Wednesday, January 27, 2016

EU: Italy at risk in the medium-term debt and suffering. And if after the bank there was another emergency? – International Business Times Italy

It will not be the years of the “consolidation of the recovery,” as he would have liked the government, the years 2016-2017 will be the acid test for Italy, when we understand if the country is really seeing a light at the end the tunnel or is it a train that comes to us. The considerations arrive Monday by the European Commission on the health of Italian public accounts confirm a thesis repeated several times: the problems that the government and see the dust that hides under the carpet risk esploderci face. Just think of the safeguard clauses, defused in 2016, but postponed to 2017, all the news of the stability law financed asking (without even getting) more flexibility to Europe and the new safeguards that weigh on the future of the citizens with increases VAT and excise duties.

In the short term, thanks to referrals and accounting tricks, there should be no risk to the stability of public finances Italian, but continue to weigh on Italy for uncertainty and problems that we carry for some time without being able to solve them. First the issue public debt, a cross that Italy carries the happy years of the First Republic.

Touched the peak at 133% in 2015, the debt Italian public expected to decline to 130% in 2017. Despite the expected decline, the debt remains the “main source of vulnerability of the Italian”, because “it limits the country’s ability to respond to economic shocks and leave it exposed to rising interest rates on government bonds, while the ability to increase government investment is limited by the account of the interests, at 4.3% of GDP in 2015 “.

Possible further economic shocks can then put at risk the return path of the debt and the EU sees the 11% chance that the Italian debt in 2020 is still higher than that of 2015. However, in the short term, the Commission seems confident: “the risks appear to be high in the medium term “short, an economic slowdown or new problems in the financial market could easily lead the Italian accounts outside binary safe. And unfortunately the risks for the Italian economy on the horizon there are several. From a macro perspective, the recent estimates by the IMF, despite having mentenuto inelterate forecasts for Italy, indicate the persistence of economic risks for China and other emerging countries that usually drive the economy and world trade. Even in 2015 the slowdown in emerging, linked to the collapse of oil prices, has slowed the world economy, European and Italian who finished with a growth infer estimates.

In addition to the external factors, the ‘ Italy must monitor what happens at home. The beginning of the turbulent financial markets and the storm that is coming down on the banking system represents a heavy risk factor for the country . And the European Commission seems to be aware of it. “The share of non-performing loans in the banking sector could be a major source of risk of short-term liabilities”.

The mountain of non-performing loans that ballast the Italian banking system is a problem postponed too many times and raised to the point of not being underestimated. The emergence of the Italian banking system, which in recent months has shown all his weaknesses, could be solved by state intervention, but this is not possible for several reasons: first for the ‘high debt and deficit that we do not allow this type of maneuvers and then because governments have waited so long to take action that is now prohibited by the new European standards. While other countries were saving banks with the public sector continued to Italy claim to have the strongest banks in Europe.

The business of banks and the turmoil on the Milan Stock Exchange show that we have a bomb ready to explode and that is why the Minister of Economy Padoan is accelerating time for the agreement with the Commission on the bad bank Italian. But if after emerging banks there was another?

When you walk a tightrope with a heavy baggage of critical shoulders any gust of wind threatens to lose balance.

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