Interest on public debt (which is 130% of GDP, inferior only to Japan [1]) makes it basically impossible to have any sort of expansive economic policy. Since the '90s, any investment has to be financed with cuts elsewhere (this has even been enshrined in the Constitution, for good measure). The state routinely struggles to pay for schools and police cars, and to hire replacements for retiring civil servants or doctors. One year, the state literally took a chunk of money out of all bank accounts overnight; a repeat has recently been considered.
The country is broke, but our survival skills are so proverbial that the markets more or less trust we'll always come up with enough money to keep going. The day this stops being true, we'll go the Argentina way very quickly.
> One year, the state literally took a chunk of money out of all bank accounts overnight
To be fair, that was 1992 so way before the euro. The problem is that ratings are easy to send down, but very hard to bring back up. Currently they are just two steps above junk, (despite having had pretty low interest until a few days before the current government swore in). Even just a single downgrading would be bad, two would lead to a massive sell and basically a disaster way worse than the Argentinian crisis.
I never mentioned the Euro, the country was on life support well before that. In many ways, the Euro was actually the first step towards a "get out of jail" card. Unfortunately, the second one (Eurobonds) hasn't happened yet.
Yes, I agree. I just wanted to say that the economic situation at the time of the "prelievo forzoso" was very different. I agree with your definition of the Euro as a "get out of jail" card, too.
Really?