Lack of English saved Italy from subprime crisis, minister says
Italian financiers dodged toxic American assets in part because of a deficit of language skills.Paris -- Italian banks may have been saved from the American subprime debacle because few financiers speak English, the Italian Minister of Economy and Finance said earlier this week.
"Our banks suffered little from the subprime crisis,” the minister, Giulio Tremonti said. “There are few of them where English is spoken. So their exposure to toxic assets therefore stayed extremely limited. Today, our bankers are not asking us to come to their rescue."
The American subprime crisis has so far mostly affected American and other European banks, particularly British ones.
The term "subprime" refers to high-risk home loans that were repackaged as complicated securities whose values plummeted when the American housing market slipped into reverse.
Tremonti said that the capacity of the Italian economy to bounce back should not be underestimated.
"One should be suspicious of GDP (gross domestic product) figures,” he said. “Not only do they not include the informal economy, but, above all, a large part of the activity of our companies takes places outside of our borders. Italian companies often have a holding group in Luxembourg, a brand registered in the Netherlands, a commercial structure in Switzerland or in Austria and investments in central Europe."
Italy fell into recession last year, as defined by two consecutive quarters of contracting GDP.
The economy shrank 0.5 percent in the third quarter after a fall of 0.4 percent in the April-June period.
Regarding the Group of Eight (G8) rich countries, which Italy has just taken over as president, Tremonti said that the group is no longer representative of the world in which we live.
He said he was open to ideas on enlarging the group, but that the G20 was not perfect as a representative body either.