This weekend will bring the election of the next prime minister in Italy. Worrying about what is happening in Italy, Greece, Spain and the rest of the PIIGS feels “so-2012,” but anyone who cares about the global economy has to care about this election.
Americans will have to expect is that a resolution and outcome may not come because there are four main candidates. That means that another group of coalitions will have to be formed, if it comes to that. Back to why you have to care … We have taken figures from the CIA World Factbook for reference here:
- Population is almost 61.3 million.
- Italy is the third largest economy in Europe.
- Public debt has increased steadily and is now more than 126% of gross domestic product (GDP), ranking eighth in the world on that metric (Greece is third at 161.3% and Portugal is ninth at 119.7%).
- Italy’s GDP growth (loss) in 2012 was -2.3% and its GDP is now 7% below its 2007 precrisis level.
- Unemployment now is projected to be 10.9%.
- GDP under a purchasing power parity for 2012 was put at about $1.834 trillion, which ranks as number 11 in the world.
- Some 17% of GDP is said to be the underground economy, although other sources over the years have had it being higher.
- Taxes are projected to be 48.3% of 2012 GDP and the budget deficit is 2.9% of GDP.
- External debt is listed as being some $2.46 trillion, ranked as ninth in the world.
Pier Luigi Bersani is the leader of Italy’s Democratic Party, and CNN said he is who most expect to become the next prime minister. CNN said, “He has pledged to keep outgoing premier Mario Monti’s austerity reforms, but says stimulus is needed to boost the country’s flagging economy.”
Silvio Berlusconi is a billionaire campaigning to retake this position yet again. He has resigned before and has been in a sex scandal and tax fraud scandal.
Then there is the current and possibly outgoing Mario Monti, who has also held the office, and has been the chief austerity-ist of Italy. This effort was popular outside of Italy but internally let’s say “not co much.”
Giuseppe “Beppe” Grillo is a comedian that has sort of come up through the ranks with those disillusioned with all the parties in Italy. He represents a total wild card and he has been critical of austerity.
The long and short of the matter is that Italy’s election matters. Most Americans do not care for the moment. That may change if austerity measures get back off track and if things in Italy turn for the worse all over again.
The phrase of “too big to fail” has been applied to the biggest banks in the world. As far as bailing out Italy in a manner, we have seen in Greece and elsewhere, the public needs to know that Italy is “too big to bail.”
Jon C. Ogg