Italy Needs To Have A Car Sale

Although Greece is in the news with its near debt default which was starved off only due to a last-minute European Union-IMF record bailout worthy over $150billion, but even when Greece was the pitied state it was clear that the continent had similar trouble looming elsewhere.

The catch-phrase international finance is PIIGS: Portugal, Ireland, Italy, Greece and Spain. These are nations with at least nearly gripping debt and with low economic growth and thus low revenue, thus poor prospects for managing debt, and thus they will probably need aid to pay off debt matched with austerity measures.

Greece was first to go, but it may not be last. Recently there were bank defaults in Spain and Portugal. And the former has an unemployment rate of 20% which means less tax revenues which can go toward financing the debt.

But consider the case of Italy:

With Italy growing by just 0.8% this year, after contracting by 5.0% in 2009, the IMF expects the debt to continue rising relatively to the size of the economy. Italian public debt, the highest in Europe in 2009 at 115.8% of gross domestic product, is seen increasing to 118.6% of GDP.

So Italy has low growth and a rising debt, but the low growth makes it harder to cut the debt and this is what some nations get stuck in if spending levels remain the same: consistently rising debt with not enough revenues to manage it.

Italy is now taking measures to bring down debt in an effort to avoid the fate of Greece:

The International Monetary Fund Wednesday welcomed Italy’s 25-billion-euro ($30.5 billion) austerity measures, but urged more efforts to cut a big — and rising — public debt. [...]

IMF directors, who met with officials in Italy over the past week, praised the government’s overhaul to the state pension system. But some said the scheduled increase in the retirement age should be brought forward.

Current legilation foresees that the minimum retirement age would rise to 60 in 2011, with the added requirement of 36 years of pension contributions, from 59 in 2009.

All good so far. But Italy could do more. And part of that need not be a spending cut, but a sale. Italy is known for its sports cars, why not have a car sale. The Italian government owes more cars than any other government in the world. There is no justification for such ownership, there is no need for Italy's politicians to have more cars than France or the U.S.:

RECKLESS, flashy and chaotic sums up the general view of Italian governments as well as the popular image of the country's drivers. It is hardly surprising that the two are so similar according to Renato Brunetta, Italy's minister for public administration. He reckons that the country runs a fleet of 629,000 official cars, ten times the number in similar European countries and 50,000 more than just a couple of years ago. The official fleet includes top-of-the-range Maseratis to ferry senior officials around Rome. Italy's domestic carmakers, which are starting to recover after a tough time, will be hoping that this particular government-efficiency drive goes no further.

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Italy's government has over 600,000 hundred cars! Think of the billions that can be derived by selling even half of them. Many of then could fetch in the $70,000 range.

Italy needs to have a car sale. This is exactly the wasteful government spending that has caused such high debt, it would be a necessary symbolic and substantive effort by the government to sell most of its cars. It shows Italy's commitment through the use of an Italian icon and it would in the process generate some money (albeit not that much, but it's something). And, in addition, it makes Rome a more pleasant city to live in and visit by freeing up more traffic. Win-Win-Win!

And it's an Italian way to pay off some debt, by getting rid of the Maserati.