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Italian report
by Euro Reporter
2011-10-31 07:12:57 |
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Italy at heart of euro crisis as borrowing costs soar
Italy’s borrowing costs jumped to record levels on Friday, underlining its vulnerability at the heart of the eurozone debt crisis and scepticism about whether the struggling government of Italian Prime Minister Silvio Berlusconi can deliver vital reforms. The 6.06 percent yield paid at an auction of 10-year bonds was the highest since the launch of the euro, and not far from the level reached before the European Central Bank intervened in August to cap Rome’s borrowing costs by buying Italian debt. Italy, the eurozone’s third--largest economy, is again at the centre of the debt crisis, as fears grow that its borrowing costs could hit levels that overwhelm the capacity of the bloc to provide support amid chronic political instability in Rome.
In a speech in Rome, Berlusconi insisted that Italy would meet its target of balancing the budget by 2013. Tainted by scandal and repeatedly at odds with his coalition allies, Berlusconi has promised his European partners a package of measures meant to spur Italy’s stagnant economy and cut its towering public debt, but has failed to convince markets made sceptical by his repeated failure to deliver reforms. European leaders welcomed a letter of intent on reforms that he delivered to their summit last Wednesday, but emphasized that the measures must now be implemented.
“The interest rates that they are paying are punitive,” Monument Securities strategist Marc Oswald said. “Italy ... is still the bete noire of the whole eurozone problem.” “They are still going to carry on having to pay higher yields unless they come up with reform plans and implement them, but anyone who expresses an optimistic opinion about that is probably looking through rose-tinted glasses,” he added. France and Germany have expressed open exasperation at a succession of unfulfilled reform promises by Berlusconi, and fear the crisis in Italy could spark a wider emergency that would threaten the very existence of the single currency.
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Education no saviour for Italy's lost generation
"WE don't need no education" is the catchphrase that Elena Gualandi has written on her scooter, and for this teenager in Rome it is more than just a Pink Floyd lyric. "We really don't need an education because in Italy today there is no point to have an education," says the 19-year-old architecture student. Gualandi and her fellow university students are part of a discarded generation, some of the most despondent victims of the economic and social malaise that has made their country the European Union's new weak link. EU leaders told Italian Prime Minister Silvio Berlusconi at their crisis summit this week that if he did not use the breathing space created by this week's bailout deal to finally deliver on his repeated promises to cut red tape, liberalise hidebound industries and closed-door professions and do anything he could to stimulate growth then Italy was the country most likely to follow Greece into crisis. It is young people like Gualandi who are paying for Berlusconi's failure to deliver. "The only question for most of my friends is which country do they want to emigrate to," she said.
"It is very difficult to study and work hard when you know that you are unlikely to get a decent job at the end of it. If I stick at it and study for five years then I will have to be lucky to find a job where I will work for two more years at low pay or no pay." No other developed country thrusts such a lopsided share of its economic pain on the young, with a skewed labour market making things uniquely tough for those aged under 25. Italy is one of the few modern economies in which young university graduates have lower average incomes than their peers without tertiary educations. Young Italians with degrees have the lowest employment rate in the OECD, and less success in finding a job than Italians out of high school. While Italy's unemployment rate of 7.9 per cent is well below the 9.9 per cent average for the 17-nation eurozone, its 29.6 per cent youth jobless rate is way above the average of 21 per cent, exceeded only by the burst-bubble economies of Spain and Greece.
In 2003, when Mr Berlusconi was serving the second of his three terms as Prime Minister, his government baulked at badly needed labour market reforms and left existing workers with cosseted labour protections, instead partially liberalising the workforce by stripping new employees of many rights and protections. Since then young workers have been easier to sack and to underpay while their heavily unionised parents have remained virtually impossible to sack and enjoy higher pay rises than even the more efficient workforce of Germany. About 13 per cent of young Italians who were working before the crisis have lost their jobs, compared with only 3 per cent of young workers in France and Germany, according to the Bank of Italy.
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Italy takes treehouses to a whole new level
Forward-thinking architects are coming around to the view that inner-city tower blocks and woodland can be combined and are incorporating both in their latest designs. Plans for "vertical forests" – 25-floor buildings, flecked with balconies full of bushes and small trees – are sprouting up in several European countries. Fittingly, Milan, the continent's design capital but also one of Western Europe's most polluted cities, is leading the way with the construction of two green towers. The Bosco Verticale (vertical wood) project, due to be completed in 2015, consists of two residential blocks, 110 metres and 76 metres in height, set in the Isola neighbourhood just north of the city centre. The towers will house a total of 900 trees, ranging from 3m to 9m in height, plus thousands of shrubs and flowering plants.
Stefano Boeri, the architect responsible for the design, says that together the buildings will provide the city with the equivalent of a further 10,000 square metres of woodland. The layer of foliage around the apartments is supposed to produce humidity, absorb CO2 and dust particles, produce oxygen and shield the building from traffic noise. Energy recycling systems that generate power from sunlight and wind should produce "dramatic" energy savings. The designers say that the plants provide shade in the summer and allow more light through during the winter months after they have shed their leaves.
But all that environmental technology doesn't come cheap. Prices at the exclusive development will start at €750,000 for 100 square metres, near the ground, rising to €1.2m for flats with spectacular views across the city. "The towers may well be beautiful, but they are not something everyone can afford," said Damiano di Simine, regional president of the environmental campaign group Legambiente. "The real answers to Milan's pollution problems lie with sorting out the traffic problems and improving public transport." Michele Brunello, an architect working with Stefano Boeri, agreed that the apartments under construction were at the luxury end of the market. "In this area, being so central, they're bound to be expensive," he said. "But the fact that these apartments cost a lot doesn't mean this project is not a good thing in an environmental sense.
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