taly’s most disheartening economic news has less to do with euros and bonds spreads than how people behave with money. According to CGIA, a small but reliable business research group based outside Venice, the average Italian family debt has jumped more than 30 percent in three years, now surpassing €20,000, with wealthier northern cities leading the way (Como’s family debt jumped nearly 70 percent).
In a nutshell, patterns of conspicuous consumption, the norm between 1995 and 2005, weren’t waterproofed. Italians bought into temptations they couldn’t afford. Bank loans, mortgages and leasing contracts were facilitated, often without safeguards. At the same time, the digital electronic items, led by widescreen TVs and smart phones, attainted the “need-to-have” status once reserved only for cars. Banks made hay, until the debt crisis shoved them aside in favor of loan sharks. Now, with disposable income hard to come by and borrowing nearly impossible, those out on a limb hear the sawing.
Italians seldom put full trust in banks, fearing real and vested interests. When pre-boom Italians did borrow, they did so largely from middlemen, whose rates were high but whose physical presence, however unpleasant, were identified with as tangible. Arm-breakers were perceived as less cunning than banks.
Among thriving postwar states, Italy still hosted the largest number of mattress stashers, people who squirreled away cash. Many were southerners, who possess a chronic mistrust for national institutions. As a result, the south, far more than the north, has so far been less affected by debt woes, plagued instead by unemployment, retarded infrastructure, and criminal enterprises.
But recent CGIA figures indicate changing patterns. Households in Calabria’s Vibo Valentia showed average family debt of €9,500. Though far lower than Como’s level, the figure suggests Italian vulnerability to marketing, and affection for credit, the twin backbones of modern capitalism. The buying urge and credit’s consequences share much in common with how the French define orgasm, namely petit mort, or “little death.”
If only the littleness were small. Italy is now paying collectively for letting down its guard in a middle class buying spree that went over individual and collective heads (just as Greece took out a century’s worth of loans not thinking about how it might repay them.)
For CGIA chief Giuseppe Bortoluzzi, Italians have become accustomed to necessities they once knew to live without, creating a new wave of crippling needs. Continued indulgence, he added, risked shoving middle class Italians into an abyss. “The debt is concentrated among families least likely to be able to pay them off,” he said. With unemployment rising, he added, the situation was destined to deteriorate, “since Italy is a country of informal loans made outside conventional channels. With banks contracting, the tendency to seek back door loans is growing, and with it the risk that usury becomes a kind of national oil spill.”
Until 15 years ago, Italian prosperity was demonstrable mostly in terms of cars and property, the latter often long owned by one family. Cars have been supplemented digital world items that adolescents demand to stay current, increasing pressure on family heads who in turn are hard pressed to purchase items younger family members now consider essential. Smart Cars and mobile phone credit have dented Italian frugality at the worst of times. A middle class still impressed by cautionary tales (the kind generated by America’s Great Depression generation) is finding it hard to deal with the demands of entitlement.
While this fits into capitalist progression (in which innovation equals necessity) it’s a dangerous pattern in a country that can’t afford itself. Economies grow and thrive when people buy. But when they can’t afford to buy, but do so anyway, the woes only deepen, breeding a booming national anxiety that is still without a cure.