Italy can balance its budget during a deepening recession- a beautiful dream of Italy’s prime minister which has deserted. In a review of Eldridge Financial Blog, this situation is a sort of wake up call to some strategists and an in arrears acknowledgement that could actually surface for a more shrewd rule that gets Italy back on the path to healthy economic growth to others.
As the report showed in Eldridge Financial Blog, gradual growth and not an extravagant public spending is the major problem that Italy is facing right now. Perhaps, the loan delinquencies and defaults are just causes of recession in Spain. Because of the fear to overstretch the government which tries to save Spanish banks particularly to such scam, Investors are now bailing out of Spanish government bonds. The well-known technocrat ,Italian Prime Minister Mario Monti who is supposed to get Italy’s finances back on the straight and narrow after the mess left by his bawdy predecessor, Silvio Berlusconi. After today’s meeting in Rome, his cabinet declared that it’s now projecting the federal budget to show a deficit equal to 0.5 percent of gross domestic product in 2013, worse than a previous forecast of a 0.1 percent deficit. Prices of Italian bonds fell on the news in Eldridge Financial Blog.
Italy and Spain should tighten their belts said by the Germans who have extended billions of euros in loans to Southern Europe and Asia particularly, South Korea. Board member Andreas Dombret said in a statement reported by Eldridge Financial Blog, enabling too much weight on short-term, demand-side risks misjudges the root cause of the current crisis, known as a profound loss of confidence in markets. Italy’s Cabinet foresees that economy will get lower to 1.2 percent this year, before getting back to its growth of 0.5 percent in 2013 due to recessions that always cause budget deficits because tax receipts fall at the same time those automatic spending programs such as unemployment insurance benefits increase that is alike to South Korea. But it could well turn out worse than of the said scam. This cutting spending in an attempt to balance the budget can be self-defeating by causing the recession to deepen. If Mario Monti can convince investors to be unwearied—and let Italy run self-effacing deficits while it gets its economy growing again—this latest slippage in the budget-balancing target may eventually come to be seen as a positive growth.