The problem of Europe is productivity differentials between countries.

This is an example of why the Italian austerity programs will not work.

A few years ago I had to fly to Rome to witness the following process.

My mother had to sell two stores. The buyers and the sellers had an attorney each to make sure the paperwork was correct.

Enter the NOTARY. The Notary is a powerful individual representing the government in all financial transactions without working directly for the government. The Notary had to transcribe (using pencil and eraser) all the conditions of the transactions in all minuscule minutiae. It took hours.

Notaries in Italy are a very powerful and wealthy class of professionals because they represent the government and also offer legal services.

There are very few Notaries in Italy and it is very very very difficult to become one. In Italian parlance ... " you need to be recommended by a cardinal to become one."

No Italian austerity program will eliminate this redundant bureaucratic function remnant of the Spanish invasion of Italy in the middle ages.

And this is just one simple example. Another one I just read on the FT ... Mr. Monti - the new PM - could keep Microsoft at bay when he was the European Union’s competition commissioner, but could not change the cartel of the taxi drivers in Rome.

Is Italy going to change? Can you break all the vested interests and guilds causing Italian productivity to be so low?

You can guess my answer.

More details in my The Peter Dag Portfolio , in Dag's Exclusive market Alert, and my free educational videos on http://www.peterdag.com/.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
2009 Market Timer of the Year by Timer Digest

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