Seems the Italy's problems with the Euro are not typical of other
countries.* Look at the low productivity rates compared to other
countries, while labor costs are spiking.

Italy's top exports are still shoes, clothes and furniture?* Nice Old
World craftsmanship but labor-intensive and costly to produce.* The bit
about having to truck goods from Treviso to Milan at night or taking 6
hours to go 170 miles seems emblematic of inefficiencies which are
uniquely Italian.

Plus you don't cut prices on Italian goods, much of which are status
brands, without diminishing the prestige of the brands.

What about intellectual exports?* I mean, I recorded Bertolucci's
Dreamers the other night but are other things besides film?* The Three
Tenors?

========================
PAGE ONE



Golden Handcuffs
With Italy in the Doldrums,
Many Point Fingers at the Euro

Strong Currency Hurts Exports,
Causing Some to Want Out;

Another Blow to the EU

Buying Baby Formula in Austria

By GABRIEL KAHN and MARCUS WALKER
Staff Reporters of THE WALL STREET JOURNAL
June*13,*2005;*Page*A1

CAPOLONA, Italy Rossano Soldini, the 60-year-old head of a family-owned
shoe factory in this tiny Tuscan town, is getting creamed by Chinese
imports.

But Mr. Soldini isn't only blaming China. He also wants to give Europe's
common currency the boot.

Like other shoe manufacturers across Italy, Mr. Soldini says the euro's
sharp rise against the dollar inflated the price of the shoes he ships
to the U.S. and left him defenseless against Asian rivals. Italian shoe
production dropped almost 8% last year, the fourth straight year of
declines. In 2004, Italy imported more shoes than it exported for the
first time.

In the past, Italy would devalue its old currency, the lira, to help
businesspeople claw back to competitiveness against other countries. But
since Rome gave up control of currency policy to join the euro in 1999,
Mr. Soldini, who also heads the National Association of Italian Shoe
Manufacturers, has watched his fortunes slide. Having the euro has been
like "wearing handcuffs," he says, adding: "Without a doubt, I'm
nostalgic for the lira. Europe is not listening to us."
Six years ago, 11 European nations made a bold bet that a common
currency would unify and fortify the continent from Sicily to Helsinki.
Now, as many of the nations in what is known as the euro zone slog
through an economic funk, the experiment is helping to drive countries
further apart -- and fueling a growing resentment of the wider European
Union.

In Italy, an anti-euro backlash is ricocheting up and down the peninsula
as the country sinks deeper into a recession. Consumers, businesspeople
and some politicians now bemoan a currency they claim has left them
poorer and less competitive. Earlier this month, the welfare minister,
Roberto Maroni, called for a referendum to bring back the lira. The
daily newspaper of his party, the Northern League, has just begun
rendering prices in euros and lira in its news columns, even though the
lira no longer exists.

The euro-bashing isn't confined to Italy. A poll for Stern magazine this
month found that 56% of Germans want the mark back.

The mounting dissatisfaction is another blow to the authority of the EU.
The 25-member union was pitched into confusion two weeks ago by the
rejection by French and Dutch voters of a proposed new constitution for
the union. Underpinning those votes and the grousing over the euro are
deep anxieties about slow growth, high unemployment and the future of
Europe's generous welfare states.

The anti-euro feeling also underscores just how hard it is to forge a
common currency. It took the U.S. nearly a century to create a truly
national currency. Before the Civil War, thousands of American banks
issued notes that in effect worked like independent currencies, varying
widely in value from state to state. Only in the midst of war was the
Union finally able to impose a uniform greenback.

The euro has faced different but daunting challenges since the
experiment was launched in 1999. The U.S. has one national government
that can direct aid to depressed corners of the country; the euro zone
has 12, each with its own fiscal policy. Workers in the U.S. can freely
move from a slumping area to seek jobs in a prosperous one. Europeans,
tied down by different languages, pension plans and legal systems, are
far less mobile.

Still, the euro is in many ways a triumph. It is so sound that it has
quickly emerged as the world's second-most-widely-held currency by
central banks after the dollar. The euro has brought big benefits for
companies trading across European borders by eliminating currency swings
and foreign-exchange fees. It created huge, unified capital markets akin
to the U.S.'s, which have helped many European companies raise capital.
Returning to a weaker currency would mean returning to higher interest
rates.

Thus no one is expecting Italy or any of the other 11 euro members to
bolt any time soon. And many analysts say Italy's problem doesn't lie
with the euro, but with Rome, which has failed to slim down the
country's vast bureaucracy or break down the barriers to competition in
big parts of the economy. "The remedy is not to leave the euro, but to
correct the structural issues," says Patrick Artus, an economist at
French bank Groupe Caisse d'Epargne.

But the chafing of Italians and Germans at the euro, coupled with the
anti-EU feeling exposed by the French and Dutch "no" votes, have raised
questions about long-term political support for the currency. All four
countries are euro members. "Breakup is back on the radar screen as a
theoretically possible option" for the monetary union, says Holger
Fahrinkrug, an economist at Swiss bank UBS in Frankfurt.

When the new currency was launched on Jan. 1, 1999, it was greeted with
champagne toasts in Rome, Paris and Frankfurt. Economists and
politicians predicted the euro would one day rival the dollar as a
benchmark currency and, consequently, Europe would one day rival the
U.S. as a superpower.

The euro was all things to all nations. Italians thought the euro would
let them trade their feckless politicians in Rome for technocrats in
Brussels. The French gambled that monetary union would enhance their own
power. Newly reunified Germany, haunted by Europe's history of wars,
thought giving up the mark was a necessary sacrifice for durable peace
and acceptance by its neighbors.

Euro advocates vowed Italy would emerge as a big winner from the new
money. Ceding monetary policy to the European Central Bank and joining
the euro would usher in stable interest rates, which in turn would help
Italy pay down its crushing public debt, the third largest by value
after Japan and the U.S., and larger than Italy's entire gross domestic
product.

Much of that came true. Interest rates fell and Italy cut in half the
interest it pays on its debt. But adopting the euro had two downsides.
First, the euro shot up in value against the dollar -- by nearly 50%
since 2000. Three of Italy's biggest exports -- shoes, clothing and
furniture -- are facing huge competition from China, which pegs its
currency to the dollar. That currency swing priced Italian exports out
of the market, and gave an extra advantage to already-cheap Chinese
products.

More fundamentally, joining the euro took away Italy's trusty safety
valve of devaluation. Large parts of the Italian economy, from trucking
to electricity, are clogged by red tape and cartels, which hold down
competition. That pushes up costs for Italian businesses, hurting their
ability to compete with rivals from Germany or France.

In the past, when the prices of Italian exports got too high, currency
markets would adjust, sending the lira lower and spurring demand. That
would give Italian exporters a quick shot of adrenaline, but it didn't
cure the economy's underlying problems.

Now, the only way Italy can compete is to cut prices. The only way it
can cut prices is to cut costs. But the opposite is happening.
Inefficiencies in Italy's cartel-pocked economy have caused prices of
everything from electricity to zucchini to shoot up faster than
elsewhere in the euro zone.

Unions began demanding higher wages to offset lost spending power.
Companies had to grant raises that outstripped any gains in worker
output. Adjusted for productivity, Italian labor costs have risen 17%
since the euro came in, while German labor costs have risen only 1%,
according to Barclays Capital. Italian productivity grew just 0.5% a
year in the past decade, compared with 1.6% in Germany, and 2.4% in the
U.S., according to the Organization for Economic Cooperation and
Development.

The result: Italy is falling further behind other countries inside the
euro zone. The euro's one-size-fits-all value was supposed to be the
glue binding the currency zone into a whole stronger than its parts, but
instead has highlighted the discrepancies among the European economies.
Sluggish euro members like Italy need low interest rates, while
faster-growing ones like Ireland could use higher ones.

The OECD says the 12-nation euro zone is the weakest major component of
the global economy, and predicts it will grow only 1.2% this year,
compared with 3.6% in the U.S. Italy's economy contracted 0.9% over the
most recent two quarters, and the OECD forecasts that it will shrink
0.6% in 2005.

All that is prompting a rethink of the logic underlying the single
currency. "It would have been better for Italy to stay out [of the euro]
for a few years," says Julian Callow, chief European economist at
Barclays Capital in London. "There's no easy solution now."

The risk: The weaker countries in the euro zone will return to heavy
deficit spending, undermining the euro's strength. With Italy's public
debt already at 106% of its GDP, rampant deficit spending could mean
other euro members would have no choice but to bail Rome out.

Italians had worked hard just to get into the euro club, fearing that if
they didn't get their act together Europe's third-largest economy would
be shunted to the sidelines. The race to qualify, which forced Italy to
cut its budget deficit to under 3% of GDP in 1997 from over 11% in 1990,
galvanized Italians to act. The government was able to levy new taxes to
pretty up Italy's books ahead of the entry into the euro.

When Rome made the cut, by a hair, on May 1, 1998, Italians were elated.
But there was little political will left over to tackle the root causes
of Italy's inefficiency: a huge and stifling public bureaucracy, and
vast swaths of the economy that were still insulated from competition.
"Our mistake was thinking that joining the euro was the solution, the
end to our problems," says Vincenzo Visco, a silver-haired politician
who served as finance minister and then treasury minister from 1996 to
2001. "Instead, it was only the beginning."

One problem never fixed is the country's creaky infrastructure. Andrea
Tomat, president of sport-shoe maker Lotto Sport Italia SpA, is dealing
with the consequences. To ship its goods, the company, based in Treviso
near Venice, must truck them about 170 miles to the nearest
international air hub in Milan. The only highway is usually clogged,
meaning the journey often takes six hours. To be sure of catching
flights, Lotto's delivery trucks leave during the night -- or arrive a
day in advance. "This basically doubles our cost of moving goods," says
Mr. Tomat.

Another drag, he says, is Italy's bureaucracy. Lotto is trying to bring
two employees from China, where it produces 60% of its goods, to work in
Italy, but getting the paperwork approved will take six months. "In a
world where in six months you can develop whole new stores over there,
we are traveling by bicycle when everyone else has a car," he says.
Other business owners feel like they are in a losing battle. Maurizio
Brevini, an engineer in Reggio Emilia, runs a 130-person maker of
specialized hydraulic pumps founded by his father. Over the past five
years, he has boosted his revenue by 13%, to ¤18.4 million, or $22.3
million. But his costs have risen even faster in the same period and his
profits have fallen more than 10%, he says. Part of the problem: two
wage increases for his workers.

"I feel badly for them because they have lost spending power," he says.
But the salaries are rising faster than worker productivity. "This is
like poking holes in the bucket," he says.

Federica Mongiello, a 31-year-old mother from Rome, was shocked when,
traveling in the Austrian Alps last year, she discovered that baby
formula cost the equivalent of about $10 for 2.2 pounds, when she was
paying $48 in Italy. The reason for the huge difference? In Italy, baby
formula can be sold only in pharmacies, where discounting is rare.
"Fa schifo," she says, Italian for "disgusting." Some friends have since
joined Internet-based collectives of mothers who import baby milk from
Austria and sell it for sub-Italian prices.

After years of trying to adhere to the euro zone's strict fiscal
criteria, which require that deficit spending not exceed 3% of GDP, Rome
is now letting down its guard. The EU estimates Italy's deficit will hit
3.6% of GDP in 2005 and 4.6% in 2006. France and Germany have already
busted through the 3% limit, but Italy, with much higher public debt,
presents even more of a risk of destabilizing the currency's soundness.
Brussels has been urging Italy to pass a new round of spending cuts to
keep its budget in line. Prime Minister Silvio Berlusconi has rejected
the idea. Instead, Mr. Berlusconi has argued that a just-approved law
that will, among other measures, make it easier for many of Italy's
small companies to merge will improve the country's competitive position.
Despite the chorus for a return to the lira, an Italian exit from the
euro zone looks extremely unlikely. For now, such a move would cause
interest payments on public debt to skyrocket and might force more
onerous taxes on Italian citizens and businesses in order to cover the
cost.

Nonetheless, a growing number of Italians profess a new affection for
their old currency. After stocking up on cheap baby formula in Austria,
Mrs. Mongiello's enthusiasm for the euro has waned. "There's no doubt,"
she says. "We were richer when we had the lira."

"poldy" <[email protected]> wrote in message
news:[email protected]...

<< Seems the Italy's problems with the Euro are not typical of other
countries. Look at the low productivity rates compared to other
countries, while labor costs are spiking. ........>>

Here is an article from last weeks Ecconomist which you may find
interesting.


//
The real sick man of Europe

May 19th 2005
From The Economist print edition
Italy's economy is stagnant, its businesses depressed-and its reforms
moribund

IT WAS Tsar Nicholas I of Russia who reputedly coined the phrase, to
describe the Ottoman empire. Since then, many other countries have been
called "the sick man of Europe". In the 1960s and 1970s, a strike-prone,
slow-growing Britain was the favourite. In the 1990s the title passed to
Germany. Now a new patient has emerged: Italy.

For a while, the country's ills have seemed merely part of those of the
wider euro zone, whose poor performance has reflected the sluggishness of
its three core economies, Germany, France and Italy, which account for 70%
of euro-area GDP. All three suffer from Europe's familiar troubles of
excessive labour- and product-market rigidities, too high public spending
and taxes, and too much regulation. Yet last week's news that Italy fell
back into recession in the first quarter of 2005, while France and Germany
picked up, suggests that Italy has even graver problems than the bigger two.

Those problems are spread wide across the economy, business and politics. As
this week's OECD report on Italy highlights again, the country's slow
economic growth mainly reflects its structural failings. The miracle years
of the 1950s and 1960s created an economy that depended heavily on small
manufacturing firms, many of them concentrated in the north and in such
specialist areas as textiles, furniture, machine-tools, food-processing and
white goods. Such companies needed a low cost-base to sustain
competitiveness; in times of inflation, this was secured by devaluations of
the lira. That get-out is no longer available now that Italy is using the
euro.

It also happens that these industries are the ones most vulnerable not just
to competition from the rest of Europe, but increasingly from Asia, notably
China. It is no surprise that Italy's textile firms are in the forefront of
those demanding new protection from Brussels against Chinese exports. Makers
of furniture and white goods are suffering similarly. And Italian companies
are losing market share to Chinese rivals not just in Europe but in world
markets too.

No wonder businessmen in Italy are feeling ever more pessimistic. Even as
they struggle to cope with a somnolent economy, they can also point to a
string of recent steps that have undermined their own confidence as well as
that of foreign investors. Things began to go visibly wrong two years ago
when trouble (still unresolved) erupted at Fiat, the country's flagship
carmaker, and when Italy's retail banks arrogantly sold high-risk bonds to
their customers as if they were safe. The bonds were issued by Argentina and
by two Italian firms, Cirio and Parmalat. The country defaulted, while the
two food groups went bust. The fraud that brought down Parmalat showed that
Italy's system of corporate governance was rotten. The regulatory response,
though quick at first, became sluggish once politicians thought a crisis had
been averted. Although Parmalat has been rescued, prosecution of those who
nearly destroyed it has been less than zealous.

Corporate governance continues to suffer big reverses, none bigger than the
ousting last week by the government of Vittorio Mincato, boss of Eni, the
world's sixth-largest oil-and-gas company. Not only was this talented and
apolitical manager replaced by somebody who knows nothing of the industry
(Paolo Scaroni, boss of Enel, Italy's electrical utility); but also that
ignorance is now shared by Eni's entire board. The political nature of Mr
Scaroni's appointment suggests that the government considers any company in
which it holds a stake as essentially state-owned and therefore susceptible
to political direction. This reverses a slow trend for such companies to
become independent of the political graft and favours that once made Italy
pay a big premium to borrow in international markets. Mr Scaroni now has a
chance to prove that he can resist political interference, just as Mr
Mincato did. But Eni's shareholders will be watching nervously to see how
the company behaves under its new management. Similarly, foreign investors
are waiting to see whether the extraordinary saga of two attempted takeovers
of Italian banks by foreign ones ends happily (ie, the foreigners win) or in
farce. At this point, the outcome remains hazy, but the Bank of Italy and
Consob, Italy's stockmarket regulator, have so far displayed a disturbing
mixture of protectionism and sloth.

Where is the government?

Italy's poor performance has not only damaged business; it has also
undermined living standards. That is the main reason Italians are turning
away from the centre-right coalition led by Silvio Berlusconi that has been
in office since 2001. Although Mr Berlusconi got better news from local
elections in Sicily this week, other recent elections have confirmed that
his government is now deeply unpopular.

The Economist made no bones about its views of Mr Berlusconi in 2001: we
argued that he was unfit to be prime minister of Italy. Our case focused on
his long history of legal entanglements, plus the jarring conflicts of
interest that he faced from being in charge of the government (and so,
indirectly, its public television) while controlling almost all of Italy's
private television stations. Yet even we conceded one hope: that the
businessman-turned-politician might bring in the economic reforms Italy
needed and get a grip on the public finances.

Four years on, the Berlusconi government has failed to do even this.
Distracted by legal matters, dependent on his fractious coalition partners,
Mr Berlusconi has delivered too few reforms (though his personal business
interests have prospered). His cure for Italy's public finances has been
mostly one-off measures such as tax amnesties; the budget deficit is now
ballooning again. He has managed to cut taxes a little, but nothing like as
much as he once promised. He has made some changes to pensions and social
security, but in general his reform efforts have been too little, too late.
And the really bad news is that, were Mr Berlusconi to lose the general
election due next spring, the centre-left opposition, led by Romano Prodi, a
former prime minister and ex-president of the European Commission, appears
not to have any more dynamic economic policy or reforms to offer. Italy's
new title could go unchallenged for quite a while.

//

I think this is the usual Bla Bla Bla of economy professors
In italy there is something you do not find in other parts of Europe.
that is. nobody likes paying taxes
so. in the north of italy at least 50% of taxes are not paid.
in the south much more.
that explains why
notwithstanding the low salaries.
people have very high standard of living
that is.
nice houses
nice cars
brand dresses and shoes
vacations and so on.
many people have two or three activities.
I personally am acquanited with postoffice clerks that work as
pizza maker in the night
singer in a night club
owner of a small factory of mosaics
being the official activity just the way to have
medical fees paid
retirement fees paid

just think of all the state employees that do not work more than 6 hours a
day..
most of them do something else
not to talk about normal workmen that have their own field to cultivate and
so on.
there is another hidden Italy
Italians normally do not like to be employed.
they want to have an independent activity
that means. nobody cares about how many hours they work..
how many days they work in a week.. and so on.
if you look at unemployement.. then you will ask yrself why we have so many
immigrants..

just a few days ago TV was showing how many immigrants work in fields to
collect vegetables anf fruits for a mere 25 eur a day..
the person that finds a job for them gets 5 eur per person a day
without papers
without taxes
without social costs.
of course. our products cost more than others.
but I guess in the world there are enough people that are ready to pay 250
to 500 eur for a good pair of shoes
300.000 to 1.000.000 eur for a Ferrari
and so on.
look at the number of people that have in Italy more than a million eur in
cash..
their number increased.
even if 1 million eur is not an enormous sum.
you might buy a small villa with that money.
or a normal apartment in Rome or Milano.
"poldy" <[email protected]> ha scritto nel messaggio
news:[email protected]...
    > Seems the Italy's problems with the Euro are not typical of other
    > countries. Look at the low productivity rates compared to other
    > countries, while labor costs are spiking.
    > Italy's top exports are still shoes, clothes and furniture? Nice Old
    > World craftsmanship but labor-intensive and costly to produce. The bit
    > about having to truck goods from Treviso to Milan at night or taking 6
    > hours to go 170 miles seems emblematic of inefficiencies which are
    > uniquely Italian.
    > Plus you don't cut prices on Italian goods, much of which are status
    > brands, without diminishing the prestige of the brands.
    > What about intellectual exports? I mean, I recorded Bertolucci's
    > Dreamers the other night but are other things besides film? The Three
    > Tenors?
    > ========================
    > PAGE ONE
    > Golden Handcuffs
    > With Italy in the Doldrums,
    > Many Point Fingers at the Euro
    > Strong Currency Hurts Exports,
    > Causing Some to Want Out;
    > Another Blow to the EU
    > Buying Baby Formula in Austria
    > By GABRIEL KAHN and MARCUS WALKER
    > Staff Reporters of THE WALL STREET JOURNAL
    > June 13, 2005; Page A1
    > CAPOLONA, Italy Rossano Soldini, the 60-year-old head of a family-owned
    > shoe factory in this tiny Tuscan town, is getting creamed by Chinese
    > imports.
    > But Mr. Soldini isn't only blaming China. He also wants to give Europe's
    > common currency the boot.
    > Like other shoe manufacturers across Italy, Mr. Soldini says the euro's
    > sharp rise against the dollar inflated the price of the shoes he ships
    > to the U.S. and left him defenseless against Asian rivals. Italian shoe
    > production dropped almost 8% last year, the fourth straight year of
    > declines. In 2004, Italy imported more shoes than it exported for the
    > first time.
    > In the past, Italy would devalue its old currency, the lira, to help
    > businesspeople claw back to competitiveness against other countries. But
    > since Rome gave up control of currency policy to join the euro in 1999,
    > Mr. Soldini, who also heads the National Association of Italian Shoe
    > Manufacturers, has watched his fortunes slide. Having the euro has been
    > like "wearing handcuffs," he says, adding: "Without a doubt, I'm
    > nostalgic for the lira. Europe is not listening to us."
    > Six years ago, 11 European nations made a bold bet that a common
    > currency would unify and fortify the continent from Sicily to Helsinki.
    > Now, as many of the nations in what is known as the euro zone slog
    > through an economic funk, the experiment is helping to drive countries
    > further apart -- and fueling a growing resentment of the wider European
    > Union.
    > In Italy, an anti-euro backlash is ricocheting up and down the peninsula
    > as the country sinks deeper into a recession. Consumers, businesspeople
    > and some politicians now bemoan a currency they claim has left them
    > poorer and less competitive. Earlier this month, the welfare minister,
    > Roberto Maroni, called for a referendum to bring back the lira. The
    > daily newspaper of his party, the Northern League, has just begun
    > rendering prices in euros and lira in its news columns, even though the
    > lira no longer exists.
    > The euro-bashing isn't confined to Italy. A poll for Stern magazine this
    > month found that 56% of Germans want the mark back.
    > The mounting dissatisfaction is another blow to the authority of the EU.
    > The 25-member union was pitched into confusion two weeks ago by the
    > rejection by French and Dutch voters of a proposed new constitution for
    > the union. Underpinning those votes and the grousing over the euro are
    > deep anxieties about slow growth, high unemployment and the future of
    > Europe's generous welfare states.
    > The anti-euro feeling also underscores just how hard it is to forge a
    > common currency. It took the U.S. nearly a century to create a truly
    > national currency. Before the Civil War, thousands of American banks
    > issued notes that in effect worked like independent currencies, varying
    > widely in value from state to state. Only in the midst of war was the
    > Union finally able to impose a uniform greenback.
    > The euro has faced different but daunting challenges since the
    > experiment was launched in 1999. The U.S. has one national government
    > that can direct aid to depressed corners of the country; the euro zone
    > has 12, each with its own fiscal policy. Workers in the U.S. can freely
    > move from a slumping area to seek jobs in a prosperous one. Europeans,
    > tied down by different languages, pension plans and legal systems, are
    > far less mobile.
    > Still, the euro is in many ways a triumph. It is so sound that it has
    > quickly emerged as the world's second-most-widely-held currency by
    > central banks after the dollar. The euro has brought big benefits for
    > companies trading across European borders by eliminating currency swings
    > and foreign-exchange fees. It created huge, unified capital markets akin
    > to the U.S.'s, which have helped many European companies raise capital.
    > Returning to a weaker currency would mean returning to higher interest
    > rates.
    > Thus no one is expecting Italy or any of the other 11 euro members to
    > bolt any time soon. And many analysts say Italy's problem doesn't lie
    > with the euro, but with Rome, which has failed to slim down the
    > country's vast bureaucracy or break down the barriers to competition in
    > big parts of the economy. "The remedy is not to leave the euro, but to
    > correct the structural issues," says Patrick Artus, an economist at
    > French bank Groupe Caisse d'Epargne.
    > But the chafing of Italians and Germans at the euro, coupled with the
    > anti-EU feeling exposed by the French and Dutch "no" votes, have raised
    > questions about long-term political support for the currency. All four
    > countries are euro members. "Breakup is back on the radar screen as a
    > theoretically possible option" for the monetary union, says Holger
    > Fahrinkrug, an economist at Swiss bank UBS in Frankfurt.
    > When the new currency was launched on Jan. 1, 1999, it was greeted with
    > champagne toasts in Rome, Paris and Frankfurt. Economists and
    > politicians predicted the euro would one day rival the dollar as a
    > benchmark currency and, consequently, Europe would one day rival the
    > U.S. as a superpower.
    > The euro was all things to all nations. Italians thought the euro would
    > let them trade their feckless politicians in Rome for technocrats in
    > Brussels. The French gambled that monetary union would enhance their own
    > power. Newly reunified Germany, haunted by Europe's history of wars,
    > thought giving up the mark was a necessary sacrifice for durable peace
    > and acceptance by its neighbors.
    > Euro advocates vowed Italy would emerge as a big winner from the new
    > money. Ceding monetary policy to the European Central Bank and joining
    > the euro would usher in stable interest rates, which in turn would help
    > Italy pay down its crushing public debt, the third largest by value
    > after Japan and the U.S., and larger than Italy's entire gross domestic
    > product.
    > Much of that came true. Interest rates fell and Italy cut in half the
    > interest it pays on its debt. But adopting the euro had two downsides.
    > First, the euro shot up in value against the dollar -- by nearly 50%
    > since 2000. Three of Italy's biggest exports -- shoes, clothing and
    > furniture -- are facing huge competition from China, which pegs its
    > currency to the dollar. That currency swing priced Italian exports out
    > of the market, and gave an extra advantage to already-cheap Chinese
    > products.
    > More fundamentally, joining the euro took away Italy's trusty safety
    > valve of devaluation. Large parts of the Italian economy, from trucking
    > to electricity, are clogged by red tape and cartels, which hold down
    > competition. That pushes up costs for Italian businesses, hurting their
    > ability to compete with rivals from Germany or France.
    > In the past, when the prices of Italian exports got too high, currency
    > markets would adjust, sending the lira lower and spurring demand. That
    > would give Italian exporters a quick shot of adrenaline, but it didn't
    > cure the economy's underlying problems.
    > Now, the only way Italy can compete is to cut prices. The only way it
    > can cut prices is to cut costs. But the opposite is happening.
    > Inefficiencies in Italy's cartel-pocked economy have caused prices of
    > everything from electricity to zucchini to shoot up faster than
    > elsewhere in the euro zone.
    > Unions began demanding higher wages to offset lost spending power.
    > Companies had to grant raises that outstripped any gains in worker
    > output. Adjusted for productivity, Italian labor costs have risen 17%
    > since the euro came in, while German labor costs have risen only 1%,
    > according to Barclays Capital. Italian productivity grew just 0.5% a
    > year in the past decade, compared with 1.6% in Germany, and 2.4% in the
    > U.S., according to the Organization for Economic Cooperation and
    > Development.
    > The result: Italy is falling further behind other countries inside the
    > euro zone. The euro's one-size-fits-all value was supposed to be the
    > glue binding the currency zone into a whole stronger than its parts, but
    > instead has highlighted the discrepancies among the European economies.
    > Sluggish euro members like Italy need low interest rates, while
    > faster-growing ones like Ireland could use higher ones.
    > The OECD says the 12-nation euro zone is the weakest major component of
    > the global economy, and predicts it will grow only 1.2% this year,
    > compared with 3.6% in the U.S. Italy's economy contracted 0.9% over the
    > most recent two quarters, and the OECD forecasts that it will shrink
    > 0.6% in 2005.
    > All that is prompting a rethink of the logic underlying the single
    > currency. "It would have been better for Italy to stay out [of the euro]
    > for a few years," says Julian Callow, chief European economist at
    > Barclays Capital in London. "There's no easy solution now."
    > The risk: The weaker countries in the euro zone will return to heavy
    > deficit spending, undermining the euro's strength. With Italy's public
    > debt already at 106% of its GDP, rampant deficit spending could mean
    > other euro members would have no choice but to bail Rome out.
    > Italians had worked hard just to get into the euro club, fearing that if
    > they didn't get their act together Europe's third-largest economy would
    > be shunted to the sidelines. The race to qualify, which forced Italy to
    > cut its budget deficit to under 3% of GDP in 1997 from over 11% in 1990,
    > galvanized Italians to act. The government was able to levy new taxes to
    > pretty up Italy's books ahead of the entry into the euro.
    > When Rome made the cut, by a hair, on May 1, 1998, Italians were elated.
    > But there was little political will left over to tackle the root causes
    > of Italy's inefficiency: a huge and stifling public bureaucracy, and
    > vast swaths of the economy that were still insulated from competition.
    > "Our mistake was thinking that joining the euro was the solution, the
    > end to our problems," says Vincenzo Visco, a silver-haired politician
    > who served as finance minister and then treasury minister from 1996 to
    > 2001. "Instead, it was only the beginning."
    > One problem never fixed is the country's creaky infrastructure. Andrea
    > Tomat, president of sport-shoe maker Lotto Sport Italia SpA, is dealing
    > with the consequences. To ship its goods, the company, based in Treviso
    > near Venice, must truck them about 170 miles to the nearest
    > international air hub in Milan. The only highway is usually clogged,
    > meaning the journey often takes six hours. To be sure of catching
    > flights, Lotto's delivery trucks leave during the night -- or arrive a
    > day in advance. "This basically doubles our cost of moving goods," says
    > Mr. Tomat.
    > Another drag, he says, is Italy's bureaucracy. Lotto is trying to bring
    > two employees from China, where it produces 60% of its goods, to work in
    > Italy, but getting the paperwork approved will take six months. "In a
    > world where in six months you can develop whole new stores over there,
    > we are traveling by bicycle when everyone else has a car," he says.
    > Other business owners feel like they are in a losing battle. Maurizio
    > Brevini, an engineer in Reggio Emilia, runs a 130-person maker of
    > specialized hydraulic pumps founded by his father. Over the past five
    > years, he has boosted his revenue by 13%, to ¤18.4 million, or $22.3
    > million. But his costs have risen even faster in the same period and his
    > profits have fallen more than 10%, he says. Part of the problem: two
    > wage increases for his workers.
    > "I feel badly for them because they have lost spending power," he says.
    > But the salaries are rising faster than worker productivity. "This is
    > like poking holes in the bucket," he says.
    > Federica Mongiello, a 31-year-old mother from Rome, was shocked when,
    > traveling in the Austrian Alps last year, she discovered that baby
    > formula cost the equivalent of about $10 for 2.2 pounds, when she was
    > paying $48 in Italy. The reason for the huge difference? In Italy, baby
    > formula can be sold only in pharmacies, where discounting is rare.
    > "Fa schifo," she says, Italian for "disgusting." Some friends have since
    > joined Internet-based collectives of mothers who import baby milk from
    > Austria and sell it for sub-Italian prices.
    > After years of trying to adhere to the euro zone's strict fiscal
    > criteria, which require that deficit spending not exceed 3% of GDP, Rome
    > is now letting down its guard. The EU estimates Italy's deficit will hit
    > 3.6% of GDP in 2005 and 4.6% in 2006. France and Germany have already
    > busted through the 3% limit, but Italy, with much higher public debt,
    > presents even more of a risk of destabilizing the currency's soundness.
    > Brussels has been urging Italy to pass a new round of spending cuts to
    > keep its budget in line. Prime Minister Silvio Berlusconi has rejected
    > the idea. Instead, Mr. Berlusconi has argued that a just-approved law
    > that will, among other measures, make it easier for many of Italy's
    > small companies to merge will improve the country's competitive position.
    > Despite the chorus for a return to the lira, an Italian exit from the
    > euro zone looks extremely unlikely. For now, such a move would cause
    > interest payments on public debt to skyrocket and might force more
    > onerous taxes on Italian citizens and businesses in order to cover the
    > cost.
    > Nonetheless, a growing number of Italians profess a new affection for
    > their old currency. After stocking up on cheap baby formula in Austria,
    > Mrs. Mongiello's enthusiasm for the euro has waned. "There's no doubt,"
    > she says. "We were richer when we had the lira."

On Tue, 14 Jun 2005 18:15:57 GMT, "tile" <[email protected]> wrote:

    > I think this is the usual Bla Bla Bla of economy professors
    >In italy there is something you do not find in other parts of Europe.
    >that is. nobody likes paying taxes
    >so. in the north of italy at least 50% of taxes are not paid.
    >in the south much more.
    >that explains why
    >notwithstanding the low salaries.

If you have a low salary, not paying taxes doesn't make it into a high
salary.

    >people have very high standard of living
    >that is.
    >nice houses
    >nice cars
    >brand dresses and shoes
    >vacations and so on.

What about all the people who have to live with their parents, because
they can't afford their own home?
--
Martin

On Tue, 14 Jun 2005 18:15:57 GMT, "tile" <[email protected]> wrote:

    > I think this is the usual Bla Bla Bla of economy professors

I was also thinking "Which Italy are these guys talking about?"

The lifestyle in Italy is an enviable one. Personally I prefer it to
living in Australia which seems to regularly rate as having the
highest standard of living in the world. Why? A whole heap of factors,
but mostly it's the mentality of the people.

You can't measure quality of life by numbers.
--
---
DFM - http://www.deepfriedmars.com
---
--

On Tue, 14 Jun 2005 18:40:35 GMT, Deep Foiled Malls
<deepfreudmoors@eITmISaACTUALLYiREAL!l.nu> wrote:

    >On Tue, 14 Jun 2005 18:15:57 GMT, "tile" <[email protected]> wrote:
    >> I think this is the usual Bla Bla Bla of economy professors
    >I was also thinking "Which Italy are these guys talking about?"
    >The lifestyle in Italy is an enviable one. Personally I prefer it to
    >living in Australia which seems to regularly rate as having the
    >highest standard of living in the world. Why? A whole heap of factors,
    >but mostly it's the mentality of the people.
    >You can't measure quality of life by numbers.
    >--
    >---
    >DFM - http://www.deepfriedmars.com
    >---

Care to expand on "the mentality of the people"?


Cheers, Alan, Australia

On Wed, 15 Jun 2005 09:30:42 +1000, Alan S <[email protected]> wrote:

    >On Tue, 14 Jun 2005 18:40:35 GMT, Deep Foiled Malls
    ><deepfreudmoors@eITmISaACTUALLYiREAL!l.nu> wrote:
    >>On Tue, 14 Jun 2005 18:15:57 GMT, "tile" <[email protected]> wrote:
    >>> I think this is the usual Bla Bla Bla of economy professors
    >>I was also thinking "Which Italy are these guys talking about?"
    >>The lifestyle in Italy is an enviable one. Personally I prefer it to
    >>living in Australia which seems to regularly rate as having the
    >>highest standard of living in the world. Why? A whole heap of factors,
    >>but mostly it's the mentality of the people.
    >>You can't measure quality of life by numbers.
    >>--
    >>---
    >>DFM - http://www.deepfriedmars.com
    >>---
    >Care to expand on "the mentality of the people"?

That wasn't a dig at Australians, but I can see how you could read it
that way.

Quite simply I like the attitude of the Italians in their day to day
lives. Something to do with the shear chaos in which everything
happens.

At the moment Australia has less to offer me overall.
--
---
DFM - http://www.deepfriedmars.com
---
--

"Deep Foiled Malls" <deepfreudmoors@eITmISaACTUALLYiREAL!l.nu> wrote in
message news:[email protected]...
    > On Tue, 14 Jun 2005 18:15:57 GMT, "tile" <[email protected]> wrote:
    > > I think this is the usual Bla Bla Bla of economy professors
    > I was also thinking "Which Italy are these guys talking about?"
    > The lifestyle in Italy is an enviable one. Personally I prefer it to
    > living in Australia which seems to regularly rate as having the
    > highest standard of living in the world. Why? A whole heap of factors,
    > but mostly it's the mentality of the people.

So Australia is worse than Milano ?

On Wed, 15 Jun 2005 10:04:44 +0100, "Miss L. Toe"
<[email protected]> wrote:

    >"Deep Foiled Malls" <deepfreudmoors@eITmISaACTUALLYiREAL!l.nu> wrote in
    >message news:[email protected]...
    >> On Tue, 14 Jun 2005 18:15:57 GMT, "tile" <[email protected]> wrote:
    >> > I think this is the usual Bla Bla Bla of economy professors
    >> I was also thinking "Which Italy are these guys talking about?"
    >> The lifestyle in Italy is an enviable one. Personally I prefer it to
    >> living in Australia which seems to regularly rate as having the
    >> highest standard of living in the world. Why? A whole heap of factors,
    >> but mostly it's the mentality of the people.
    >So Australia is worse than Milano ?

You are comparing a country to a city?
--
---
DFM - http://www.deepfriedmars.com
---
--

"Deep Foiled Malls" <deepfreudmoors@eITmISaACTUALLYiREAL!l.nu> skrev i
meddelandet news:[email protected]...
    > On Wed, 15 Jun 2005 10:04:44 +0100, "Miss L. Toe"
    > <[email protected]> wrote:
    >>"Deep Foiled Malls" <deepfreudmoors@eITmISaACTUALLYiREAL!l.nu> wrote in
    >>message news:[email protected]...
    >>> On Tue, 14 Jun 2005 18:15:57 GMT, "tile" <[email protected]> wrote:
    >>> > I think this is the usual Bla Bla Bla of economy professors
    >>> I was also thinking "Which Italy are these guys talking about?"
    >>> The lifestyle in Italy is an enviable one. Personally I prefer it to
    >>> living in Australia which seems to regularly rate as having the
    >>> highest standard of living in the world. Why? A whole heap of factors,
    >>> but mostly it's the mentality of the people.
    >>So Australia is worse than Milano ?
    > You are comparing a country to a city?
-------------
Nullarbor being less crowded than Plaza de Duomo, on the other hand there're
less snakes in Milano so it's a matter ?

On Wed, 15 Jun 2005 07:28:38 GMT, Deep Foiled Malls
<deepfreudmoors@eITmISaACTUALLYiREAL!l.nu> wrote:

    >On Wed, 15 Jun 2005 09:30:42 +1000, Alan S <[email protected]> wrote:

    >>Care to expand on "the mentality of the people"?
    >That wasn't a dig at Australians, but I can see how you could read it
    >that way.

Oh, come on out and say it, DFM:

"Australia is a smelly dungheap and the biggest dung-heap-loving big
giant poopyhead of them all is Alan S, who, as I mentioned, is a big
poopyhead."

You'll feel better.

- TR
I didn't say it! Wasn't me! (runs away)

On Wed, 15 Jun 2005 18:19:20 -0700, Citizen Ted
<[email protected]> wrote:

    >On Wed, 15 Jun 2005 07:28:38 GMT, Deep Foiled Malls
    ><deepfreudmoors@eITmISaACTUALLYiREAL!l.nu> wrote:
    >>On Wed, 15 Jun 2005 09:30:42 +1000, Alan S <[email protected]> wrote:
    >>>Care to expand on "the mentality of the people"?
    >>That wasn't a dig at Australians, but I can see how you could read it
    >>that way.
    >Oh, come on out and say it, DFM:
    >"Australia is a smelly dungheap and the biggest dung-heap-loving big
    >giant poopyhead of them all is Alan S, who, as I mentioned, is a big
    >poopyhead."
    >You'll feel better.
    >- TR
    >I didn't say it! Wasn't me! (runs away)
Gee! Should I feel honoured to be mentioned? Wow.
Now I'll retire to play in my warm, comfortable, world's
most liveable dung-heap:-)


Cheers, Alan, Australia

In article <[email protected]>,
Martin <[email protected]> wrote:

    >
    > If you have a low salary, not paying taxes doesn't make it into a high
    > salary.
    >
    > >people have very high standard of living
    > >that is.
    > >nice houses
    > >nice cars
    > >brand dresses and shoes
    > >vacations and so on.
    >
    > What about all the people who have to live with their parents, because
    > they can't afford their own home?
    > --

That's what I don't get. How are people accumulating a million euro on
low salaries?

Maybe it's like the US where the wealthy are getting richer while the
middle class and poor are hurting more?

Did Berlusconi cut the highest marginal tax rates?

I heard he personally has seen his wealth appreciate during the time
he's been in office and has built a swanky compound in Sardinia.

On Thu, 16 Jun 2005 13:49:33 -0700, poldy <[email protected]> wrote:


    >> What about all the people who have to live with their parents, because
    >> they can't afford their own home?
    >> --
    >That's what I don't get. How are people accumulating a million euro on
    >low salaries?

They are not the same people, who have to live with their parents.

    >Maybe it's like the US where the wealthy are getting richer while the
    >middle class and poor are hurting more?

I think so.

    >Did Berlusconi cut the highest marginal tax rates?
    >I heard he personally has seen his wealth appreciate during the time
    >he's been in office and has built a swanky compound in Sardinia.

Yes
--
Martin

Martin wrote:
    > On Thu, 16 Jun 2005 13:49:33 -0700, poldy <[email protected]> wrote:
    >
    >
    >
    >>>What about all the people who have to live with their parents, because
    >>>they can't afford their own home?
    >>>--

In Italy everyone is living till 35 years old with their parents!


    >>That's what I don't get. How are people accumulating a million euro on
    >>low salaries?
    >
    >
    > They are not the same people, who have to live with their parents.
    >
    >

You mean a million Lire. They want the Lire back as currency next to the
Euro. :-)


    >>Maybe it's like the US where the wealthy are getting richer while the
    >>middle class and poor are hurting more?
    >
    >
    > I think so.
    >
    >
    >>Did Berlusconi cut the highest marginal tax rates?
    >>I heard he personally has seen his wealth appreciate during the time
    >>he's been in office and has built a swanky compound in Sardinia.
    >
    >
    > Yes

You mean Playboy Berlusconi the 'butt ugly one" who is mentioned in
this article:

Berlusconi rubs salt in Finnish wound at food body
Tue Jun 21, 2005 2:24 PM BST
Printer Friendly | Email Article | RSS

By Clara Ferreira-Marques

PARMA, Italy (Reuters) - Italian Prime Minister Silvio Berlusconi
repeated one of his most famous diplomatic gaffes on Tuesday by
insulting the cuisine of Finland which Italy beat to host the new
European Food Safety Authority.

"I've been to Finland and I had to endure the Finnish diet so I am in a
position to make a comparison," Berlusconi told local dignitaries ahead
of the inauguration of the EFSA in the northern Italian town of Parma.

The 68-year-old media tycoon also said he had used his masculine charm
to persuade Finland's president, Tarja Halonen, to give up her country's
claim to host the European Union agency.

"I had to use all my playboy tactics, even if they have not been used
for some time," said Berlusconi.

At the opening ceremony later in the day, European Commission President
Jose Manuel Barroso would have the chance to sample Parma's famous
smoked ham, Berlusconi said, and see for himself that it was better than
traditional Finnish food.

"Barroso today will be able to taste our 'culatello' as opposed to
smoked herrings from Finland," he said to laughter from the audience.

Italy fought hard to host the EU agency and Berlusconi reportedly told a
summit of European leaders in December 2001: "Parma is synonymous with
good cuisine. The Finns don't even know what prosciutto is."

The line has become one of the most memorable of Berlusconi's long list
of indiscretions.

In October 2002 he told a joint press conference with Denmark's Anders
Fogh Rasmussen the Dane was "the best-looking prime minister in Europe".

"He's so good looking, I'm even thinking of introducing him to my wife,"
he added, chuckling to himself.

During a photograph with other EU leaders in Spain in February 2002,
Berlusconi raised two fingers behind the head of the then Spanish
Foreign Minister Josep Pique, in the traditional Latin gesture for a
cuckold.

And this one:

http://forums.fark.com/cgi/fark/comm...IDLink=1540032