Tuesday, January 6, 2015

The return of the lira? This year, Italy’s fate hangs in the balance

(Reuters) FLORENCE, Italy – Italian Prime Minster Matteo Renzi, the youngest leader in Europe, faces a national economic morass that, if not decisively addressed in the coming months, could bring down the entire 17-nation eurozone.

Indeed, if he does not tackle the staggering national debt and woeful unemployment numbers, Italians this time next year could find themselves back using the lire – and the Germans marks, French francs, Spanish pesetas and Dutch guilders too.

When the 89-year old president of Italy, Giorgio Napolitano, announced this week that he is stepping down soon because of his age, he urged Italians to embrace something that has always been in short order here: national unity and trust in each other and in Italy’s institutions.

Giannelli, the cartoonist of the Corriere della Sera, could not help but comment on the symbolism of the departure of Napolitano, who it depicted throwing a crown over his head that was caught by a smiling Renzi, who turns just 40 on Jan. 11. “Grazie, Giorgio!” Renzi exclaims in the cartoon.

Napolitano’s looming departure creates an immediate political quandary for Renzi: Can he bring Italy’s famously fractious political factions together to choose an acceptable presidential successor? If he navigates that battle successfully, there may hope for the coming war to remake the Italian economy and reduce its out-of-control debt, which stood at 132.6 percent of GDP in 2013 and is expected to hit 138 percent for 2014. Forcing it off its steady rise is the largest job of the center-left government: and a grinding, horrible, unpopular one it will be. Full Story

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