This story is a cautionary tale of how romantic ideas go bust on the rocks of too much borrowed money, and the high realty prices it enables. See: How a Tuscan business dream became and Italian bad loan nightmare. Footnote: an estimated 17% of the loans held by Italian banks are now in default, and rising. One third of all non-performing loans in the Eurozone are held by Italian banks. But defaults are mounting in many countries all over the world, thanks to similarly foolish policies and thinking.
Prices can only be sustained so long as banks are willing to lend dumb amounts, governments to underwrite unreasonable risks and individuals to take on dangerous payment obligations. In reality life is full of economic downturns, revenue losses, property mishaps, illness and death. All are regularly recurring and foreseeable risks, and for the unprepared and over-levered, they routinely prove financially fatal. Lessons must be learned or the pattern just keeps repeating, ending in tears and hardship all around.
In Tuscany Roberta Tonelli faces huge debts after having to sell her hotel due to recession. Her story reflects the crisis in Italy’s banks, buckling under more than €350bn of non-performing loans. The FT’s Rome bureau chief James Politi reports. Here is a direct video link