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Italy Considers Suing Standard & Poor's
Does This Ratings Agency Make My Debt Look Fat?

With news like this, who needs satire? According to the Financial Times, Italy’s Corte di Conti is claiming €234 billion in damages from the ratings agency Standard & Poor’s for repeatedly downgrading the country’s credit during the Eurozone crisis in 2011.

Previous reports have indicated the auditor is considering whether “reckless” rating agency reports on Italy’s public debt contributed to a worsening of the sovereign debt crisis, forcing the governments of Silvio Berlusconi and then Mario Monti to take emergency measures. […]

The prospect of sovereign downgrades caused waves of selling of government debt from countries such as Italy and Spain, raising their borrowing costs and further damaging their public finances. (FT)

As if the mere fact that Italy is considering suing a ratings agency over the shambolic state of its own economy isn’t hilarious enough, the reasoning behind the claim that S&P acted “recklessly” in downgrading Italy is—how to put this—totally bunga bunga:

Notifying S&P that it was considering legal action, the Corte dei Conti wrote: “S&P never in its ratings pointed out Italy’s history, art or landscape which, as universally recognised, are the basis of its economic strength.” (FT)

How odd that, in enumerating the various treasures of Italy’s rich cultural heritage, the state auditor failed to include what must be the greatest gem of all: the never-ending opera buffa that is Italian politics.

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  • crocodilechuck

    Its not a ‘shambolic economy’. ITA runs a primary surplus.


    • vepxistqaosani

      Sure, Italy would be far worse off if it didn’t have a trade surplus — but it still has a budget deficit and carries a lot of debt. Why, it’s almost as bad off as the US.
      But the US, at least, does not have (yet) a youth unemployment rate over 40% — and that’s the real mark of a ‘shambolic economy.’

      • crocodilechuck

        Its not that cut and dried. If ITA had its own currency (Lira Mk 2?) it could devalue, its goods would become more competitive and booming exports could assist in digging itself out of its hole.

        This is one big reason why unemployment is so high-not just in ITA, but the other southern Med countries.

  • free_agent

    They write, “Italy’s history, art or landscape which, as universally recognised, are the basis of its economic strength”. That’s actually true, although it would be better phrased “… the basis of what economic strength Italy has.”

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