Putting Italy's debt in perspective

From the WSJ: "... Marco Fortis, an economist who has long been seen as a precious ally of the government and an effective advocate of Italy in the court of market opinion, on Tuesday decried what he called Rome’s “lost credibility,” even describing it as Italy’s “real deficit.”

Citing Aesop’s Fables in a front-page article in Il Sole 24 Ore, the country’s leading business newspaper, he compared Italy to the grasshopper, saying “it’s not going overboard to say that Italy in one brief summer wasted all the credibility it had built up” since the collapse of Lehman Brothers in late 2008.

Mr. Fortis, who heads the Edison Foundation think tank in Milan, leveled his harsh judgment just days after Deutsche Bank, for example, came around to accept some of his ideas.

Mr. Fortis for years has emphasized that Italy’s total debt, including household and business debt, is on far sounder footing than readings of its sovereign debt data alone imply, and that the total increase in that debt has been far more modest than other countries, including the U.K. and France.

Italy’s overall debt is 283% of gross domestic product, compared to 225% for Germany, 256% for the U.S., 298% for France, 299% for the euro-zone average, 309% for the U.K., 347% for Spain and 429% for Japan, according to a Deutsche Bank report published Friday..."

More

Comment: Taking the judgement of rating agencies seriously is more hazardous than believing in astrology.