- In Italy, 1000 Companies Go “Belly Up” Each Day!
by Tyler Durden, www.zerohedge.com
Since a government austerity plan intended to reduce the risk of a debt crisis and ensure the backing of the ECB took hold last year, Italy’s economy has tumbled into one of worst recessions of any euro zone country, and as NY Times reports, among Italy’s estimated six million companies, businesses of all sizes have been going belly up at the rate of 1,000 a day over the last year, especially among the small and midsize companies that represent the backbone of Italy’s shrinking economy. With policy “paralysis” now more likely following the recent inconclusive elections, Ken Rogoff warns, “this underscores the likelihood of Italy having a Japan-like decade with phenomenally slow growth,” and adds that this raises concerns over “the long-run stability of growth in the euro zone over all.”
Italy’s longstanding problems have grown worse in the last year as tax increases and spending cuts were pressed by Mr. Monti. 50% of small companies – ones with fewer than 50 workers, which constitute the vast majority of Italy’s economy and long provided much of its vitality, that are buckling as banks halt lending and taxes rise – unable to pay their employees on time. With the European Union standing as America’s largest trading partner, problems that plague Europe’s economy will be felt across the Atlantic.