Finance

Italy Seeks Balanced Budget Amendment

Italy Balanced Budget Amendment Silvio BerlusconiROME (The Blaze/AP) — Italy pledged on Friday to work swiftly for a constitutional amendment requiring the government to balance its budget, as Rome feverishly tried to assure domestic and foreign investors its finances are sound and calm nervous markets in Europe.

Premier Silvio Berlusconi told a hastily convened evening news conference the government will “speed up measures” in its budget law approved last month by Parliament, “with the possibility of reaching a balanced budget by 2013 instead of 2014” as first planned.

His conservative government, now more than three years into its five-year term, will also work to amend the Constitution to include a requirement for a balanced budget, Berlusconi said.

Berlusconi, saying he conferred by phone with world leaders, announced that G-7 finance ministers will meet “within days” about the exploding financial crisis.

Later, his spokesman clarified that convening an “extraordinary meeting” of the G-7 finance ministers was still “at the reflection stage” with no decision yet taken, although Italy favored one.

Concern over the crisis was trans-Atlantic.

“This evening I’ll receive a phone call from President (Barack) Obama“ because the crisis ”pertains to the global financial panorama,” Berlusconi said. German Chancellor Angela Merkel’s office also said she would be consulting with Obama later Friday.

Finance Minister Giulio Tremonti, who stood beside Berlusconi, said a balanced budget could be achieved by 2013 by speeding up reform of Italy’s extensive, and expensive, social welfare system, which includes national health care and generous retirement payments.

Also key to this goal, Tremonti said, would be what he promised as the “mother of all liberalization,” especially in Italy’s highly regulated world of labor.

“The principle that all will be allowed unless specifically forbidden” by labor laws will be the guiding principle of the government’s strategy, Berlusconi said, vowing that that, too, would be soon enshrined in Italy’s constitutional.

Italy’s industrialists and mid-sized employers have complained for decades that Italy’s strict laws making firing workers almost impossible discourages them from hiring more employees in moments of need.

Further strategy also includes privatization of sectors, which Tremonti didn’t specify, and what he said would be a “speeding up” of investment to improve and modernize infrastructure, as a way to wake up Italy’s slumbering economy.

Italy’s Parliament went on vacation for a month earlier this week, but on Friday, responding to the quickly worsening economic nervousness, officials of the two chambers said key committees would keep working throughout August.

And all the lawmakers were expected to be summoned back to work as soon as the reforms pushed by Berlusconi is ready for a full vote.

Berlusconi’s coalition, despite setbacks this year in local elections, has a comfortable majority in parliament assuming his often fickle ally, the Northern League, closes ranks.

The opposition center-left has been clamoring for Berlusconi to step down, insisting he has essentially done nothing in three years to create jobs or lower the tax burden on workers.

Berlusconi’s pledges Friday night “are nothing new compared to the paucity of ideas shown by his government in recent months,” said Rosy Bindi, an opposition leader.

Italy‘s borrowing costs rose above Spain’s for the first time in more than a year, pushing European leaders to interrupt their vacations and look for a response to deepening fears about the health of the eurozone’s No. 3 economy.

At the start of Europe’s debt crisis 21 months ago, Italy was rarely grouped with the weaker members of the single currency zone, such as Greece, Ireland and Portugal. Many in the markets thought Spain, with its 20 percent unemployment rate, was vulnerable.

But the emergence of Italy as a potential victim over the past few weeks has highlighted just how vulnerable the eurozone is and how insufficient its anti-crisis measures are.

The yield on Italy’s 10-year bond stands at 6.09 percent, ahead of Spain’s equivalent of 6.04 percent – though both are lower than the euro-era highs earlier in the week and markedly below where they were at the start of the day, they’re still not far from the levels that forced Greece, Ireland and Portugal to seek international financial help.

Worries that Italy and Spain maybe next in line led Merkel, vacationing in the Italian Alps, and French President Nicolas Sarkozy, on the French Riviera, to take time from their holidays for a phone conference on the eurozone crisis. Spanish Prime Minister Jose Luis Rodriguez Zapatero spoke with Sarkozy and Berlusconi in separate phone conversations Friday.

Merkel’s office said she spoke with Sarkozy, Berlusconi and British Prime Minister David Cameron.

All agreed that “decisions made by the EU summit on July 21 should be implemented quickly,” Merkel’s office said in a statement.

At last month’s huddle, eurozone leaders agreed to a sweeping deal that will grant Greece a new bailout – but likely make it the first euro country to default – and radically reshape the currency union’s rescue fund, allowing it to act pre-emptively when crises build up.

But their options to what a leading EU policymaker described as “incomprehensible” movements in the markets appear limited.

Even a better than expected U.S. jobs report Friday failed to ease the pessimism that has gripped investors over the past few weeks.

It’s only been two weeks since eurozone leaders agreed to expand the powers of its euro440 billion ($623 billion) rescue fund that helped bail out Greece, Ireland and Portugal. The fund will be able to buy governments bonds and bail out banks, but the new powers will not be in place until parliaments approve the changes in September.

Analysts also warn that the fund is currently not big enough to rescue Italy, whose debt amounts to 120 percent of economic output, around double that of Spain. Only Greece has a bigger proportion to service in the eurozone.

Markets have put increasing pressure on Italy because of its chronically weak growth and a general lack of confidence in Berlusconi’s ability or willingness to push through politically difficult measures to make the economy more productive.

Comments (37)

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  • brotherwiki
    Posted on August 7, 2011 at 12:17pm

    Yes, the Italians must be terrorists for proposing such an extreme view as a balanced budget.

    Warn Obama! The Italian Extremists are coming to fundamentally transform an unbalanced budget!

    Report Post » brotherwiki  
  • nysparkie
    Posted on August 6, 2011 at 10:34am

    At least someone is acting with sanity. Maybe it is contagious? We should send some Demo’s over there to catch the buy!

    Report Post » nysparkie  
  • karen162
    Posted on August 6, 2011 at 6:16am

    Balanced budget??!! Did Italy become Tea Party Terrorists spouting non-sense? If you listen to the Dems, requiring that your budget be balanced (Like most households are doing now) and not living beyond your means is crazy, terrorist talk!

    Report Post » karen162  
  • JQCitizen
    Posted on August 5, 2011 at 9:46pm

    Dang! Are they going to get one before we get one? Can’t we LEAD in Anything, anymore?

    Just hope it also includes cuts and caps though. Without Cuts in spending, and Caps on ratios of government spending to GDP, balanced budget amendments will just be a way to excuse constant tax increases.

    Report Post »  
  • Kawohlus
    Posted on August 5, 2011 at 9:27pm

    What the hell, Socialist don’t balance budgets! Are they starting to hear the words of Daniel Hannan?

    Report Post »  
  • crapgame
    Posted on August 5, 2011 at 8:16pm

    Euro nations have been leading each other around by the a$$ for decades, hoping to find the perfect socialist utopia. Now that the Euro collective, is now out of money and ideas to save themselves. A balanced budget will be too little, too late, as the Euros are so far under water. America should pass the balanced budget amendment now, or We will find Ourselves in the same sinking ship as the Euros, sooner rather than later.

    Report Post »  
  • GaryInTheMiddle
    Posted on August 5, 2011 at 8:05pm

    Are you listening OBAMA?

    Report Post » GaryInTheMiddle  
  • wildwood
    Posted on August 5, 2011 at 6:29pm

    Just what we have needed for years, just hope each and every one of you will fill your representivies mail boxes demanding we get a balanced budget bill passed, keep it up every day until we get it!!!
    IF WE STICK TOGETHER WE CAN MOVE MOUNTAINS!!!!!!!!!!

    Report Post »  
  • Bernard
    Posted on August 5, 2011 at 5:38pm

    The Greek crisis, the Spain crisis or the Portugal crisis all fade in comparison to the Italian crisis. Italy’s economy are one of the big boys along with France, Germany and England. If Italy defaults it will deeply effect other European markets and we may feel the repercussions.

    Report Post »  
    • Jaycen
      Posted on August 5, 2011 at 5:54pm

      If they default, it will force them to spend their money wisely – at least for a few years.

      It will not be an apocolypse.

      Report Post » Jaycen  
    • Servant Of YHVH
      Posted on August 5, 2011 at 7:25pm

      I agree and at first I thought that he was serious about getting a balanced budget amendment, HOWEVER, we know that he isn‘t serious about it if he’s going to talk to obama about it. That is one guaranteed way to keep from getting one.

      Report Post » Servant Of YHVH  
  • Ronko
    Posted on August 5, 2011 at 5:32pm

    I wonder if Glenn’s head will explode after hearing this news.

    Report Post »  
    • Jaycen
      Posted on August 5, 2011 at 5:39pm

      Why would Glenn be surprised that some Euro-socialist country is using a scam to trick its population? They’ve been enacting bad legislation for centuries in Europe.

      The BBA will just be another feel good measure to tell people how to spend their money. Oh man, we could just legislate all behavior and have the government tell people what to do all the time!

      I mean, the reason we haven‘t had responsible behavior to date is we didn’t have legislation telling us what to do!

      Report Post » Jaycen  
  • biohazard23
    Posted on August 5, 2011 at 5:22pm

    “This evening I’ll receive a phone call from President (Barack) Obama“ because the crisis ”pertains to the global financial panorama,” Berlusconi said. German Chancellor Angela Merkel’s office also said she would be consulting with Obama later Friday.

    You have GOT to be kidding. These people are acting like the Romanovs and Obumbler is Rasputin…..

    Report Post » biohazard23  
  • redbone007
    Posted on August 5, 2011 at 5:16pm

    “US pledged on Friday to work swiftly for a constitutional amendment requiring the government to balance its budget,” Damm what a shame that Italy not the US.

    Report Post » redbone007  
    • Jaycen
      Posted on August 5, 2011 at 5:33pm

      Yeah, it‘s too bad the Progressives can’t make a law telling us how to spend every penny, isn’t it?

      Report Post » Jaycen  
  • Jaycen
    Posted on August 5, 2011 at 5:14pm

    PLEASE – Conservatives, please stop with the BBA nonsense. They don’t work.

    If they did, most of the states would not be $10′s of billions in debt. Missouri would not be $39.6 Billion in debt.

    YOU CAN’T LEGISLATE RESPONSIBLE BEHAVIOR. If you try, you are acting like a Progressive.

    You know, the people who think they can make a law to force people to behave properly?

    Report Post » Jaycen  
  • lisa2994
    Posted on August 5, 2011 at 5:06pm

    National healthcare, social welfare system… See where we are headed? Sound familiar?

    Report Post » lisa2994  
  • This_Individual
    Posted on August 5, 2011 at 5:03pm

    Berlusconi is ridiculous!

    Report Post »  
  • semihardrock
    Posted on August 5, 2011 at 5:02pm

    DONT WORRY….“Shared Sacrifice”……The USA will pay it….funneled TO the IMF …which The Federal Reserve Bank……FUNDS……From the US Dollar…..Which is Distributed…..ALL OVER THE GLOBE!

    OR…From US Tax Payers…..Through Inflation….FROM PRINTING MORE US DOLLARS…Which Brings down Countries….Like Italy!

    “SHARED SACRIFICE” and Simple Global Economics 101….Very Difficult for “The Stupid Little People”

    “Out Seven…..Line Away”….”Pay the Dont’s”….”Last Come’s…A WINNER” aka (The Fed)

    Report Post » semihardrock  
  • Scarab Sport
    Posted on August 5, 2011 at 4:54pm

    The USA needs a balanced budget amendment too. Then, maybe the economy and stock market would improve. However, the Dems in the Senate are brain dead under the pathetic leadership of Harry Reed. Can’t believe that the drones in NV voted the clown back in for another term. They deserve what the voted for: Continued Pain and Economic Suffering until Obama and the rest of the Dems are kicked out of the Senate in 2012. Then, the House and Senate need to pass the balanced budget amendment. It will be a major embarassment, or at least it should be, if the Italian’s beat us to it.

    Report Post »  
    • Jaycen
      Posted on August 5, 2011 at 5:45pm

      No, we don’t need a BBA. We don’t need a law to tell us how to behave. That never works anyway.

      Seriously, why to people who are normally Conservative fall for this BS? When was the last time we legislated good behavior and it worked?

      Point at a single instance where a BBA has done any good. What about the Debt Ceiling? That‘s a SPENDING CAP and we’ve raised it 70+ times since Progressive Woodrow Wilson enacted it in 1917.

      Report Post » Jaycen  
    • Snafu777
      Posted on August 5, 2011 at 8:32pm

      (@Jaycen) As a fiscally conservative Libertarian, I understand where you’re coming from concerning a BBA, but the problem isn’t writing the law. It’s keeping the politicians accountable for breaking it. As far as those states you mentioned are concerned, they are just more examples of politicians not held accountable by their people. If a BBA were enabled in the congress it could be a useful tool to get some leverage on out-of-control spenders. I’m not implying it would be the end of the problem, or that it would somehow turn bad spending habits into good ones, but it could provide a framework, as it were, to regain some control over our government, and give us a means of holding them accountable. As it is, we have next to no means of doing so, and they know this and take advantage of it.

      Report Post »  
  • ACLUHater
    Posted on August 5, 2011 at 4:53pm

    Sounds like common sense except for where it says that he will be consulting with Obama. That’s like asking the fox how to make the hen house safer.

    Report Post »  
  • LadyIzShy
    Posted on August 5, 2011 at 4:51pm

    wait wait wait.. they have to wait for a call from BHO before they take these steps to correct thier OWN COUNTRIES PROBLEMS? what the heck he is NOT God. do what you must to save your own country and dont worry what we think over here. when he looses reelection we WILL do what we think best and not worry about what YOU think. do not doubt it

    Report Post » LadyIzShy  
  • capecodsully
    Posted on August 5, 2011 at 4:50pm

    Bellissimo! Hey do you think we could by a clue from you to give to Obama for his birthday?

    Report Post »  
  • vennoye
    Posted on August 5, 2011 at 4:49pm

    Guess we get to watch the Italian version of the debt ceiling increase! Chain Reaction is not going to be good!

    Report Post » vennoye  
  • Captain Crunch
    Posted on August 5, 2011 at 4:48pm

    The Italians are learning from our mistakes.

    Report Post »  
    • Jaycen
      Posted on August 5, 2011 at 5:46pm

      No, they aren’t. The BBA will do nothing to curb spending.

      Report Post » Jaycen  
  • 13th Imam
    Posted on August 5, 2011 at 4:48pm

    Having a balanced budget amendment is only half the pie. The other half of the pie is having a low budget. These thieves in DC will continue to spend and then call for higher taxes to cover the BB. Or Automatic Tax increases. Good Luck Italy, love your meatballs

    Report Post » 13th Imam  
  • mhs4
    Posted on August 5, 2011 at 4:46pm

    I hope he wasn’t taking balanced budget ideas from Obama.

    Report Post »  
  • Gonzo
    Posted on August 5, 2011 at 4:42pm

    That makes American Democrats in Congress further left than socialist Europeans. Congratulations

    Report Post » Gonzo  
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