Showing posts with label Italian debt crisis. Show all posts
Showing posts with label Italian debt crisis. Show all posts

Tuesday, July 16, 2013

16/7/2013: Italian Government Debt: All Is Going According to 'Plan'


Today's news:

ITALY'S GENERAL GOVERNMENT DEBT: €2.074 trillion (setting a new all-time record) and up on €2.0413 trillion prior… in other words, all is going according to the EU 'sustainability' plan.

A gentle reminder, back in April 2013, IMF forecast for Italy's 2013 GGD was EUR2.0405T, so that fiscal consolidation, then, is outperforming the targets, clearly… In fact, IMF forecast for 2014 GGD was EUR2.08055, so Italy is well into getting to 2014 target by the end of 2013. Keep digging, folks. Perhaps a French solution of raising taxes? Just for 'fairness' sake.

A chart via Ioan Smith @moved_average :


To update: via @lemasabachthani two charts:

Notice in the above chart the evolution of debt over years. And recall that Italy is cutting and cutting deficits. Clearly, something is amiss: there is austerity and there are continued increases in debt in levels terms, as well as in GDP-referenced terms. In other words, forget growth effects of austerity - Italian-styled policies are not cutting Government spending.

Also, notice the effect of the absurd Euro area 'solution' system whereby already over-indebted country like Italy is forced to take on more debt to fund 'adjustment' programmes for the peripheral states.

But even disregarding the above absurdity, there is a new spiking in funding requirements for the Italian Treasury.


Monday, September 24, 2012

24/9/2012: Italy's debt overhang effect


Via @FGoria on twitter, this chart on Italy's potential GDP and output gap:
Shows brilliantly the cost of Italy's public debt overhang as a steadily falling potential GDP growth and sustained structural recession since ca 1990-1992. Better yet, shows that even cheap liquidity in the naughties failed to produce any real effect on the economy.

Now, keep in mind, Italy is suffering solely from the Government debt overhang, with relatively benign debt levels on household and corporate balancesheets, and with relatively functioning banking system.

Monday, April 16, 2012

16/4/2012: Italian debt is going up, not down

John Langdon Down - a descendant of an Irishman and a British psychiatrist was, reportedly, the first person to use the French term 'idiot savant' to describe a specific condition in which a brain injury can lead to a person with 'developmental delays' of the brain is being able to demonstrate "profound and prodigious capacities and/or abilities in excess of those considered normal". I am no psychiatrist, but the cheerful reports with today's news that Italian Government debt has declined month on month in February were met suggests to me a manifestation of the similar nature.

Here are the facts. Italian public debt is down €6.8bn in February to €1,928 billion - a drop of 0.35% month-on-month. With a borrowing requirement down €1.4bn yoy in February, but flat at €12.7bn for two months January-February, compared to 12mos ago. It is the latter part - the static nature of Government borrowing requirements, not the former part - the reduction in debt, that matters most. The reason is simple - see charts below:


You see, in January-February 2011, tax receipts were €56,370mln, against €53,940mln in Government expenditure, yielding 2mos cumulated balance surplus of €5,072mln. In 2012, same period tax receipts were €55,931mln or €439mln below 2011 figures, with Government spending at €54,290mln or €350mln ahead of same period last year. January-February 2012 Government balance was in surplus €5,302mln. So the debt 'repayments' are not a sign of any improvement in the fiscal dynamics.

Now, there is a bit more to consider here, folks. The stated reduction in the Government debt is month-on-month and the statement above syas nothing about year-on-year comparison. Ok, so let's take Table 10 from April 16th Banca d'Italia data release. Column 1... errr... General Government Debt:
February 2011 at €1,875,010 mln, against February 2012 at €1,928,211 mln. Contrary to the cheerful view of 'debt falling €6.8bn', Italian debt went up year on year €53,201mln.