Bungle Bungle: Italy's Failed Economic Turnaround

http://www.spiegel.de/international/europe/matteo-renzi-struggling-to-solve-italian-economic-crisis-a-995558.html



Ever since Matteo Renzi became Italy's new prime minister, officials in Berlin and Brussels have had newfound belief that Italy's deep-seated economic problems are being tackled. But that won't happen until the country stops deceiving itself.

Bungle Bungle: Italy's Failed Economic Turnaround
By Hans-Jürgen Schlamp
October 06, 2014 – 05:52 PM

~snip~

The Tuscan town of 34,500 has a port from which tens of thousands of tourists head to the islands of Elba or Sardinia annually. It also has an ironworks plant with a gray and rusting coking plant, a relic from the industrial Stone Age.

Now an Indian steel baron intends to take over the plant, but only wants to retain 700 of the employees. Another thousand jobs among the companies that supply the plant are also in jeopardy, and there are already "for sale" or "for rent" signs on almost 100 businesses in Piombino. The crisis looms over the city.

And it's not just Piombino. Stores are closing, tradespeople are being let go and manufacturing is collapsing all over Italy, especially in the south. Many young academics are leaving the country. While productivity elsewhere has climbed over the past two decades, it has stagnated in the Italian manufacturing industry. There has been hardly any growth for at least as long. The crisis has struck an economy that was already ailing: Since the summer of 2007, Italy's overall level of industrial production has declined by a quarter.

Italy's managers and company-owning families, meanwhile, have padded their wallets, both legally and illegally. Fired Ferrari head Luca di Montezemolo was given a €27 million farewell. Managers and the "brokers" of an oil deal with Nigeria reportedly stashed away €200 million.

Prominent business figures are facing embezzlement charges everywhere. Many ownership families have preferred to take money out of their companies instead of reinvesting. "Not even Superman," says economic expert Salvatore Bragantini about Telecom Italia, could ever save that company from the "hole in which Telecom stakeholders have thrown it."