Courtesy of Mish.
The economic situation in Italy has reached a critical phase as Ten major cities face risk of crash
The word “crash” implies bankruptcy. Milan, Naples, and Turin are among the cities. The Association of Municipalities plans to demonstrate in Rome against new cuts, hoping to sends a clear message to prime minister Mario Monti that will “force his hand”.
What follows in blockquotes is an “as is” translation from La Stampa.
There are ten major Italian cities with more than 50,000 inhabitants, who are a step away from the crash. Naples and Palermo at the top of the “black list”, although a task force for weeks at Palazzo Chigi is doing everything possible to avoid the worst. Then Reggio Calabria, finished in red already in 2007-2008 and is now being investigated by the judiciary. And then so many other governments, large and small (like Milazzo), perhaps far virtuous, could be forced to ask for the “collapse”, which means dissolution of the council, entrance of the Court of Auditors and prefectural commissioner.
At risk are at least a dozen large cities’ trust in the government technicians who are monitoring the situation. “The situation is becoming more difficult every day,” confirms the president of ANCI Graziano Del Rio. Pointing the finger at yet another cut in transfers, against the measures introduced by the spending review, and that raises the alarm of many fellow mayors. “By cutting the residual assets of a sudden it is clear that financial statements do not fit anymore.” In itself the principle, Del Rio argues, is not even wrong, “but is more gradual to allow time for the mayors who have used this method to adapt. Why else would even virtuous municipalities, such as Salerno, at this point are at risk.”
Based on data available to the Interior Ministry that the phenomenon of Commons have declared bankruptcy in the last two years has literally exploded from 1-2 cases a year has passed about 25, including north-central governments also where this type the phenomenon was unknown until recently. Striking in the case of Alexandria, whose mayor just a few weeks ago, threw in the towel under the weight of 100 million euros of debt. The same fate had previously befallen smaller municipalities like Riomaggiore (SP), Castiglione Fiorentino and Barnsley in the province of Como.
There is a problem of keeping budgets and there is an even stronger cash. Often the mayor in office is empty.
“At 4 months from the closing of accounts 2012 – Del Rio says – even the 500 million cuts to transfers planned for this year are very heavy. They represent a very significant part of our budgets and delete it at once not only creates other problems of cash but also disrupts the objectives of the Stability Pact.” For this reason the Association of Municipalities, which will return tomorrow to demonstrate in Rome against the new cuts, sends a clear message Monti: “Attention to force his hand, because this step forward the day when common as Milan, Naples and Turin will leave the Stability Pact will this gesture only plows in the accounts of the entire state. ” Del Rio concludes: “We are open to reason, but things should be done wisely. And above all we must take into account that in recent years as municipalities have already given 22 billion euros. ”
Eurointelligence sums up the article this way:
Over 10 Italian big cities are on the verge of financial collapse. Debts, derivatives and mistakes: the Italian municipalities are in crisis. After the default of Alessandria, a big city in Piedmont (North-Western Italy), there are several risks for Turin, Milan, Napoli, Palermo, Reggio Calabria and other cities with over 50,000 inhabitants. “Too much debts, over 10 metropolitan cities should ask to Corte dei Conti (the Italian Court of Auditors) for an orderly default,” Graziano Del Rio, chairman of Italian Association of Commons, said to La Stampa. In last week the Sicily has asked for a financial support and has claimed over €1bn of credits to Italian government.
Mike “Mish” Shedlock
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