Italy's Monti in austerity race as IMF role eyed

[formercia]

Source: Yahoo Finance


Reuters – 22 minutes ago


By James Mackenzie and Francesca Landini

ROME (Reuters) - Prime Minister Mario Monti faces a testing week seeking to shore up Italy's strained public finances, with an IMF mission expected in Rome and market pressure building to a point where outside help may be needed to stem a full-scale debt emergency.

Monti is expected to unveil measures on December 5 that could include a revamped housing tax, a rise in sales tax and accelerated increases in the pension age. But pressure from the markets could force him to act more quickly.

One source with knowledge of the matter said contacts between the International Monetary Fund and Rome had intensified in recent days as concern has grown that German opposition to an expanded role for the European Central Bank could leave Italy without a financial backstop if one were needed.

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Read more: http://finance.yahoo.com/news/italys-monti-austerity-race-market-172704002.html

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Italy may be about to get a dose of Shock Doctrine, Methinks.

[PSPS]

1. This is what happens after the bankers' coup d'etat.

I wonder how the 99% of Italy and Greece feel having their governments led by unelected "technocrats" installed by the bankers.

[formercia]

2. It's going to be a long, hot Winter

Better stock-up on Popcorn.

[russspeakeasy]

4. They probably feel like we do. Screwed !

[jmowreader]

3. And when the austerity measures don't work, then what?

Seriously, guys...when has austerity EVER worked?

They've been doing austerity in British since the 1960s and the British economy has been in the shitter ever since they started. Seriously: when, since the end of World War II, has Britain had a good economy?

They are trying it in Greece and it isn't working there.

They are now trying it in Italy and it's not going to work there either.

The best economies in Europe are Germany and Sweden. Both nations believe in taxing the shit out of their citizens, near-universal unionization, and spending tax money on infrastructure. As a result the economies of those nations are strong and the roads aren't full of chuckholes. (I knew a German Army colonel when I was stationed there. We were talking about roads, and I asked him how they were able to fix the potholes so effectively. Then I had to tell him what a pothole was. He looked at me like I was drunk--okay, I WAS when I told him this, but he was too--and asked, "you tolerate those in America?") Ya think maybe there's a connection?

[Javaman]

5. +1000! nt

[bossy22]

7. Thats not true

Germany is strong because it is an export based economy. If you look around the world, all net-exporting countries are doing better than net-importing countries. This is because of a multitude of factors such as deleveraging, asset devaluation, etc....

In fact, Germany is not as strong as she seems- she is heavily reliant on the lower eurozone countries to buy her goods and as they go through this painful process of deflation germany will start to find the market place for many of her goods empty. That's why the Bundesbank (Germany's central bank) is expecting only .5-1% growth. In reality though, many economists believe by the middle of 2012 that Germany will find herself in the middle of a recession.

[JackRiddler]

10. In the present system every country wants to be a net exporter.

It's an effect, not a cause.

Germany's systems of labor relations, education, health care, industrial policy and social welfare all have something to do with its success on export markets. Contrary to the prevalent libertarian ideology with its advocacy of low wages and no limits to private capital.

[Yo_Mama]

16. But it had all those things when it was experiencing 10% unemployment chronically

There's a lot going on in the world, and even a well-governed country can find itself with a weak economy.

Germany is doing well now because the types of goods it is producing have found a strong market in Asia and other developing nations. And Germany's currency, the Euro, is kept lower than it otherwise would be because of the currency union with nations that don't run an export surplus, which helps it keep its goods marketable. Germany would be in much more of a Japan-like position if it still were on the DM.

If the Asian sales fall off significantly, the drag on sales in the EU is also going to impact Germany, and it very well might find itself in recession or close to it next year. However housing investment is picking up in Germany, and that might carry them through next year. It all depends on how bad things get.

Germany also launched a long term productivity plan in the 2000s - the union structure you speak of was used to deliberately hold down worker incomes, the terms of retirement, health insurance schemes, unemployment etc were tightened (less benefits for recipients on average, forcing unemployed workers to take lower rung jobs, delaying retirements) and so forth.

Reunification imposed a high cost on Germany, and what's happening in Germany now is to some extent the result of a prior austerity plan.

[Angry Dragon]

6. It seems all on the backs of the little people

Pretty soon the rich will not be welcome in any country and then where will they go??

[unkachuck]

8. "...and then where will they go??"

....to hell, where they belong....

[lonestarnot]

9. Don't they still like them over in Paraguay?

[formercia]

12. Poppy and Junior are getting the Ranch ready for immediate occupation.

They even have a nice airfield to go to. Mengele never had it this good.

[lonestarnot]

15. Exactly.

[DallasNE]

11. Have They Ever Heard Of Quantitative Easing?

The European Central Bank needs an expanded role whether Germany wants it or not. The IMF should be a player but in a more limited role. It also looks like the European Central Bank needs to be made more independent. If that were the case they probably would have taken more aggressive action already. Germany and France need to back off and allow the monetary people to do what the situation calls for which is stimulus rather than austerity. With Europe we also have to worry about nationalism raising its ugly head and this pitting the weak against the powerful is troubling. Very troubling.

[Octafish]

13. Goldman Sachs, Italian Style

http://www.reuters.com/article/2011/11/28/italy-leader-idUSLEADERIT20111128

[meow2u3]

14. Better known as Mario "Three Card" Monti

What better to run a Goldman Sachs scam than the appropriately named Mario "Three Card" Monti?