As two of Berlusconi’s most-trusted aides, Paolo Bonaiuti and Gianni Letta, had announced it a couple of days ago, “The time has come for sacrifices,” and they will be “very heavy, very hard and let’s hope temporary.” And yesterday, in an effort to comply with the International Monetary Fund calling on Italy not to relax fiscal discipline, to reduce the public debt and boost its long-term growth rate, the government of Silvio Berlusconi approved budget cuts of up to €24 billion ($29.7 billion) over the next two years. The austerity package is the most stringent put in place since Italy tightened its belt in the late 1990s to enter the euro.
This should hopefully bring the deficit back below 3% of GDP (3.9% in 2011 and 2.7% in 2012) from last year’s 5.3%—which is, after all, relatively modest compared with other EU countries—and offer reassurance about the country’s accounts to financial markets.
“This is not a classical budget law. It is an intense discontinuity for the system that all of us must understand,” said Finance minister Giulio Tremonti. “What we did last night is a change of direction,” Berlusconi’s Public administration minister, Renato Brunetta, said on Sky Italia. “Enough uncontrolled costs of the state.” And, perhaps, they both are right. Why? Well, first of all because the government will carry out half of the cuts by reducing the amount of funds that Italy’s central government allocates to regions and cities. This means that major regions running large deficits (Lazio, Campania and Calabria) will be forced to raise business and income taxes. And it was time for this to happen, in my humble opinion. After all, as Stefano Manzocchi, international economics professor at Rome’s Luiss university, puts it, ”Italy is like a microcosm of Europe,” and just as Brussels labors to impose fiscal discipline on Athens, so Italy’s central government has (always had) to fight a desperate battle to control the debt-laden finances of its own wayward regions, and that’s perhaps the most serious challenge that the country is facing today. Furthermore, provincial governments with less than 220,000 inhabitants and some publicly funded think-tanks will be abolished. This is what one might call “structural cuts,” or at least this is how, in my deep ignorance (this is the plain truth, believe it or not…), I understand it. But “structural cuts” is exactly what everyone was hoping for from the government …
Other key measures in the plan include a crackdown on tax evasion and false benefit claims (100,000 checks per year in 2010-2012 on claims for invalidity pensions, and a ban on cash payments for sums above 5,000 or 7,000 euros). The rest, so to speak, is just routine.
However, analysts say the plan is an encouraging first step, though probably not enough, in the long run. “We feel this should be a forerunner of a prolonged period of better fiscal management,” said Raj Badiani, of IHS Global Insight. And I personally couldn’t agree more, if this may be of any interest to you readers.
The name of this blog indicates a place where people seek their bearings, but this is not a site where they can actually find them—everyone is, or should be, his own wind rose.
Previous incarnations of this blog: here and here.
I have been a High School teacher of History and Italian almost all my working life. Now that I am retired, I can finally spend more time doing what I love most: writing.
In my Twitter profile I describe myself as “European by birth, American by philosophy,” which after all is quite an accurate description. Perhaps it also supports the adage that brevity is the soul of wit.
I live in the Venice area with my wife, my daughter, and my dog, a Golden Retriever that swims like a fish and is crazy about tennis balls.
Visit my website for more info and full bio: www.srpiccoli.eu.
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«Proclaim LIBERTY throughout all the Land unto all the Inhabitants thereof Lev. XXV, X
By Order of the Assembly of the Province of Pensylvania for the State House in Philada»
«If I had a bell
I'd ring it in the morning
I'd ring it in the evening ...
all over this land,
I'd ring out danger
I'd ring out a warning
I'd ring out love between all of my brothers and my sisters
All over this land.
It's a bell of freedom» Lee Hays and Pete Seeger
["If I Had a Hammer"]
"Friends, Romans, countrymen, lend me your ears;
I come to bury Caesar, not to praise him.
The evil that men do lives after them;
The good is oft interred with their bones;
So let it be with Caesar. The noble Brutus
Hath told you Caesar was ambitious:
If it were so, it was a grievous fault,
And grievously hath Caesar answer'd it.
Here, under leave of Brutus and the rest--
For Brutus is an honourable man;
So are they all, all honourable men--
Come I to speak in Caesar's funeral.
He was my friend, faithful and just to me:
But Brutus says he was ambitious;
And Brutus is an honourable man.
He hath brought many captives home to Rome
Whose ransoms did the general coffers fill:
Did this in Caesar seem ambitious?
When that the poor have cried, Caesar hath wept:
Ambition should be made of sterner stuff:
Yet Brutus says he was ambitious;
And Brutus is an honourable man.
You all did see that on the Lupercal
I thrice presented him a kingly crown,
Which he did thrice refuse: was this ambition?
Yet Brutus says he was ambitious;
And, sure, he is an honourable man.
I speak not to disprove what Brutus spoke,
But here I am to speak what I do know.
You all did love him once, not without cause:
What cause withholds you then, to mourn for him?
O judgment! thou art fled to brutish beasts,
And men have lost their reason. Bear with me;
My heart is in the coffin there with Caesar,
And I must pause till it come back to me. (...)"
Act 3, Scene 2