Investment Risk
Italy has one of the largest economies in Europe and one of the ten largest in the world. This has not however prevented the continued deflation Italy is experiencing. Italy has performed very poorly with an approximately 7% decline in growth over the last five years. Italy has a huge state debt for which it needs to develop growth so that it can prevent further debt and begin to reduce the debt which is currently 130% of its’ gross domestic product($2.014 trillion:2012). With the government's nearly $1.1 trillion budget Italy began paying $52 billion it owes to private companies. The Italian government has also begun using funds to guarantee bank loans to small- and medium-size companies. These along with their selling of BTP Italias totaling almost $90.42 billion, have helped Italian bonds gain approximately 5.1 percent this year and Italy on its’ way out of a two year recession (Armstrong, 2013).
This high demand of BTP Italias will allow the Rome based Treasury to slow the supply of its’ medium and long term bonds. This will also lower the governments’ cost of borrowing according to Chiara Cremonesi, a fixed-income strategist at UniCredit in Milan. One issue however is that in 2017 the latest bonds issued, these medium and long-term bonds which are valued at approximately 20% of GDP, will mature. The design and hope of these BTP Italias is the draw of the country’s own households which could be a new and possibly more stable buyer. With bank lending across Italian households and non-financial firms shrinking steadily for more than a year this is one positive sign for Italian governments (Emsden, 2013).
According to Fabrizio Saccomanni, Italy’s Economy Minister and former deputy governor of the Bank of Italy, ...
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...nza Bond Aimed Squarely at Mom and Pop . Retrieved November 6, 2013, from The Wall Street Journal Online: http://blogs.wsj.com/moneybeat/2013/11/06/italys-30-billion-bonanza-bond-aimed-squarely-at-mom-and-pop/?KEYWORDS=inflation+italy
Frye, A. (2013, November 12). Italy Seeks to Ease REIT Rules to Attract $1.3 Billion a Year. Retrieved November 13, 2013, from Bloomberg Online: http://www.bloomberg.com/news/2013-11-13/italy-seeks-to-ease-reit-rules-to-attract-1-3-billion-a-year.html
Mattich, A. (2013, October 28). In Italy, ECB Battles Poor Demographics . Retrieved November 6, 2013, from The Wall Street Journal Online: http://blogs.wsj.com/moneybeat/2013/10/28/in-italy-ecb-battles-poor-demographics/?KEYWORDS=inflation+italy
The World Bank and the International Finance Corporation. (2013). Doing Business 2014, Economy Profile: Italy. Washington, DC: World Bank Group.
"Viaggiando manterrà il vostro cuore giovane nella vostra mente forte," was one of the many inspirational quotes told to me by my Italian grandmother. Storytelling was her forte. And it is because of these stories of her life that I developed an obsession for Italy and travel. Full of energy and complete wanderlust, she lived life to the fullest, passing away at 94. I often wonder if her long life had anything to do with growing up in Italy, and whether her lifestyle choices varied significantly from that of American culture. From a business perspective, GDP is an oftentimes used term to describe the government’s spending habits. And as a business major intent on making a positive difference in our society, I can’t help but wonder why Italians have a much longer lifespan, yet spend nearly half of what the United States do on their health care system.
Ginsborg P (1990). ‘A History of Contemporary Italy: Society and Politics: 1943-1980’ Published by Penguin; Reprint edition (27 Sep 1990).
To begin with, this is determined by Italy's weak and foreign expansion policy. In 1871, the long-torn apartness of Italy achieved unity, providing favorable conditions for the development of capitalism. But the reunification is completed from top to bottom, retaining a large number of feudal remnants, which seriously hindered the further development of the Italian economy, resulting in the backwardness of Italy, mainly in three aspects: First, backward agriculture, food production is extremely
Ehrenreich, Barbara (2001). Nickel and Dimed On (Not) Getting By in America. Published- New York, New York.
Since healthcare in America is expensive, many people choose to go without coverage. Other negative issues that raise questions amongst Italian citizens are that Italy spends a significantly lower amount on health care than the other fifteen European countries, which allocate 9.2 % of their Gross Domestic Product (GDP) (Bruttomesso). This status puts the Italian health care system ranked second in the nation, therefore the question rises, why is there so many limits and lack of development (Bruttomesso)? The main reason that Italy’s national health care system was made available was to provide equality amongst distribution of health care (Bruttomesso). However, some Italian citizens are starting to question if the equal distribution is worth it or are they willing to do without it, considering the financing circumstances (Bruttomesso). It seems the issues of unequal distribution are not improving, which seem to suggest that policies remain unsuccessful at finding a solution
Clark, Todd and Christian Garciga. "Recent Inflation Trends." Economic Trends (07482922), 14 Jan. 2016, pp. 5-11. EBSCOhost, cco.idm.oclc.org/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=aph&AN=112325646&site=ehost-live.
During the late 1800's Italy became one of the most overcrowded countries in Europe. Many Italians began to consider the possibility of leaving Italy to escape the new low wages and high taxes. For centuries the entire Italian peninsula was divided into quarreling states, with foreign powers often controlling several states. In this chaotic situation, the feudal system ruled above the economic system, leaving money only in the hands of a select few (Wikepedia.com, 2007).
The answer is likely to be a combination of the elements presented in this report, and the fact that Deutsche Bank does not appear to have a clear path for resolving the issues it faces. Further, the portfolio of solutions that the bank has is restricted. Deutsche Bank cannot consider pivoting on other arms like UBS did around its wealth management division, neither considering the retail option, back in the fragmented home retail market, as Santander has done . Moreover, there is also the political implication of a possible government intervention, which is not allowed from the new EU regulation on public bailout . This will also create a precedent that Italy is keen to follow, to revamp its suffering banking
25 Nov. 2013. “Economy.” CQ Researcher. 15 June 2013. Web.
This article by Andrew McCathie posted in EarthTimes and titled “European inflation climbs unemployment at 12-year high was posted on Friday July 30 2010. The article reports that food and energy costs have played a critical role in driving up inflation in the 16-member eurozone. The rates of unemployment remained stagnant to its highest level during this time.
Michelis, L. (2011). The Greek Debt Crisis: Suggested Solutions and Reforms. The Rimini Centre Economic Analysis (RECEA), Italy.
IMF Surveillance. (2013) IMF Surveillance [online]. International Monetary Fund. Available from: http://www.imf.org/external/np/exr/facts/surv.htm [Accessed 10 November 2013].
Italy is a developed country in Europe with a population of 59.83 million people. Life expectancy is the second highest in Europe and ranks tenth in the world, having an average lifespan of 82.2 years. Italian healthcare has been universal since 1978 and has remained effective ever since. Italy is ranked as the second best healthcare system, just behind France. There are many factors that ensure the effectiveness of the Italian healthcare system, such as government funding and individual cost, private insurance companies, medical technology, and preventative measures and the spread of diseases.
The other option, an exit scenario of Germany, also causes problems for the country’s economy. As a result of loss of purchasing power in the periphery economies and additional transaction costs, German exports to these countries will decrease. Also a stronger Euro will reduce competitiveness of German exports against the rest of the world. On the other hand, Germany has significantly benefited from the latest developments inside the union.[12] It is observed that there is an increase in demand for German bonds.
In the year of 1327, Kind Edward III of England defaulted on his Italian debts. This caused the banks of Bardi and Peruzzi in Florence to collapse. Who would know that over 650 years later, the world would still have these types of problems? After World War II, the need for an organization like the IMF was finally realized. After the war, politicians and economists began to work on blue prints for a postwar world. They envisioned a liberal international economic order, based on stable world currencies and revived world trade. The International Monetary Fund (IMF) finally came into existence on December 27, 1945. On this date, twenty-nine countries signed its charter when meeting at Bretton Woods, New Hampshire. On March 1, 1947 the IMF came into financial operations.