The Knock-On Effects of Italy’s COVID-19 Lockdown

Published on
April 7th, 2020
41 minutes

The Knock-On Effects of Italy’s COVID-19 Lockdown

The Interview ·
Featuring Lenore Elle Hawkins

Published on: April 7th, 2020 • Duration: 41 minutes

Lenore Hawkins, chief macro strategist at Tematica Research, joins Real Vision's Ed Harrison to share her experience on the ground through Italy's coronavirus lockdown. She breaks down the macroeconomic consequences in short- and long-term of the world-wide shutdowns and explains how European governments might respond with tools they are already employing. Hawkins also discusses the challenges to European monetary policy, the potential for a Eurobond, and even a Brexit-style departure from the European Union for Italy.



  • LS
    Luca S.
    28 April 2020 @ 15:55
    As enjoyable and interesting as this was, i must say that I'm frankly quite amazed to hear people of higher education who should have first hand information STILL talk about Italy like this was the 2011 debt crisis. We're in 2020, yet they talk like it was 2011. Granted, this interview was done in early April, and much has changed in the last 3 weeks, but I'm still a bit disappointed to hear knowledgeable people simplify everything down to whether "Italy leaves the euro or not"... So goes Italy, so goes everyone else. Either they find a way to keep everyone afloat, or they all sink (taking the world economy down with them). The german parliament holds the final say on the fate of Europe. Merkel will do "whatever it takes" to save the eurozone, but she needs to convince the german people and lawmakers. Everything depends on whther she'll succeed at doing that.
  • SR
    Scott R.
    19 April 2020 @ 00:34
    Great interview Elle and Ed. Elle - after talking about how central banks were "mucking with the price of money" I was surprised to hear you endorse Draghi. I agree that Greenspan started the process but believe that Draghi is guilty of taking it to an extreme that has only added to Eurozone issues. Ed - you interviewed Warren Mosler a while back. He was consulting 5 Star about leaving the Euro and had some interesting ideas. It sounds like they might be doing it as you noted an IOU is essentially govt fiat. Next step w/be to make the IOU's eligible to pay taxes and you have basically created the currency. Keep up the good work!
  • db
    dan b.
    11 April 2020 @ 23:34
    Ed. Why did you laugh when you were told that Greece’s GDP had grown by 3.1% since the start of the Eurozone? It’s around the 23 minute mark.
  • JH
    Joseph H.
    11 April 2020 @ 18:36
    Excellent interview. Longer term question. Will this pandemic, and the likely chance we haven’t seen our last, impact Italy’s decision to join China’s One Belt/One Road project?
  • IP
    IDA P.
    7 April 2020 @ 19:39
    I find in this interview everything stated is true, but not objective. Italy has a disgraceful public debt, but quite low private debt. Russell Napier for example has studied the French situation where public debt is around 100% of GDP , but private debt is very high, and so believes that France will end up with public debt at least the same as Italy's by the end of this crisis. The point is a different one: you can't have monetary union without fiscal union. Italy is a mess, but there are a few european countries which are in fact tax havens. the solution is to have the same taxation and fiscal rules in the Eurozone, and this will enable the eurozone to solve the problems and become stronger. Unfortunately the politicians of the 90's didn't explain this aspect to the voters when they promoted the Euro. On a geopolitical level Germany needs the eurozone to stay together so I don't really see any other solution, anything else would be a bandaid I believe.
    • EH
      Elle H.
      8 April 2020 @ 05:28
      I agree and being objective about the country is tough as I’ve fallen in love with my second home. You are so right, Italy has a shameful track record with its finances and my God doing business here makes one insane with all the red tape. I wish we’d get an adult here to clean it up, but I’m not optimistic. When have we ever seen a nation in crisis clean up its overly burdensome regulatory and legislative mess? Argh.
    • IP
      IDA P.
      11 April 2020 @ 14:14
      Reply to Elle: the reason that some US southern states like Mississippi are financially weaker is also due to historical events I believe, but it seems that the US stays together, and Italy has the same weak spots for historical reasons. You tend to ignore that France has a total debt (private and public) among the highest in the world, higher than Italy, and that Netherlands who has an accelerating private debt (Russell Napier has written about this) and is a tax haven (which should not be allowed in theory), and it is the Netherlands who are opposing the fiscal union. I wonder if France has an economic crisis what will happen then? We must criticize Italy, I am appalled every day, ( I grew up in Canada), but I think that you should have been more critical also with other members as well. France has a gigantic sector, they aren't saints either.
    • IP
      IDA P.
      11 April 2020 @ 14:14
      correction;: France has a huge public sector, I hate it that you can't correct comments....
  • DM
    David M.
    10 April 2020 @ 00:37
    @ElleH if there was a pickup in global inflation down the line, do you see the ECB or the Fed going to fight it first? From my perspective at the moment, we're all in the same boat in terms of what's coming short term, they will do everything they can to backstop... but long term I just don't see the Fed raising rates to fight the inflation, the US just has so much debt...... Our national debt is 24 trillion, if rates went to 5% we'd be paying 1.2 trillion a year on the interest... I think the Fed would avoid that situation at all costs
  • DM
    David M.
    10 April 2020 @ 00:25
    Wow, she hits the nail right on the head.
  • FG
    Flavio G.
    7 April 2020 @ 08:44
    Italy is an economic black hole: You can throw any money to it, it will eat it and nothing will come out. World champions in value destruction. And it's not the fault of politicians alone. The government is just a reflection of how the population thinks and operates. The big problem with Italy is that Italians are not designed to operate as a country. They simply can't scale into large organisms. And that's ok. Way forward: Split Italy into independent regions (the old kingdom if you like, just without the nobility). Let everyone run its own show.
    • vp
      valentina p.
      7 April 2020 @ 20:17
      100% agree. The first thing to do would be to dismantle the black hole of the Italian public administration and bureaucracy. And cut all those useless public expenses that have brought this country to the verge of bancrupcy. After having worked in one of those bureaucracies for 20 years I understand how corrupt and disfunctional the system is.
    • AB
      Andy B.
      8 April 2020 @ 00:13
      The problem of Italy is people like you. Always negative about your own country and positive about the rest no matter what. Always willing to criticise but never lift a finger to improve things. Is the UK or US designed to operate as a country? Have you got any idea of the living standards for the average family in the UK or US vs Italy? Vilifying the public sector is a national sport in Italy until you move abroad and get cancer. You would love to experience the British or American healthcare system. Schools? Try the public ones in London and let me know.
    • EH
      Elle H.
      8 April 2020 @ 06:16
      I tend to agree. The country remains so regionally focused. There really isn’t such a thing as an Italian as you are Milanese first, then Italian, Roman, Genovese... This is a nation that’s pretty much perpetually making itself bankrupt!
    • Ev
      Emiel v.
      9 April 2020 @ 20:48
      You can throw any money to it, it will eat it and nothing will come out. World champions in value destruction. Sadly but true.. Yet Italy can be the frontrunner of whats waiting for the rest of the EU. To be realistic, things are in worse shape then ever. Ironically we have seen enough examples of italian leadership. They do know how to trow a bung bunga party :P :P But in the private sector it's not any better. Have a look at italy's pride. Alfa Romeo. The complete history of the brand is huge up and down swings. There are times when they had a very succesfull model in the show room. They are very succesfull throwing parties. Celebrating, Having short working days.Enjoying long lucnhes, a lot of meetings. Basically Living the Itallion lifestyle. After a couple of years their once succesfull model has been superseded by the competitors. So, one would expect a new model based on the success of its predecessor. Not with Alfa and the italians!! They are in Panic mode!!! During the 10 years the model had run, the italians were unable to do any forward thinking to start the design for the new model. They are caught by surprise that the sales are down. Quickly they turn to dramatic measures. They close down all the factories. Not only the mothership is under stress. Also the dealers. They don;t have any models left in the showroom to sell. Many dealers are closing shop. Sales are even dropping further! Now they see the emergency of designing a new model. Knowing that they are too late. As the design of a new model takes approx 5 years. They are literately just at the forefront of the design of the new model. During the design process there is a lot of emotion and temperament. Many fights over nitty gritty details which hold down the progress. Somehow they manage to present their new model 2! They catch everyone by surprise. Instead of buidling upon the succes of the predecessor. The model 2 is in a new segment. and even a segment which is totally new for the brand. The car enthousiasts are underwhelmed. But not only their customer base is shocked.. The same goes trough for the company itself. Their dealer network shronk to dramitacally low levels. During the panic they closed down 80% of the factories, laid off all their staff. Now they have the new model 2 out. They cannot find qualified people to build it. The model 2 gets assembled in a hastly put together in a brand new factory by unqualified people. The famous complaints about the italian Quality hits the news again. 40% of the once so happy drivers of model 1 have lost moved on to other brands as Alfa was unable to build cars. I love Italy, I love Italians, the food the culture. and My god, I love driving Alfa Romeo's. Yet i think that this will be the end.. Alfa Romeo, Italy and europe will be something we will only know from musuems. I hope the italians are as flexible as the Alfa Romeo brand. Each and every time you think it has collapsed in a major disaster. When you think they have hit rock bottom and gone forever. Miracilously there is a recovery! Will this time be different?
  • JR
    Jared R.
    8 April 2020 @ 01:14
    Draghi? More ECB and Brussels? Interesting how this virus is targeting Italy. A country that has been moving further and further away from Brussels is now being brought to its knees, begging for the technocrats/globalists to come to their rescue. It's a very convenient crisis for those wanting to centralize power. Read Kissinger's article that was published in the WSJ the other day, "The Coronavirus Pandemic Will Forever Alter the World Order". Essentially what he's reiterating is that "you need us...give up your sovereignty...a new political and economic order ruled by my fellow globalists is the only solution." Never give in, folks. Never give in. Decentralization, sound money, free trade, property rights. We're in the Fourth Turning and the real war will not be between nation states (though there's a decent probability we see that). The real war is between the people of this world who want to live in a free society that respects privacy and the rule of law against those who wish to be (or continue to be for that matter) our feudal overlords. We either succeed or it'll be a Brave New World, with a boot stomping on our face - forever. For those of you who need be reminded of the first video ever posted on Real Vision, here's a link: As Charlie states, fight for liberty!
    • EH
      Elle H.
      8 April 2020 @ 05:21
      I couldn’t agree more, but as you’ve said, we don’t appear to be moving in that direction and this crisis is pushing us in the wrong direction. I have been working with folks behind the scenes here to try and whisper ideas in the right ears, but who knows. The history of human civilization does see much in the way a panics delivering increases in Liberty or a freer economy,
    • JR
      Jared R.
      8 April 2020 @ 16:38
      Keep planting seeds and influencing the best you can. Good to see you back on RV.
    • Ev
      Emiel v.
      9 April 2020 @ 20:09
      Wow, Amazing comment. Could'nt have said it better. These are scary times to live in. While the mainstream media is only focussed on COVID. and the people are in lockdown. Our Dutch politicians aren't going to let this crisis to waste. A lot of bills have been passed without any chance of protest. How convenient that we are not allowed to be on the streets to fight for our Liberty!
  • SB
    Stephen B.
    8 April 2020 @ 22:27
    Lenore's question at the very end (what to do with Euro denominated contracts in the event of a denomination) arose in Argentina in 2000 (when they removed the 1:1 peg to the US$). The government passed a law stating that all contracts dominated in US$'s would be converted to Pesos at a fixed rate. Mortgage holders did very well, out of this - the banks took a massive hit. But there was mass confusion (and a lit of litigation) between businesses - such as an Argentine company buying supplies from overseas, arguing that Argentine law applied (and they should pay their invoices in devalued pesos), or two foreign local subsidiaries arguing that they should still be paid in US $ (and not pesos). I was a CEO of an Argentine business at that time and it took years to resolve - and the businesses most affected were put out of business.
  • KJ
    Karim J.
    8 April 2020 @ 20:48
    And, right on cue:
  • RM
    Robert M.
    8 April 2020 @ 00:49
    My biggest takeaway was her experience in quarantine in Italy. Can't even go for a run or walk, This is how they got their curve to decrease. Since this will not happen in the US, makes one wonder how long it will take to get our numbers down without a vaccine. Stay at Home seems to be working OK right now, but when we restart, see that 2nd wave hitting.
    • LS
      Lemony S.
      8 April 2020 @ 20:41
      The numbers will go down when we get herd immunity. Distancing just asks to pay the piper later. The numbers go down due to infections and herd immunity, not the other way around. We distanced too late and because of isolation now, we will have a 2nd wave. But they will say, "We need to save you again!" because they are silly egomanics and liars, and you fall for it.
  • CH
    Chad H.
    8 April 2020 @ 01:17
    Big props to Ed! He's doing a fabulous job providing the straight goods daily. Thank you for your part being on the front lines. When this passes, I'll forever think of Ed who kept me grounded with his logical and thoughtful analysis each day during this unique time in our history. One day I hope to buy him a beer!
    • EH
      Edward H. | Real Vision
      8 April 2020 @ 11:43
      Chad, thank you. That brings a smile to my face.
  • IS
    Ivar S.
    7 April 2020 @ 07:40
    Cant believe i still have to ask this question Realvision. When was this filmed?!
    • RS
      Riccardo S.
      7 April 2020 @ 08:11
      This is very recent, I would say the first days of April.
    • FG
      Flavio G.
      7 April 2020 @ 08:16
      April 1st
    • MM
      Michael M.
      7 April 2020 @ 08:28
      Always include the date recorded in the synopsis. Never don't do this. Easy, right? (She says around the 15 minute mark that's it's April 2nd)
    • RG
      Razmig G.
      7 April 2020 @ 08:53
      April 2nd. She says: yes
    • RG
      Razmig G.
      7 April 2020 @ 08:53
      she says " yesterday april the first
    • IS
      Ivar S.
      7 April 2020 @ 09:27
      Thank you guys!
    • GW
      Geoff W.
      7 April 2020 @ 11:04
      How about you ask nicely?
    • IS
      Ivar S.
      7 April 2020 @ 12:03
      People have tried to ask this more or less nicely on almost every single video they have published recently Geoff, and nothing happens. Disappointing, as i expect more from Realvision.
    • EH
      Elle H.
      8 April 2020 @ 06:18
      We filmed it on the 2nd, midday EST time.
  • HJ
    Hendrik J.
    7 April 2020 @ 08:28
    Those are rookie numbers, Italy can go much further than 60% debt to GDP. Japan runs at 236% and that was in 2017.
    • UJ
      Ulf J.
      7 April 2020 @ 09:32
      I think she said Italy debt to GDP is 135%
    • EH
      Elle H.
      8 April 2020 @ 06:17
      The challenge for Italy is the rules of the Eurozone limit the Annual budget deficit and without controlling one’s own central bank, the Japanese style print to infinity and beyond is not possible.
  • SP
    Sat P.
    7 April 2020 @ 09:16
    Turn Italy into a Special Economic Zone, slash taxes, the place could be transformed within 5 years. There is no other solution.
    • DS
      David S.
      7 April 2020 @ 22:17
      I am not sure many are paying taxes now. DLS
    • EH
      Elle H.
      8 April 2020 @ 06:13
      God that would be wonderful!
  • JQ
    James Q.
    7 April 2020 @ 09:26
    Great job Lenore.
    • EH
      Elle H.
      8 April 2020 @ 06:12
      Thanks James!
  • GW
    Geoff W.
    7 April 2020 @ 11:03
    Great insight into a mix of on the ground macro and politics, thank you
    • EH
      Elle H.
      8 April 2020 @ 06:12
      Thanks Geoff!
  • CB
    C B.
    7 April 2020 @ 13:57
    Interesting insights here. My favorite was the idea that Central Banks meddling in the true cost of money has obscured market signals that allow economic actors make good, data-driven decisions. I suppose this is true for politicians as well as businesses and investors. With every CB worldwide ramping up "meddling", expect even more mistakes to be made. Bumpy trails ahead.
    • EH
      Elle H.
      8 April 2020 @ 06:12
      Thanks CB! Tough to have price discovery when the price of money is being meddled with.
  • JE
    James E.
    7 April 2020 @ 23:04
    Great insights. Thank you.
    • EH
      Elle H.
      8 April 2020 @ 05:22
      Thanks James!
  • AH
    Andre H.
    8 April 2020 @ 02:38
    Fascinating perspective. Thank you!
    • EH
      Elle H.
      8 April 2020 @ 05:18
      Thank you Andre 😊
  • TS
    Tim S.
    8 April 2020 @ 03:33
    Wow, she is great. More, please. And I am really enjoying Ed as well, he has a great way of making the complex simple. Which takes a *lot* of understanding.
    • EH
      Elle H.
      8 April 2020 @ 05:17
      Thank you Tim and Ed is great. He makes it easy!
  • KE
    Kathryn E.
    8 April 2020 @ 03:49
    Amazing interview. I would love her to do a follow up in 3 to 6 months.
    • EH
      Elle H.
      8 April 2020 @ 05:17
      Thank you!
  • NL
    Nikola L.
    8 April 2020 @ 04:13
    Today Italy's new infections fell again and is just above 3k. I think they got over the worst and in 2 weeks there is a good chance for Italy to be reporting single digit new infections. But they need to stay closed for the next few weeks. Size of money printing needed to get over the virus.. I just can't see how any currency can hold against gold and perhaps bitcoin.
    • EH
      Elle H.
      8 April 2020 @ 05:15
      I agree! Here is no obvious or even slightly painful way out of this. All options are utterly awful. Ugh.
  • ar
    andrew r.
    7 April 2020 @ 16:45
    Ms. Hawkins, your last speech sounds like it's straight out of the Mises Institute. Bravo! (I wont tell …)
    • EH
      Elle H.
      8 April 2020 @ 05:14
      Hehehe, I appreciate that 😉
  • sc
    sung c.
    8 April 2020 @ 03:50
    My understanding is that many of Italy's companies are Chinese owned and have thousands of Chinese workers from Wuhan working in those Italian factories. That's the connection and if they also attended the soccer matches, then there you go.
  • AM
    Anthony M.
    8 April 2020 @ 02:04
    I joined recently on the basic package to hear raouls views however we hear everyone e but raoul- think he has an obligation in these difficult times to inform his listeners on all package levels
  • MT
    Mark T.
    7 April 2020 @ 18:16
    Southern Italy sounds a lot like Alabama or Mississippi.
    • RM
      Robert M.
      8 April 2020 @ 00:51
      Actually not a bad analogy.
    • OM
      Owen M.
      8 April 2020 @ 00:59
      Come on down to Mississippi, you'd be surprised.
  • SK
    Shiu K.
    7 April 2020 @ 23:13
    You should think about boots on the ground in China/Russia. IMO, one of the flaws of RV. Lots of arm chair quarterbacking from outside of those countries, but not enough boots on the ground there to even understand the culture, much less the macro. This limits RV's perspective, IMO. I'm just an investor, I'm not being political.
  • RG
    Razmig G.
    7 April 2020 @ 08:51
    Let's not forget the 300,000 Chinese workers in Northern Italy in spreading the virus.
    • BM
      Beth M.
      7 April 2020 @ 16:38
      The snowflakes don't like comments like that!
    • DS
      David S.
      7 April 2020 @ 22:21
      Neither do the raindrops! Sorry Beth M. I just came out of minor surgery. I just could not stop myself. DLS
  • wj
    wiktor j.
    7 April 2020 @ 16:31
    Italy has an opportunity to stop this. Lets hope Italy has learned more from this nonexistent union. Lets switch EU off Italy we all be better off. Poland will be next and other countries can follow. Lets switch production back to local countries and have less of a dictatorship which basically is the EU.
    • BM
      Beth M.
      7 April 2020 @ 16:37
    • DS
      David S.
      7 April 2020 @ 22:14
      The European Economic Union is rational. The Euro is a fiat political currency without a sovereign that is irrational. If everyone in the Eurozone really wants to be completely governed by bureaucrats in Brussels it could work. I do not think it is possible for everyone to give up sovereignty to bureaucrats who are elected to office only by politicians. It may happen in the short run during these crises, but it will be dissolved someday. In either event there will be massive defaults in European bonds. DLS
  • DS
    David S.
    7 April 2020 @ 21:53
    Excellent. Boots on the ground. Very interesting about Italian government issuing IOUs, fiat currency, may be the starting point of the new Lira. Well worth listening again. Thanks, DLS
  • OC
    Otto C.
    7 April 2020 @ 21:01
    Draghi, really? One of the reasons for the EU problems was Draghi. I don't who's more corrupt, Draghi or legaard?
  • BK
    Boris K.
    7 April 2020 @ 13:40
    i dont get it.. she said "yesterday was april 1st".. 24:23... is this material 5 days old, really?
    • SM
      Shivani M.
      7 April 2020 @ 18:26
      Ever try editing 10-15 hours of finished video per week? Very time consuming.
    • bt
      brian t.
      7 April 2020 @ 20:45
      Yup, your not paying enough to get the information in real time! This will be on youtube in couple of weeks. Remember we only have the basic package! Didn't you get all the emails to upgrade for how many thousands, just to hear it sooner. We do have to give them credit, and time to edit, and put in the line up for are viewing pleasures.
  • GR
    Grant R.
    7 April 2020 @ 19:59
    Missing data: Lots of Chinese workers in Italy at Chinese owned factories making chinese shoes in Italy going back and forth. More missing data: Italian people virtue signalling by hugging Chinese to prove they aren't racists like the US is.
  • CR
    Chris R.
    7 April 2020 @ 19:47
    Italy might have more hospital beds per capita, but the USA of over 2.8 times more ICU beds verses Italy. Only Germany comes close to the number of ICU bed per capita vs. the US Data here:
  • IP
    IDA P.
    7 April 2020 @ 19:12
    I live in Italy, as for unemployment, in Europe the labour market is not so flexibile, I know lots of small business owners in difficulty of course, but you can't just fire people so the data would be hard to confront
    • IP
      IDA P.
      7 April 2020 @ 19:13
      so of course unemployment will rise but it should be at a slower pace in general
  • GH
    Garrett H.
    7 April 2020 @ 18:44
    Fiat on fiat haha
  • AN
    An N.
    7 April 2020 @ 18:06
    Store of value and growth will come from: innovative tech and code governing inflation rates Altcoin run is inevitable
  • Cd
    Christiano d.
    7 April 2020 @ 17:59
    "We need an adult in charge" Same in Brazil :D
  • SP
    Steve P.
    7 April 2020 @ 17:01
    Ok, time to short da Pasta mama mia!
  • so
    steven o.
    7 April 2020 @ 16:14
    Good interview with helpful insight, but hard for me to accept that Draghi could be part of a solution. Not that I know anything about Italian pol/econ, but I've watched that arsonist for too long to believe he could bring a sane solution to anything.
  • CB
    Clifford B.
    7 April 2020 @ 15:01
    Great video and insight however in these times filmed on date is needed for reference of the situation at that time. Videos lose at least 50 % value without date reference.
  • OT
    Omar T.
    7 April 2020 @ 14:54
    It was great to have a happy positive person like Lenore Hawkins deliver what is otherwise a tale of misery and destruction, it made the video somewhat hopeful :)
  • GL
    Geoffrey L.
    7 April 2020 @ 08:35
    Could you please label every video with the date / place of filming.
    • JD
      James D.
      7 April 2020 @ 14:23
      and twitter address..
  • CD
    Christopher D.
    7 April 2020 @ 10:24
    If gov pays the corporates with IOUs, is that money good for tax collection purposes or are businesses supposed to settle with euros? By the way I seem to recall that in sovereign CDS, redenomination is not an event of default if the country is in the G7.