Tuesday,
November 11, 2008
The
ANNOTICO Report
Despite
increasingly bleak outlooks, the international financial panic did not hit
For
There
have been no major bank failures or rushed bank rescues south of the Alps or
the
The
By
Sebastian Rotella
November 10, 2008
Reporting from Rome Months before
the global financial meltdown this fall, the talk in the boisterous cafes of
Rome and Madrid had turned from sports and politics to economic woes.
Despite increasingly bleak outlooks, however, the international financial panic
did not hit
Why? The reasons range from the prudence and discipline of institutions and
individuals to the existence of large informal economies, analysts
say. Not to mention remaining a bit old-fashioned amid modernization.
"Italians distrust banks," said Mary Merva,
an American economist at
In recent years,
Italy belongs to the Group of 8 club of wealthy
nations thanks to traditions of industry and small-business acumen.
But certain prudent habits remain ingrained from the years when the two nations
sent out humble immigrants instead of free-spending tourists.
In a speech to Parliament here at the height of the international crisis Oct.
9, Economy Minister Giulio Tremonti explained that
Italian banks were solid. Unlike most European banks, which
were exposed by dangerous investment overseas to the American subprime mess and
other financial toxins, Italian banks had not engaged in creative financing
or other risky operations, he said.
"A characteristic of the Italian banking system is its less
sophisticated character that has protected us from elements of the crisis we
see in other European countries," Tremonti
said.
The Spanish banking sector, on the other hand, stands out for the
sophistication and international muscle of Banco
Santander and other giants. Nonetheless, government regulators and the banks
themselves have shown notable discipline and prudence that has kept them safe.
"They have rigorous
banking rules, wise bankers; the Spanish are doing pretty
well," said Francois Heisbourg, a French
political analyst.
Similar caution exists at the street level. American families are as leveraged
as their banks, with a savings rate that hovers near zero percent of disposable
income. In contrast, Spaniards save at a rate of 10% and Italians at 6.8%,
numbers that have declined from 12% and a frugal 21% a decade ago, according to
the Organization for Economic Cooperation and Development.
Southern Europeans also tend to receive old-fashioned pensions that are not
linked to the world
And there
In
At times when doubts about the world banking system are acute, the presence of
so much cash already in people
"In these circumstances, anything that removes you from the main circuitry
is good for you," Heisbourg said.
All that may be mild comfort. As a worldwide recession looms, the troubles of
the globalized economy do manifest themselves in
The key to the future, Merva said, will be the extent
of the crisis in the
"The vulgar, crass
consumption of Americans has been the engine of the
global economy for a very long time," she said. "Now what happens?
What if Americans become like Europeans and start saving more and consuming
less?"
Rotella is a Times staff writer.
rotella@latimes.com
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