by Michael Snyder
July 7, 2013
from
TheEconomicCollapseBlog Website
When you get into too much debt, really bad
things start to happen.
Sadly, that is exactly what is happening to
Italy right now. Harsh austerity measures are causing the Italian economy to
slow down even more than it was previously. And yet even with all of the
austerity measures, the Italian government just continues to rack up even
more debt. This is the exact same path that we watched Greece go down.
Austerity causes government revenues to drop
which causes deficit reduction targets to be missed which causes even more
austerity measures to become necessary.
But if Italy collapses economically, it is going
to be a far bigger deal than what happened in Greece.
Italy is the ninth largest economy on the entire
planet. Actually, Italy used to be number eight, but now Russia has passed
it. If Italy continues to stumble, India and Canada will soon pass it as
well. It really is a tragedy to watch what is happening in Italy, because it
really is a wonderful place.
When I was a child, my father was in the navy,
and I got the opportunity to live there for a while. It is a land of great
weather, great food and great soccer. The people are friendly and the
culture is absolutely fascinating. But now the nation is falling apart.
The following are 11 signs that Italy is
descending into a full-blown economic depression...
-
The unemployment rate in Italy has risen
to
12.2 percent. That is the highest that it has been in more than
35 years.
-
The youth unemployment rate in Italy is
sitting at
38.5 percent, and in southern Italy it recently hit
the 50 percent mark.
-
An average of
134 retail outlets are shutting down in Italy every single day.
Overall, approximately 224,000 retail establishments have closed
since 2008.
-
Italy's economy has now been contracting
for
seven quarters in a row.
-
It is being projected that Italy's GDP
will shrink
by 1.8 percent this year.
-
Industrial production in Italy has
declined for
15 months in a row. It has now fallen to its lowest level in
about 25 years.
-
Overall, factory output in Italy has
fallen
by about one-fourth since 2008.
-
In May, automobile sales in Italy were
down 8 percent compared to one year earlier.
-
The number of people that are considered
to be "seriously deprived" in Italy
has doubled over the past two years.
-
Italy now has a debt to GDP ratio of
130 percent.
-
It is being projected that Italy will
need a major EU bailout
within six months.
At this point, Italy is flat broke.
And unlike the U.S. or Japan, Italy cannot run
over to a central bank and have them print up oodles of new money with which
to buy up government bonds. Italy is married to the euro, and so that
greatly limits their options.
Unfortunately, the money is rapidly running out.
The following is from a recent article
by Wolf Richter...
In most countries, it would be an act of
mind-bending chutzpah, or perhaps a display of political insanity, but
in Italy it barely made ripples: for a government official, a minister
no less, to declare that the country cannot pay its long overdue bills,
and not for a month or two, but for the rest of this year! Due to
"technical" problems.
The Italian government is out of money. Not
that the US government is in any better shape in that respect, or the
Japanese government for that matter, but they have central banks that
print the missing moolah with lavish abandon.
Italy doesn't. It has the ECB which is run
by an Italian who promised last year to print with lavish abandon to
keep countries like Italy afloat. But that promise is not the same thing
as having your own central bank.
On July 4, Italy's budget fiasco
came to light once again. Wracked by the pretense of austerity,
expenditures rose 1.3% in the first quarter, while revenues
remained flat. So the deficit rose to 7.3% of GDP, up from 6.6% last
year, bringing the national debt to 130% of GDP.
Ballooning debt and deficits in a shriveling
economy - Italy has been in recession since the fourth quarter of 2011 -
is a toxic combination in the Eurozone.
While those numbers may sound really bad, the
reality is that the people that are suffering the most are the average folks
on the street.
Many Italians have been completely blindsided by
this economic depression, and suicides
are skyrocketing...
In Italy, the tragic stories of suicides
apparently linked to the deep recession are becoming all too frequent.
Last month, a former factory worker hanged himself near Turin because he
could not find work, his relatives said.
In May, a young man committed suicide
outside of Rome shortly after he lost his job. The next day, Italian
President Giorgio Napolitano begged the government to deliver “the
utmost attention for situations of greatest malaise and need” to help
stop the wave of suicides.
That is absolutely tragic.
But you know what? The United States is headed
down the same path that Italy has gone. In the coming years unemployment and
suicide will both skyrocket here too.
Those that are
sticking their heads in the sand right now will be absolutely blindsided
by what is coming. But those that understand what is on the horizon and are
preparing for it will have the best chance of making it through.
Italy is kind of like the Leaning Tower of
Pisa. Everyone knows that it is going to fall eventually, and when it
does fall it is going to be a major disaster.
When the financial system of Italy totally
implodes, that will be a sign that things are really starting to accelerate.
Expect dominoes to start tumbling much more
rapidly in the aftermath.