The perceived

Sara Simon and Nerio Montesel
Current events

In its latest bulletin in April, Fitch‘s rating agency rated Italian public debt BBB – confining it to an embarrassing position just above “junk” securities. Why should this worry the average Italian citizen? Well, public debt represents the monstrous amount of debt – mostly made up of interest on the debt itself – which prevents those who govern a Country from easing the tax burden and consequently increasing the level of the Country’s well-being. Investigation on the reasons that have led to such a level of debt won’t be dealt with here but we will focus on the perception that the average citizen has of this phenomenon.

On closer inspection, in fact, every Italian knows that they live in il Belpaese, an Italy fill with art and culture, with tourism and great cuisine. A Country that gave birth to great minds and that can show off the world’s most unique cities. In the face of this, the Italian citizen hears daily, the unsatisfactory numbers relating to the amount of public debt and the ratio of this to the gross domestic product: today this ratio has reached 135%, which means that what Italy produces in terms of income in a year is not sufficient to repay the debt, in contravention of the criteria dictated by the Treaty of Maastricht which would like this ratio to be less than 60%.

In fact, in every inhabitant of il Belpaese lives an inestimable and deep-rooted conviction of living in one of the most beautiful nations in the world. A nation endowed with the ability, intelligence and spirit of adaptation that can excel in any living and production area.

Just as the humidity in summer creates a discrepancy between the real temperature and the perceived temperature, there is also a similar humidity in Italy’s economic sector. It creates a discrepancy between the real temperature provided by the harsh numbers relating to the evaluations of the agencies, and the temperature perceived by the Italian citizen. In fact, we must not forget that, while Italy is in crisis and potentially close to default (as depicted on an international scale) living standards within it seems to be in contradiction with what would be expected. Take for example weekends, if we do not bother booking, it is difficult to dine in any restaurant or lodge at any hotel. The same phenomenon of the increase in consumer credit testifies a population that, despite the contingent lack of liquidity, is intimately convinced of living in a country that is certainly able to create the conditions to repay the debt incurred.
Are we therefore a nation in crisis populated by incurable optimists, or a Country in good economic conditions victim of bad relations with international financial institutions? It is plausible to think that Italy is reducing the excessive political fragmentation of recent decades in which it has not been able to propose leaders who have remained in power for a sufficient period of time to consolidate relations and weave fruitful relations. Our continuous government crises are not reflected in any of the great European countries, having caused too frequent a turnover of those who have led the government. By comparing the main European countries that are part of the G8 it is easy to see the abnormal difference in the number of heads of government: since 1974 Germany has elected 4 Chancellors, France 6 Presidents of the Republic, the United Kingdom 9 Prime Ministers and Italy 26 Presidents of the Council of Ministers. It is therefore clear that any international interlocutor finds it more difficult to establish institutional relations with Italy than with the other countries mentioned.
We spontaneously ask ourselves: can this lack of interlocutorship have affected or negatively influenced our international image – also and above all our economic image?
The answer probably seems to be positive, even if it is not sufficient to explain the extent of the current financial instability, which is certainly not attributable to a turbid operation of the rating agencies. These, in fact, are private institutions which are concerned with understanding what is the value of a security – share or bond – issued by a State, by a bank or by companies authorized to issue it. They therefore provide the necessary instruments to, private or institutional, investors to evaluate the quality of the securities that States, or companies place on the market to finance their productive activities.
It is therefore easy to assume that the rating issued by these agencies determines not only the conditions of access to the credit of the rated entity, but also the real possibility of access to the market for issues of shares and bonds. Clearly, the lower the rating, the more expensive it becomes to finance oneself, because the State – or the company – must remunerate the investor for the greater “risk” sustained; the latter, in turn, by incurring greater interest on the debt contracted, contributes to increasing the figure of public debt.
Therefore, we can claim that the rating agencies limit themselves in creating a realistic picture of the financial instant they portray, and probably what they do not portray, due to the lack of observation, is the same element that makes the average Italian perceive a better Italy than the one depicted. And it is certainly something that is not found in the numbers or in the balance sheet graphs. It is rather something that goes beyond the pragmatic calculations that leads to aseptic evaluations of results obtained and accounting reports. In fact, in every inhabitant of il Belpaese lives an inestimable and deep-rooted conviction of living in one of the most beautiful nations in the world. A nation endowed with the ability, intelligence and spirit of adaptation that can excel in any living and production area.
A country that stands out for its levels of civilization, freedom, democracy, in which each individual is free to think and express their dissent as well as to participate actively and civilly in the life of their community. We have a social “humus” in which an individual is stimulated to exploit and grow their own potential. Perhaps having to overcome a path fraught with obstacles, but certainly not hindered by prevaricating religious systems or repressive government apparatus.
Italy has already experienced and treasured this, developing a sensitivity that today prevents any clear attempt to nip in the bud any blatant repression of its own freedoms.
Ultimately, perhaps also for all these reasons, the average Italian has a substantially different perception of their own status from that to which our monstrous public debt would like to relegate us to. The monster, however, undeniably exists. And with its cumbersome presence, if it is not reduced in size, it risks thwarting this proud sense of belonging which is the most precious asset and which no rating agency can codify and include in its evaluation criteria.

[1] Flavia Provenzani, Agenzie di rating: cosa sono e perché hanno tanta importanza, in, reperibile al sito

[2] Trentaquattro anni di rating sull’Italia: il lungo crollo, in True numbers, reperibile al sito

[4] Bollettini ufficiali Fondo Monetario Internazionale e Sole 24 ore.