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Credit Crunch Not Biting in Italy

The credit crunch, credit crisis or whatever you want to call it doesn’t seem to be worrying Italy too much.

Indeed the message being sent out by Italy’s government is that Italian banks are in a position  which is more than sound enough to survive what is looking to become a worldwide economic storm.

Unlike in the UK, Eire and Spain, there are no reports in the Italian news of Italian banks which are in imminent danger of collapse.

The only bailing out the Italian government expects to have to manage in the near future is that of Italy’s problem airline, Alitalia.

At street level however, there are Italians who have invested in US funds, and these people according to a TV news report last night, are concerned.   Luckily though, Italians appear to be shrewd, if unadventurous, investors.  This conservative approach to investment coupled with a reluctance to pour every single last penny into complex overseas funds promising too good to be true returns will probably prove to be a saving grace for many Italians.

This is just as well in view of a rate of inflation which is fast approaching 4%.  Prices really do seem to be rising fast and simple trips to supermarkets for everyday necessities are becoming ever more expensive.  Italian staples such as bread and pasta have been shooting up in price and everyone is noticing this.  At the start of the year a quick shop for a few everyday items tended to leave this Italian resident out of pocket to the tune of 30 Euros.  Now quick runs to the shops gobble up around 50 Euros.

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That is not to mention the cost of petrol and diesel for all those cars on Italian roads.

Evidence that the increase in the cost of living was starting to bite was first manifested this summer in the reluctance of quite a number of Italians to use their omnipresent cars.  Many Italians, who would usually have thought nothing about piling into their beloved cars for the annual summer pilgrimage to the sea or mountains, decided that the inconveniences of rail travel were outweighed by its relatively low cost.

When an Italian starts thinking about abandoning his car in favour of alternative transport, well, that really says something.  The statement is clear: Prices are becoming unbearably high.

Rocketing grocery and utilities prices, coupled with low salaries and soaring mortgage payments are starting to cause problems for the average Italian.

But at least Italian banks may well still be able to hand out mortgages to the Living Museum’s citizens in the aftermath of the credit crunch.

Trouble is, nobody really knows how many will still be able to afford one.

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