Italy Becomes Austere…

Italy Gets the "Boot"...

As the second and larger shoe drops in the Europe Union with the reality that Italy is headed to the financial drink right behind Greece has forced the hand of the Berlusconi government.  In fact it appears that Silvio himself is headed for the door as its rumored he will be resigning the top post which is opening the door to many questions as to the how the leadership void will be filled post departure.

The other interesting thing is their Senate is due to vote on a package of “austerity” measures lead by an increase the retirement age.  What’s interesting here is in an unrelated manor over the course of this week we’ve waxed about the age being pushed back here in the United States.  As well as the social dynamic which this has played with the [baby] booming generation and the parallel here is this is also the “generation” which would be most affected by an increase in “retirement age”.  In fact it also appears they are stealing a page from the US play book by pushing the age to 67.  As a side bar, I imagine there will be some upset 65 year old folks in Italy!

What is interesting as the Italian debt is sitting at EUR1.9 trillion which is almost 120% of the Italian gross domestic product.  In short, to put this into perspective if you earned $100,000 per year and you now owed $120,000 dollars how will you repay the debt?  As yes, you can run it over time; however time also costs money in interest payments.  Therefore, you have to run your house hold (still), pay off your over indulgences of the past, as well as the interest burden cast upon you all while this Sword of Damocles is hanging over your head.

In fact you can’t dig fast enough as the dirt refills the hole over your head as fear begins to set in as the reality is your doom approaches quickly as the single horse hair which holds the sword above your head lets loose.  Bleak, yes, reality yes to as unless GDP grows and grows significantly for our Italian colleagues we will see the sixth largest economy in the world  tumble bringing with it an untold impact to the Euro-Zone.    As the next question is who will bail them out and maybe better asked, will it be possible to bail them out at all…

P.S. I’m sure they must have Merkel’s phone as they borrowed it from the Greeks…

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About Joseph Campbell

As a strong believer in the fact that "people work for people", it has been a life driver to better to understand the complexities of the various aspects which drive efficiency within this axiom, especially the concepts of leadership. Supporting this, I have been fortunate enough to having experienced this as leader on a global basis over the last decade and half. During this time it has been clear there are three core drivers being Life, Leadership and Economics.
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