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The results of austerity

Earlier this year I posted an article about the outlook for the Italian debt in 2012 and I promised to post updates from time to time. Now that Q1 is over it may be time for a small update: below some charts and data worth much more than words....

March 2012 Italian Energy consumption: -5% Y/Y net of seasonal and climatic factors
Energy consumption data are probably one of the best coincident indicator for industrial production because they are less easily manipulated than official economic figures. In this case it is easy to notice that Italian energy consumption is almost back to 2009 level....



Feb 2012 Italian Overnight Deposits Y/Y change -5.7% in February 2012 (Euro area +1.7%):  few days ago ISTAT (Italian Statistics Agency) reported that the saving rate of Italy in 2011 was the lowest in 17 years...Italians spendings their savings to cope with the crisis and pay the price of recent austerity measures.

February 2012: Latest  unemployment rate data for Italy

Italian industrial production down 6% in February 2012


So much for the Monti's Austerity and Growth Program (so far just huge tax increases, weak reforms and small spending cuts) : things are getting worse and worse in the real economy and financial markets  has significantly deteriorated over the last few weeks now that the LTRO effect is fading:

BTP Bund Spread: from 300 to 400 over the last two weeks....

The Italian Ftse MIB Index is lower than it was when Mr Monti was appointed last November....

It is not so easy....Mr Monti

LTRO I totally ineffective so far for the Italian banking system (February 2012 data from Bank of Italy):  loans (first chart above) continue to fall....in the meantime (second chart below) the deposit flight continue and the Italian banks are increasingly reliant on "ponzi" bonds whose growth looks exponential for financing (with the ECB)


I will post additional updates along the way, as I explained in my 2012 Italian forecast things could start to look even worse this next summer due to some relevant long term cycles completing...and when the people of Europe eventually will vote in key local and general elections.