I think it goes without saying that the problems for Spanish and Italian regional governments are due to the austerity-induced double dip recession those economies are suffering. The real insight here is that this municipal - double dip nexus is transferable beyond Spain and Italy because key municipal and state revenue sources fall dramatically in these cases.
For example, many Spanish regional governments have really gone to town on budget-cutting already. But revenue is in freefall as regional noninterest income and property taxes have fallen even further. The regions have, therefore, lost access to debt markets and bank lending and have turned to the central government for aid. In Italy, Sicily, one of Italy's poorest (and most corrupt) regions is on the verge of bankruptcy. The une...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.