It looks like it is decision time for Italy. The markets will not allow more debt, so it is now about time to take Italy into the current century by restructuring the whole political and economic system.
The current economic and political leadership has been resisting change for more than 30 years. For as long as I remember they have increased spending, to avoid solving the real problems, kicking the can down the road. Pre-euro it was through the devaluation of the lira, and during the past 10 euro years, through very cheap borrowing thanks to the perceived impossibility of default within the euro zone.
Italy can follow two distinct paths, one of staying in the league of developed nations and the other of competing with emerging countries. The former path requires the current economic and political elite to commit to structural reforms of the whole system within the euro that will eventually lead them to lose power and become irrelevant. Abandoning the euro and going back to the lira will allow the political and economic elite to hold on power, having no need to commit to structural reforms; they will keep devaluing the lira as they see fit, so that Italian companies are competitive again. Only this time competition will come from Eastern Europe and Asia, so expect the standard of living to adjust accordingly.
If you are part of the Italian economic and political elite, you are probably over 60, with everything to lose from restructuring and much less to going back to the lira. On the other hand, if you are a young Italian, you probably would prefer to keep living in the developed world.
We all know that restructuring means taking tough decisions that will hurt some in the short term, but the option of going back to the lira will surely hurt most in the medium long term. If you are in power and over 60, chances are you have sons, daughters, nieces and nephews: offer them a better future, take the medicine now!
It is time to choose which path to follow, Italy, make the right choice!!!