind the US and Japan. It is entirely symptomatic of the continental mentality that has throttled the European economies.

What is truly frightening about this whole thing is that there is no reason why this can't happen to most EU countries, who have all been encouraged to borrow and spend beyond their means.

Two Prime Ministers have resigned this week. As the Eurozone falls deeper into turmoil, how many more will follow?

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