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This Is How Italy "Fixes" Its Unsustainable Debt Problem
Earlier today, Morgan Stanley released a report titled "Debtflation - One Shock Away?", which we will review more in depth shortly, but here is the gist: "Because public (and private) sector leverage is very high in parts of [Europe], this unstable situation is better described as debtflation. With bond yields already very low, when inflation is so subdued the challenge for debt sustainability is whether real growth is enough to cushion any shock. Several euro area economies look vulnerable, we think."
Of these, Italy, which recently just returned into economic contraction and hence, a triple-dip recession, is the most vulnerable. To wit:
Italy – debt stock problem… We expect a primary budget surplus of about 2.3% of GDP this year. Yet, with nominal GDP growth close to zero, this would not be enough to stabilise the debt trajectory. What’s more, 2014 debt/GDP and interest expenses/GDP – which we estimate at over 135% and 5.3%, respectively – are so high that a descending debt trajectory would only be achieved with a primary budget surplus higher than 5% of GDP, which should be maintained over time, thus requiring a permanent austerity drive.
…requiring an ambitious combination of real growth and inflation: Or, alternatively, government debt could come down, assuming an unchanged primary budget surplus (2.3% of GDP) as in the exercise above, if nominal growth were to accelerate to at least 3%Y. Yet this would require substantially higher inflation, which doesn’t seem to be very likely in the near term, or stronger real growth – which is unlikely to materialise too, unless a long period of political stability and structural reforms were to come through.
Of course, there is a "hard way" of doing, as in fixing, things and then there is... the European way.
Below we show how Italy's debt/GDP for 2013 just was "reduced" by 5% making the country appear far more "sustainable" and attractive to debt investors (the ECB?).
As Bloomberg reports, Italy’s 2013 public debt was revised to 127.9% of GDP from a previous estimate of 132.6% of GDP, the country’s statistics agency Istat says in report. From the report.
The National Institute of Statistics releases the estimates of Gross Domestic Product (GDP) and General Government debt in accordance with the definitions of the European System of Accounts (ESA2010) and Council Regulation (EC) n. 549/2013.
In 2013, GDP at current prices decreased by -0.6% (to 1,618,904 million euro) compared with the previous year.
The chain-link volume measure of GDP fell by -1.9%, after a decrease by -2.3% in 2012.
The fall in GDP was due to a sharp contraction in Gross fixed capital formation (-5.4%) and in Final consumption expenditure (-2.3%). Imports decreased by -2.7%.
General Government net borrowing was -45,358 million euro (-2.8% of GDP), comparing with -3.0% of GDP in the previous year, while General Government debt went up to 2,070,165 million euro (127.9% of GDP).
And that's how stuff is done in Europe.
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Extend and pretend.....to infinity.....and beyond.
It's not the German way but the Italian one. There is no European way.
correct. so? there is definitely a continental vs an anglo-saxon gap, in Europe, as much as a gap between North and South, and the Scandies are a whole world apart, as well as the Easterners vs the Westerners
yet there is an European Consensus, though it's more often then not with some English interest kicking and screaming. Banker bonuses come to mind, there is a little EU regulation - on which the whole continent strongly agreed, as in line with "banks as facilities" - capping them that the City of London still tries to circumvent
next month the ECB will open it's butcher shop, where 128-something horses - pardon me, banks - will be sized up on their fitness. remember your words when the German Landesbanken start whining
lol.
Your "continental Europeans are one people" schtick that is implicit in your reponses is cute. No matter how factually incorrect or ideologically dishonest, as long as it furthers "the expirment" you'll say it -- huh?
I would say there is;
1) An Anglo-Saxon Model
2) A Germanic/Scandanavian model
3) A Latin Model
4) The Greek way of life.
But alas, those evil Anglo-Saxons don't want to comply with the Austerity/CTRL+P view of economics the unified, Continental Europeans have.
Death to the EU AND the EMZ.
so there are 4 models, but no continental consensus? how about the Banker Bonus Cap? bah, you seriously let me down again, including that "evil" which I never, ever wrote in all those years. note that the "continental" label is a British one. Brits agree on a view of continentals thinking similarly and they thinking in a way similar to the whole Anglosphere/Former Commonwealth
and don't get me into the Austerity/CTRL+P thing. I'm pointing at facts, like the Banker Bonus Cap EU regulation, you are quibbling about the labels
Like the Energizer bunny....he just keeps going and going.
Whatever happened to the enegizer bunny?
I think he's a banker now.
Recruited by ISIS: http://mentalfloss.com/sites/default/legacy/blogs/wp-content/uploads/201...
Heart attack. Turns out it wasn't the batteries keeping him going, it was a nasty coke habit. He went to rehab but when ge got out, he went straght back to it and a couple months later his heart gave out.
Live Fast, Die Young, and leave a Beautiful Corpse. And no I don't know how I survived.
Nervous exhaustion, I heard.
"Brits agree on a view of continentals thinking similarly and they thinking in a way similar to the whole Anglosphere/Former Commonwealth"
==============================
Do they? So the British think that -- for example -- the Dutch and the Albanians are "thinking similarly"? First I've heard of it. And the Germans and Italians? The Portuguese and Scandinavians? (if you are including Scandinavia). Serbs and Croats? Turkish Cypriots and Greek Cypriots?
So, for example, a Scottish highlander and a black Londoner and a Leicester Indian will "agree on a view of continentals thinking similarly"?
I see that as usual whenever I'm engaged in a "battle of bullshit" whatever I'm trying to say gets completely lost
there is an "Anglo Meta Culture". I don't think this can be denied. and this is visible in many shared things, including politics and media
in the same way, but more subtle, from Portugal to Finland, from Norway to Greece there is something very similar, which Brits who do engage with continentals do recognize as existing
of course if you are one of those Brits that - at most - just makes vacations somewhere on the continent you won't recognize anything. so yes, the claim was staked too high, I should have heavily qualified which Brits
for example, the Brits who go to Brussels and face the EU parliament, and note that. or those who travel much, though this breed is waning. suit yourself, I'm not here to convert anybody to my views
I am so glad you don't capitalize the "P" in parliament when referring to that lulzy "EU" institution.
I am a human being who happens to live in Ireland. I am not, nor will I ever be, "European".
BS. There's a European Dictatorship in Brussels; and zero consensus. I repeat for emphasis; zero consensus. The Euro is a failed experiment.
You know, I have spent a fair amount of my adult life unemployed. And I have a spent a fair amount of time on minimum wages, taking whatever crap low-paid job was available because I didn't want to starve.
And then there are these other people that have jobs, keep their jobs, still get paid and get paid heaps more than me ...
My horse needs new shoes, guess I'll have to shoot it....
lol, "And that's how stuff is done in Europe" long lipstick for pigs
and yet... Italy has a primary budget surplus, in an environment of ultra-low rates, with the medium/5y's implying an inflation expectation of 1.9%
when was the last time <insert your country here> had a primary budget surplus of over 2%? wink, wink
How correct you are.
All people need to do, is exclude a chunk of MANDATORY SPENDING from their budget -- hey Italy has a primary surplus.
Because, you know, interest on debt, doesn't really count as spending, and if you want a fair picture of Italy's ability to service future debt (which will also be interest bearing, but the interest isn't worth counting) -- just exclude one of the few items (perhaps the only item) of spending that will never go away as long as Italy remain in the Euro.
Lipstick on a pig. How correct you are.
Haus, I decided I won't answer your comments, at least for a while. you often seem to debate things with some intellectual integrity, but then leave serious discussions unanswered, for example this one. did you ever go into the details of this, or are you shooting from the hip?
the interest on debt is important... that's why the ultra-low rates environment is important too. all inflationistas forget to mention that if you allow inflation, you raise the interest payment part in the future
have a look at this http://www.eudebtclock.org/, and then have a look in a year or so. you know when I bought my first "Tesoro" bonds? 1979. believe me or not, I've seen worse. in fact, I expected way worse, five years ago. I repeat: Italians are doing way better then what I expected
Ghordius out
Ghordo,
I shoot from the hip when I see stuff that is egregious.
Your original comment was essentially;
"Hey, Italy isn't doing so bad if you take out interest on public debt."
But ask yourself -- what does that statistic have to do with anything? All it does is puts, let me borrow your phrase, "lipstick on a pig."
Yes, Italy right now runs a 2% surplus if you don't factor in debt service costs. The problem is you HAVE TO factor in debt servicing costs, as they will be the last things to get cut. Taking debt servicing costs out of the equation is dishonest, and, at least in my opinion, a really intellectually dishonest way of doing two things;
1) Giving talking points to people who don't know what they are talking about. This line would do great on CNBC, but this isn't CNBC -- this is ZH, and for some reason or another we all keep coming back here for our macro-financial jousting. When you throw out a CNBC talking point on ZH, you need to do so with the knowledge beforehand, you will very likely get called out on it.
2) Attempting to make Italy appear better than it is. You yourself said that the interest rate is important, and if it goes up, Italy finds itself in a whole world of hurt. But assume for a second that all other Italian spending remains the same (thus your 2% surplus) and Italian 10 year notes go back up to say -- 5%, which, is historically low for Italian 10 year debt, I'll give your argument the benefit of the doubt. If this happens, the cost of Italy to service her debt just doubled -- but people who talk about "primary surpluses" can still go on CNBC (or in your case come here on ZH) and talk about how great Italy is because of its primary budget surplus.
Yes Italy has a primary budget surplus. No one will argue with you -- however, that still doesn't take away from the fact that
a) Italy is still borrowing money to fund itself
b) Its current state of solvency is based on ultra low cost debt
c) Said ultralow cast debt is in a bubble
Just admit the Italy is a huge world of hurt, and they could have a 30% budget surplus -- as long as they are still running a 33% y/o/y deficit -- they are still toast.
I am not trying to be coy here -- but attempting to refute your points with sarcasm. Normally my sarcasm only shows up on the net after I am a few beers in -- and today -- there is no booze at work. :-/
have a look here: http://www.istat.it/en/archive/131787, it's in English. Net borrowing decreasing
Ghordo -
This link is essentially the main jist of the article here.
Their borrowing "decreased" because they changed the way they calculate it.
This debt clock says Italian public debt is still increasing.
http://usdebtclock.org/world-debt-clock.html
See below and "General Electric was rated triple AAA just prior to going bankrupt." They vowed to defend their bond rating at all costs...and it nearly deep sixed the entire enterprise.
When I think of "Europe" (and admittedly I am not even a beginner...let alone an expert) I reflexively think "General Electric."
Also...what about "Ukraine"? That really is all I need to know about "what is Europe?" is it not?
That really is all Europe is now, yes, yes?
Regrettably, Europe used to be a term used in the English lexicon to describe a place. Now it describes an idea, as well as a place, but you cannot be sure.
For example, 10 years ago, you could say "I like Europe." Which translates to "I like the various peoples, countries and cultures on the continent of Europe" in today's English.
Today, if you say "I like Europe" it means "I like the EU" or perhaps "I like the idea of a United Europe."
One has to be careful with what words he choses to use.
I wrote a master's thesis on the EMZ's monetary crisis. It is one of the only things in the world I consider myself an "expert" at.
But your anaology to GE is pretty accurate I would imagine -- I cannot really comment as I have no info on the GE bankruptcy. Although, I would disagree with you just a little -- as I *FORESEE* the EU being a good Arthur Anderson anaology.
You'll have one office (country) somewhere screw up -- and it will burn the entire organization, with its competitors coming in thereafter to feast on the carcus in the vacuum.
so, now that the thread is "cold", I can write a few things about it
"I like the idea of a United Europe". Very interesting that you get so incensed about it. Compare it to "I like the idea of a United States of America". It's not the first time I get the impression that you don't really "see" Europe even while living here, and just project some misgivings on it
nevertheless, you wrote as a young man a master's thesis on the EMZ's monetary crisis. Very fashionable. Yet when you quote it, how can we check on it? At least you should take the time to post a condensed version with your conclusions
all I wanted to point out gets droned down by heaps of unconclusive rah-rahs about you living in Frankfurt, knowing it all, knowing everything there is to know about the EMZ, and getting incensed about europeans that remind you of US Democrats
in short, I find it very shallow, and I find it telling that whenever I start a conversation about German politics, I find you severely lacking any kind of depth. best example: your very definition of a conservative, a typical issue of Anglo-Americans, bet seen at the moment in the politics of Australia
tell me when you stop looking at caricatures
I have no problem discussing in a "cold" thread about it.
I will be completely frank -- I love Europe. I hate "Europe." I firmly believe that the European Union is one of the most unnecessary, fundamentally anti-democratic institutions on the planet. It (as an institution) is used almost daily to reduce its population's quality of life in almost every way. This reduction in a quality of life is promulgated on a very gullible population via "Green initiatives" or "Ensuring Peace" in Europe. The blearily-eyed Euro Federalists quote these talking points all the time -- but they are just that -- talking points. There is very little articulable reasons for why the EU should exist in its current form, or even a more integrated form. However, when you try and have a simple discussion with people about this -- from a monetary point of view -- I always get one of two responses;
1) It isn't always about the money.
2) I don't mind paying more to make the Greeks have a better life.
But herein lies one of the EU's many democratic deficits -- what about those of us (and there are millions of us at this point in time) who would rather buy a new car, redo their kitchen or go on a vacation instead of giving money to the Southern Europeans? We aren't given a choice -- our governments simply do a wire transfer, and we the tax payer on the line for it. Thank God where you are in Austria, you can have a debate about this sort of thing without getting shouted down as a Nazi. Here in Germany, this faux post-war guilt imposed on its population by the victors (Siegerjustiz vielleicht?) makes this discussion impossible.
So when I discuss the EU or the EMZ here on ZH, my view on things might be "shallow." I look at every argument about the EU and the EMZ as one sided, there is the correct side, that is "The EU and EMZ are fundamentally evil institutions, which has done nothing but breed an Oligarchy that robs the various peoples of Europe for the benefit of few, and must be destroyed as soon as possible." Then I see the other side, which is always wrong -- which supports the EU and EMZ. The reason I appear shallow in this discussion, is by supporting the EU and the EMZ one justifies the democratic transgressions which have occured, and which must occur in the future to ensure the EU's survival, and for me, this is just unacceptable. Democracy is the fundamental tenant of Western Society. When you remove the ability of people to vote, based off of funding technicalities (Greek and Italian Coup de etat in 2012 -- which you love to point out) -- you remove the cornerstone of our society. There was the Irish vote, the Dutch AND the French votes, and lets not forget what happened in Ukraine this past year.
I would love to do a statistical regression analysis of the various elections that keep occurring all over Europe, where the pro-EU side, whatever it may be always seems to win by the slightest of margins. How likely is such a thing? Would be interesting to research. The other thing I think would be interesting to research would be a physiological study of the human brain, and compare the chemical composition of a religious fanatics brain with that of the fervent EU supporter's brain. I would imagine the "political" part of the brain in both persons would be subdued with the "religious" part of the brain -- if such a thing exists. My gf's sister studies the brain. I should talk with her about it.
Next, with your jab at my political affiliations here in Germany, before you point out that the AfD wants to remain a EU member, but just leave the EMZ, and these views go against what I believe -- let us not kid one another. The ensuing chaos of any major power leaving the EMZ would cause a wide-spread economic depression across the continent as everyone rushes for the exists. The popular revolt would destroy the EU as well. I imagine those running the AfD know this, and behind closed doors want to destroy the EU as well.
You come across, or you attempt to come across as a pragmatist -- however, you are an ideologue, which isn't bad -- but your unwavering support of the "experiment" shows it colors, the reason I get so much more fanfare on here than you do is first, this is a libertarian financial blog. Anyone who supports ideals that encourage the further centralization of power will most certainly get push-back. You are fighting against the current here, I am swimming with it. If we were duking it out at Eutopia's discussion forums, you would have the advantage. But I don't come on here to poke fun at you, or ärger you, I come here, and post religiously laying out my case for why the EU and EMZ are evil -- because we don't know who reads these comments.
I know Santelli does, as does Kaiser, and I can imagine a few of our commentators here are names we will all recognize in the mass media. I, am no one. But, thoughts and ideas don't care who carries them -- they are pervasive, they outlive people, governments and financial blogs.
Lastly, my knowledge of German politics does not lack depth, but looks at things the way they actually are. The most "conservative" Chancellor Germany has had since 91 was Schroeder -- SPD. Conservatives are not made conservatives solely because they have a CDU/CSU or have a black name tag on. They are conservative based on what they promulgate. Frau Merkel lowers the retirement age, she put Germany on the hook for almost a half-trillion in EMZ bailout based liabilities, while convincing people she handled the crisis well. She has thrown Germany under the bus in favor of the EU. Germany is still solvent, but what happens when interest rates rise of Italian government debt, and it needs a bailout (mind you little Greece took almost half a trillion Euros and is still a disaster and will need a third round) -- Germany can either sign on for more debt, or let the whole thing crash and get wiped out. It is just a matter of when, not if.
My Master's Thesis compared American state bankruptcy and bailouts (btw -- has never happened in the US, EU style) and analyzed whether or not such a process would/could work in Europe. The simple answer was "no" and it would bankrupt the north as the nations who run net deficits vs the other exceeds those who run a surplus vs the others, which is unlike the US where there is equilibrium among most states, with a few examples such as Texas and Florida which run constant surpluses and then there is Mississippi and Louisiana and Michigan which run constant deficits, the rest equal out. Because the American solution wouldn't work in a European context without someone nation somewhere leaving in disgust (think France or Finland) I built a quantative easing program that was EMZ wide, and was allocated based on the nation'S respective depositor base with cash injections directly into bank accounts of its population -- based on a % that bank account is of the entire nation's depositor base. In the end -- this wouldn't work either as populations would get addicated to bailouts at the expense of the adjusted moneatry base and would eventually end Weimar style as the direct injections into people's bank accounts would not only increase the sidze of the adjusted moneatry base, but also increase the velociaty of money (which is different than simply injecting it into reserves which very rarely ever see the light of day). I concluded my thesis by saying that if the European Union wishs to survive is monetary leaders need to base monetary policy not on "political capital" but on cultural-monetary alignment, and the EU could still be saved if they split the EURO in half, with a northern Euro and a Southern Euro. But this has already been hashed out so many times as to why it would work -- that adding an additional 30 or so pages to my already 88 page Thesis (over 300 footnotes) was unnecessary.
I am not willing to give you my real name, for obvious reasons -- as my thoughts here in Germany are akin to hanging a Swastika off my balcony. But, this is changing.
So, I look forward to your response.
I have no business wading into this. Here I go anyway.
You both agree. You, it seems to me (but I have not tracked the history of your debates [have I built in enough qualifiers yet??]) have the broad picture. Everyone is engaged in mark to fantasy accounting, coming up with their formulas to claim that they are okay, or even more okay than the next country. Italy is one of them. If we are honest, all countries are lying in some way because not all of the system is on the public books. But for you, no way can we look at Italy and say it is anything but a pig in lipstick. I agree.
Ghordo, acknowlding this, is attempting to say that he believes that given they are all fucked in this manner (because they are) that Italy might be doing a little bit better, inside the context of the fact that they are all lying. Maybe they have cut back and are consuming fewer resources than the rest of the lying, dying, nations. But they still have cancer, nothing good about it.
Back to your perspective, it's still too late, they are bankrupt. So is everyone. The system itself is broken. Everyone is bullshitting and fictionalizing because everyone is bullshitting and fictionalizing. Only when physical supply chains are disrupted will anyone fess up to what is really happening. Until then, if your story is good enough, the show must go on. The show "going on" is the new "sustainability." Ghordo is thinking their story may float a little longer.
You are macro, Ghordo is micro. It is a perspective thing.
and I'm very happy that you go in here, MsCreant. I'd kiss your hand, if I could, always been a fan of your contributions, even when in disagreement ;-)
Haus and I both agree on several points, yes. no, I don't think we ever locked horns about Italy's debt, but I might be mistaken
but I fear that when I write something, he translates it automatically in "CNBC speak", which is...
my point is actually more historic then micro. following gov debt levels is a little habit of mine that predates the internet, going back in the 70's
you are correct, looking at Italy now, my point is that the story might float a little longer, which is already way longer than I expected in the 90's, for example. I have a couple of friends that have cancer, btw, and they are in a similar stable situation. In fact, I have never seen Italy's debt situation so stable as now
from an historic perspective, there are plenty of examples of countries paying back humungus debt, from the UK to Romania. interestingly, always following hard money policies, never soft (aka devaluation)
we'll see, my dear lady. the trick is to survive and so be able to judge all foolishness with the perfect (hindsight) 20/20 vision
That's what I'm sayin' Miss, Ghordo has a problem seeing the forest because of the tree in front of his nose.
If you are in Frankfurt am Main by the time I get off work in 2 hours -- I will buy you a beer. Well said.
I dont think Italy has started to add in Hookers to the GDP yet...when they do ..watch out....to da moon bunga bunga
the trick would be to tax hookers and drugs. in fact, in Italy they should find a way to tax sex, it would solve all state finance problems. plenty of Italian jokes about it
Have they changed their stance since May?
http://www.bloomberg.com/news/2014-05-22/cocaine-sales-to-boost-italian-...
The canes in the strada know that Italian budget figures are a joke. But then so are those of all the other countries as well I suppose.
Heard Beckie & Sorkin talking about 'the free market' this morning.
"Lets check in on what the free markets are doing".
Now they are just mocking everyone me thinks.
Ha ... as if the US or the rest of the world does NOT stuff like that ... ROFL, LOL
Well that was easy!
It's all Greek to me.
Isn't a (decrease ) of (-)2.7% an increase?
Have whats his face print up some more gyros. Pay it down. Problem solved.
The globalist fascists are doing this with all types of data now. The practice has scientists up in arms (not literally yet).
add in that tax free cash cow's revenue from the Vatican and europe is saved
Italy is the third largest economy of the Euro-zone after Germany and France, unfortunately it holds the largest public debt totaling over 2 trillion euro. This debt has been growing at an astonishing pace, even in more recent times and particularly as a ratio to GDP. The fact that the GDP is contracting has exacerbated the problem.
This is not sustainable and the country is held together only because of the direct intervention of the ECB which made over 102 billion euro of Italian bond purchases in 2011-2012 alone. This has continued since then and the sum has gotten much larger. Only through the LTRO can the finances of the Italian state be kept afloat. For more on how government debt has made Italy the Achilles heel of Europe see the recent article below.
http://brucewilds.blogspot.com/2014/09/italy-achilles-heel-of-europe.htm...
To be fair Italians are considerably less deluded than the vast majority of their western counterparts!
WTFUD don't get emotional on me.
No craus, the BANKSTER killed what little emotion i had left in reinstating SLAVERY as a POLICY
This may be true.
But they live day to day by ripping off tourists.
Maybe craus but it's a fraction of a % compared to the FED or Vatican or City of London.
The Fed is stuck because they can't raise rates. It would consume all of US government income to pay for interest
Now it QE on or QE off.
Don Vito Corleone to Mario Draghi :
" Never tell anyone outside the family what you are thinking again ".
We know that none of this debt is to be ever repaid in real money or services so why fixate on the percentage of debt to GDP?
Paying off the government debt in real money is like trying to put lava back into the volcano.
S&P is the cause of Italys problem.
http://www.ansa.it/english/news/business/2014/09/22/trial-requested-for-...
Italy is currently being invaded, so yeah, they have a host of problems. Ebola anyone?
http://www.dailymail.co.uk/news/article-2596907/Army-600-000-migrants-li...
http://www.npr.org/blogs/parallels/2014/03/12/289015729/a-magnet-for-afr...
http://whitegenocideproject.com/italy-thousands-of-illegal-north-african...
HATE! RACIST! It's not being invaded it's being enriched. Diversity is strength. What sort of stuff have you been reading?
Ie., LIE!
What you can't see won't hurt you. And now we see 5% less.
#Winning
Utsa matta you, we fixda da problem?
Pikers....call Yellen to see how it is really done....at the end of the day, SOMEONE isn't going to get paid one morning and that will be the start of the apocolypse, no matter what the reports say.
Rome will decide the Euro's fate according to Jorg Asmussen.
Okay, I know the graph looks bad but if you turn it upside down and transpose the axes it looks much better - problem solved!
Report from Italy ,
Without debating the " fxing of the debt problem " . I would like to remind you of a few fact that are relevant .
The Italian Government decided recently to include the work of the prostitues hidden income into GDP (national product figures .
Cocaine sales, prostitution to boost Italian GDP figures
http://article.wn.com/view/2014/05/22/Cocaine_sales_prostitution_to_boos...
So the improvement of the public debt is clearly a result of inserting ficticious data about prostitues work and ficticous data of cocaine sales . The government might have used data that indicate the use of drugs in the body fluids of sewers .
The situation is truly desperate .
Business is closing down evrywhere and the unemployement rate is much higher that what the statistics say .
Industry is escaping to Austria , Slovenia and Serbia due to the crushing taxation regime Up to 68 % of company income goes to taxes and bureaucracy .
That's good because worse is better. No other way will the system get purged.