The threshold - Italy

I've climbed through the Alps. The world feels different up there... all silent and timeles beneath peaks where snow still shines in the sunlight. I've ridden over the Colombiere, Roselend, up the road to Saint Bernard, summits and passes steeped with the rich history of European cycling, lessons in patience learned on your way up above two thousand metres. After Saint Bernard the road angles down, you see the Valle d'Aosta opening below as gravity takes a hold and starts hauling you down, pulling you faster. Faster. Faster the tarmac tumbles under you, the corkscrew unwinding so that the road invites you to accelerate... pines, abandoned restaurant...to accelerate down into the turns, daring you carry more speed into each new bend, stay later on the brakes so that in the dying metres you're sticking out your chest to try and catch a little more drag, leaning in and out of the bend... upright again as the road goes straight down... crucifix, fountains... everything jumping out from the corners of your eyes, the lands below shining in misty sunlight as the speed gains, pulls water from your eyes, the valley walls opening to let you out after almost an hour of pure descent, gliding down into a summer's morning... in Italy.

Newly downgraded by Moody's to "Baa2". I like to imagine Marcus Aurelius being told by a young buck in a suit that he's been made a "Baa2". The timing of the downgrade couldn't have been more political, a matter of days before an Italian bond auction, one more proof that credit rating agencies are not the objective market observers that their profitability hangs upon. Cycling in Italy the surprise is not so much that the country faces economic difficulties, it's more that the economy ever got so strong to begin with. On the roads I'm passed by groups of old men, a dozen of them in matching lycra and bronze skin, pedaling up towards hills where later I pass them snapping cards down upon a cafe table. The cafes and beaches are full, the most regular signs of commerce are stalls selling peaches at the roadside, the occasional rusting bicycle that rolls by with a crate of courgettes stuck over the back wheel.

And yet Italy still works. Apartment blocks are still being constructed in Genoa, a General Electric plant on an industrial stretch of the Tuscan coast is still constructing platforms for oil and gas extraction, foreign number plates still drive in to spend their tourist euros. As with Centre Parks in the UK, as people start taking their holidays closer to home, recession has been good for domestic tourism. At the same time, there are signs of trouble. In a foccaceria, the woman behind the counter puts my €20 note through a machine, raises her eyebrows and nods that counterfeit notes are definitely a problem. In the hills outside Genoa, a Tunisian man with a fruit stall enthuses that "Italy is beautiful!... to visit. To live and work," he smiles, "as a foreigner... is difficult." In Tuscany I'm assured there are no more prostitutes than before on the road from Pisa to Livorno, but with at least one on every junction, to me it seems more present. Italy's street art is as lively as ever, all the usual encouragement to smash fascistas and capitalistas, to rebel, to remember that the Genovese police killed Carlo Giuliani at the G8 protests of 2001, that they beat up a school full of activists in the same week. All through the north I see "No TAV" daubed on walls, I'm told it's a proposed high speed rail link to Lille in northern France. Italians joke that nobody wants to go to Lille anyway... it's comforting to learn it's not only British politicians who have a soft spot for fast, expensive trains at a time when the economy seems to ask for something more.

As ever I'm confronted with a conflict. Travelling by bicycle, with farmers giving you peaches and refusing your money, lends life a feeling that all is well. At the same time, it's clearly not so simple, because if it were then the police brutality, prostitution and government waste would not be the problems that they are. What I like about life by bicycle is its tendency to prove the fundamental goodness in human society, and the fundamental deception behind the cultures of consumerism and fear all too prominent in our societies. That said, there's clearly work to be done in making societies a bit more reflective of the spirit of life on two wheels. 

Speaking to Italians, people obviously believe the wrong work is being done. The government of Mario Monti is well passed its honeymoon, the early days when a grey haired academic, dubbed 'the professor', took charge of a team of technocrats to give politics some post-Berlusconi respectability. After the former president's charges for sex offences, Monti was parachuted in at the behest of the head of state, the equivalent of our queen choosing a successor to a disgraced prime minister. At the time there were raised eyebrows, but it's as the policies become more unpopular that the government's credibility is being questioned. Just as Britain has found itself beset by an aggressive regime of privatisation that didn't figure in any election manifesto, so too are the Italians scratching their heads at the democratic gulf that seems to have opened. Monti himself seems little happier in the role, and with Berlusconi eyeing a return to office, the new man has already said this will be his only term.

As for the policies, they are dismissed as either insignificant or set to effect the wrong people. The billionaires and mafia are being ignored, people anticipate that hard-saving Italians will be left to pick up someone else's bill. Italians demonstrate the remarkable human ability to detect unfairness whenever they are a victim of it. A cafe owner complains, in words that vault a fairly high language barrier, that in today's Italy only the Church has any money. The new government has started to address as much, and the church must now pay taxes on profit-making ventures such as its many commercial properties. Too little, too late summarises the reception, and middle-class Italians seem more concerned by the repeal of a Berlusconi tax break on second home ownership. Unaffordable housing and adults stuck at home with parents make those who have saved for country retreats no more sympathetic. Cash is proving a further bone of contention, and the outlawing of cash transactions above €1000 has been an unwelcome start in clamping down on commonplace evasion of VAT. The verdict varies from this as encroaching government, to discrimination against an old population without plastic in wallets or PINs in heads, and repeat questions about why the government isn't going after Italy's largest firms instead. Market liberals will be little happier. There is talk of opening the pharmacy business to competition and stopping old practices of price protection. Taxi licenses are to be reassessed, with the revocation of licenses that have been sold-on by previous holders. Cabbies in Rome have already begun to make their displeasure known, in the capital the license is enough to secure a mortgage approval from a bank, but even then... nobody believes chemists and cabbies are at the heart of the problem.

It's become a piece of eurozone trivia - Italian debts are bigger than Greek, Irish, Portuguese and Spanish combined. Greek perseverance within the euro is key to keeping the heat off Italy and remaining contenders for the unenviable position as Europe's sickest man. Debt-GDP ratios have also become part of the popularisation of debt culture, Italy has a debt 120% of an annual output... a more terrifying way of saying that Italian debt could be cleared with fifteen months output. Government debt stands at about $2.2 trillion... Italian GDP is about $2 trillion. None of this is to say Italy has no problems, only that if there's a calm or an apocalyptic way of saying something, the mood of our times is to go for apocalypse. Few commentators mention that some of this debt will not mature for half a century, that innovations and inventions will have made the economy a very different place by the time they do. For all the stereotypes put about in the name of selling olive oil and pesto, the truth is Italy is a significant industrial nation. Everything from helicopters to torpedos and dentist chairs to power tools are manufactured here, not to mention the obvious production of automobiles, gourmet foods and designer labels. Italy is not a southern European backwater that may or may not have been admitted too early to the euro, it's an original member of the G7. The 1970s proved that governments do go bankrupt, but bankrupt governments are not in the interests of the markets. Without markets society is in trouble, but without societies that trade, produce and consume... the markets cannot even exist. You can find evidence of as much in gains for the dollar and yen across the last eighteen months, this in spite of Japanese debt rates of 200%, and the US senate constantly having to lift the debt ceiling to permit more borrowing. In uncertain times, markets have no safer bets than large, functioning economies... just don't expect them to shout about it.

So is Italy doing fine? In terms of gelato for a touring cyclist... definitely. In terms of a robust economy... perhaps not. My road is about to take me out of the EU, into Croatia, and via a city that underlines the foremost Italian problem. In Trieste the local newspaper is covering a McKinsey report that has found the city to be Europe's oldest, with 27% of the population older than 65. Italy's declining birth rates and generous pensions have created a somewhat top-heavy pyramid scheme. Monti's government has already raised retirment ages, prompting predictable resentment in those who have seen the finish shift just as they were sticking out their chests to cross the line. At the younger end of society, the extension of working lives exacerbates an already acute lack of jobs. Italians stress that national debt is a government problem, families here balance their books, and household debt is all but non-existent. Of course the complaint is relevant, but if generous pensions and state empoloyment has bankrolled this nation of savers, it's ironic that Italians can simulatenously be found to complain that the state is too big.

As with all the countries I will cycle through, the Italians need to make some big decisions in the coming years. The root of the problem, however, is how best to balance our sovereign monetary systems with unstoppable changes in populations. Whatever decisions are made, the whisperings of the free market will not provide the best advice... I didn't ask an insurer if cycling to Istanbul would require travel insurance.