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August is meant to be a quiet month. A month when national and international finance should enjoy the break that would normally occur when the big-shots and high-flyers go off on their holidays. But no. it was this August that saw the critical “blow ups” in some of the most important Asian economies, that of Japan most of all. It was in August that the near-bankruptcy of Russia came to light. And it was in August that the early signs of a recession in the most important of the South American economies showed up.

The stock exchanges, all of them, have inevitably been caught up in the sequence of events. It has been a share trading period displaying the characteristic that the experts call “nervousness” and there has been a share price slump, to differing extents ion the various borses, compared to July.
In Italy too, may savers that had bought stocks, spurred on by the continued and repeated peaks being achieved by stock prices, have lived through tense times. Many sold (perhaps taking profits) and many have returned to “quieter”, low risk investments in fixed-rate securities.
The comments and analyses of experts and/or “presumed experts” have almost daily displayed dialectical ability in their attempts to explain (without actually being able to do so) the causes of this financial “cyclone” that has knocked over many economies that really seemed to be set on solid foundations.
What fault has this been of the Niño phenomenon?
And now what about the future? To what extent will Italian exports feel the effects from those destination markets in difficulty? The price war over goods originating from countries that have already devalued, or who are getting ready to do so, what consequences will this have for Italian markets?
One thing is certain: the Finance Bill that the Government is preparing to pass will have to start with a revision of the projections for the Italian economy in 1998 which in Spring had been estimated at 2.5% growth but which, if all goes well, will be less than 1.5%.
After having sworn and perjured themselves that there would be no new taxes, there is already talk of the need for new revenues of 4 or 5 thousand billion Lire, while spending cuts (what and where?) of around ITL 8,000 billion are forecast.
It has been heard said that to promote employment in the South finishing touches have been put to a plan that provide for ITL 100,000 bn. worth of investment. The only flaw is that this plan is meant to be up and running in the year 2001. We are still in 1998! And in the meantime? Employment in these early months of 1998 has dropped by 20,000 in large industry and another 10,000 jobs are at risk in the high-tech sector.
The EU point out that it is only in Italy that unemployment is rising. Also, the approximately 4,000 jobs that will derive from the “area deals” of Manfredonia are less than a drop in the ocean of the unemployed millions.
So August has been anything but tranquil. What is worse is that stormy conditions are indicated for the coming months too, in the global economy as in the Italian.
It may be a consolation to recall the essentially Mediterranean philosophy the great Eduardo De Filippo, “Ha da passà a nuttata” (The night must go by).

Italian Leadership^®

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