Italian Traditions Provide Buffers To The Crisis

The research concludes that grandparents' contributions don't just sustain and deepen familial relationships, "but are fundamentally linked to the economic systems of social services." Older Italians, defined here as over 54, contribute every year around ⿬18.3 billion ($24.5 billion) to the Italian economy, or 1.2 percent of GDP, according to IRES. That sum amounts to roughly what Italy's economy has grown annually for the last two decades.

"It is reasonable for 35-year-olds to be living with their parents, and whole families may be relying on a grandfather's pension. One or two incomes may support four or five people, and it is not considered dysfunctional," said Raj Badiani, an IHS Global Insight analyst.

Other economic factors are at play in preventing social tumult despite youth unemployment of 37 percent:

⿿ Italy's robust underground cash economy allows many young people to work four or five months a year in sectors such as tourism, allowing them to pad their pockets with cash ⿿ albeit with corrosive consequences for the nation's tax receipts.

⿿ Unlike Spain, Italy has avoided a housing bubble. Housing prices are steady in a country with 80 percent home ownership. It means legions of families, many of modest means, may have a home in the city and another in the countryside, perhaps in a town where their family originated, allowing them to take the kind of holidays that foreigners fantasize about ⿿ passing days in idyllic settings and feasting on cheap local specialties.

⿿ And Italians are exemplary savers, unlike their government, which has been placed under international scrutiny for its poor handling of public debt, now over 126 percent of GDP and expected to worsen.

A new study by Pioneer Investments and Unicredit found Italian savings are four times its public debt, or ⿬8.5 trillion compared with a debt of nearly ⿬2 trillion. In other words, Italy's public debt is 22 percent of its private wealth ⿿ which puts it in line with Germany and the United States. Italy in 2011 had higher household financial assets than France and Germany, and was above the eurozone average, according to the Italian Banking Association.

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