Lavora, Nonna, Lavora!

The eurozone, in recent days, has started to unravel into even more of a mess than it has been in the past several years. Even after multiple bailouts Greece is still in tatters. It now looks like those who loaned money to Greece may just never get this money back. Private investors in Greek debt may need to take a 50 percent loss rather than the 21 percent loss previously agreed to, according to eurozone finance minister Jean-Paul Juncker. But Greece isn’t even the biggest concern in Europe anymore. Many fear the viability of one of the eurozone’s largest economies. Spain is not the problem, as many had feared, but Italy. Both French President Nicolas Sarkozy and German Chancellor Angela Merkel publicly reproached Italian Prime Minister Silvio Berlusconi over the weekend saying that Italy’s public debt needs “to be reduced in a credible manner in the coming years.”

However, not all of the reforms the eurozone is pressuring Italy to enact are credible. One of the most important is a proposed reform to raise Italy’s retirement age well above the life expectancy in many less developed countries. Berlusconi has been far from receptive, “I’m not touching our pensions, which are fine, to bring up the age to 67 just to please the Germans.”

While many of Berlusconi’s other views and positions may be unsavory, he may have a point. The wave of austerity schemes that have swept the continent have not been extraordinarily successful in containing fiscal crises like the one in Greece and have exacerbated high unemployment in places like Spain and Portugal. While it is imperative to build confidence in Italian public debt, putting grandmothers to work and rushing into new bouts of austerity may not be the best answer.