COVID-19’s Social and Economic Shock in Italy with Paolo Mafredini

Paolo Mafredini sat down with Ryan Morfin to help listeners get a better understanding of Italy’s COVID-19 situation.
Paolo Mafredini sat down with Ryan Morfin to help listeners get a better understanding of Italy’s current COVID-19 situation. In late January, Italy experienced almost 3 times the normal amount of pneumonia cases which were later suspected to have been COVID-19. The first major outbreak of the virus occurred in areas near Milan because Fashion Week and sporting events had brought a large influx of foreigners into Italy. Since then, Italy has experienced a death rate of roughly 5% in comparison to the global rate of about 3%; Mafredini believes that Italy’s above-average median age is partially responsible but that it is unlikely to be the only contributing factor. Since the financial crisis of 2008, the Italian health care system has slowly become decentralized, resulting in budget deficits in critical areas such as intensive care.

In response to the outbreak, Italy has discouraged citizens from leaving their residences. The Italian government requires that individuals carry government issued permission forms if they wish to leave their homes. In addition to this, they have requested support from the European Union which has just recently been addressed, they closed non-essential businesses, and took measures to ensure that the supermarkets remained well-supplied. The future of Italy is still uncertain, but it is fair to conclude that economic hardship and mass loan defaults are soon to come.

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Ryan Morfin:                    Welcome to Non-Beta Alpha. I’m Ryan Morfin. On today’s episode we have Paolo Ravetto from Torino, Italy calling to tell us a little bit about what’s going on on the ground in Italy. There’s been good news recently out of Italy that the new infection rate is slowing, but the death toll is still growing. And so he is a few weeks ahead of the US, and has been with the rest of his compatriots on lockdown for the last four weeks. We’re going to talk to him today on Non-Beta Alpha. Paolo, welcome to the show. Thank you so much for coming on.

Paolo Ravetto:                 Thank you. Thank you.

Ryan Morfin:                    Well, so you’re up in Torino. So what football club do you support, firstly?

Paolo Ravetto:                 I’m a Torino supporter. That is the smallest football team in Torino, because in Torino we have another one much more famous that is Juventus, but I’m a Torino supporter.

Ryan Morfin:                    Fantastic.

Paolo Ravetto:                 We are always making a big fight between the two teams.

Ryan Morfin:                    I’m sure the league is suspended and I’m sure it’s making people bored out of their minds. I know there’s no sports here in the US and it has slowed down society a bit. Well, we’d love to chat with you a little bit about…

Paolo Ravetto:                 The league is suspended, but it’s still not finished. They still didn’t decide if the season was finished. They took time until the second half of May to decide if we are enough time to finish the league or not. So it’s still not decided. [inaudible 00:02:07], for example said, okay, the league is finished and we are still waiting to take a decision.

Ryan Morfin:                    Yeah, I know it’s going to impact Liverpool and the Brits as well. There’s some amazing seasons going on that have been suspended. Well, Italian football is something I watch on the weekends and so I was disappointed to see the suspension, but it makes a lot of sense. So Paolo, you’ve been ahead of the curve. Unfortunately your country was one of the first severely hit. Over the last few weeks you guys have been locked down on quarantine. Also, you work at a commercial bank in Torino. How has your day been affected? Are you still going to work every day? Are you part of the critical infrastructure of employees that go to work? Tell us a little bit about what’s going on on the ground.

Paolo Ravetto:                 Yes. As you said we are on the top of the curve, but we still have to wait probably a few days to see numbers going down. And now it’s about nearly three weeks that we are on lockdown. We are in quarantine. Everything when I go out in the morning for go to work fortunately, I go by walk because my job is 10 minutes walk from where I live and everything is completely unreal. The streets are empty. If I meet someone when I walk you try to avoid them and you meet the distance. And even when I entered the branch, the branch basically has been divided into two groups. One day one group works and the other group stays at home. And the next day the opposite. And we can’t meet. We can’t mix. So one day I work and one day I stay at home in smart learning or smart training.

                                           When we are in the branch everything is completely changed. It’s completely different. It’s like to work during a war. Basically, we are at war. We are in a war that is a completely unusual war because we don’t know our enemy.

Ryan Morfin:                    So you’ve been literally going to work. Your bank’s been open. During the first few weeks did people come to your bank and try to pull all their money out? Was there a run to grab cash and currency in euros?

Paolo Ravetto:                 No, no, no, no, we didn’t. We didn’t have that. In others I heard that someone in other branches ]it was like that happened, but basically no. For sure a lot of people wanted to exit investments after the crash, the crash of the financial market, we had. When I say that I walk in the street I feel like a war. I feel like to be in a war. There’s another war on the financial market and you know better than me.

Ryan Morfin:                    Yeah, the markets are severely impacted by this. We’ll call it consumer destruction, demand destruction, but we’re optimistic that it’ll bounce back even in Italy, and we’re hoping you guys bounce back first.

Paolo Ravetto:                 Yeah, yeah, yeah, yeah. Lots of people for sure at the beginning was the panic selling. Most of them want to exit investments, but maybe it’s the worst decision. You have to wait and time will solve this situation.

Ryan Morfin:                    Yeah, I believe it will rebound here in the coming weeks ahead. One question I have for you since it’s part of your day job, what have your bosses or the company talked to you guys about in terms of touching money and all that? Do you wear have to wear gloves and masks at work or is it not that big of a deal and you guys are distanced away from the customers, the retail customers.

Paolo Ravetto:                 To be honest the bank just give us a special soap for wash our hands. So, I do it five, six, 10 times per day. If we wear gloves, some of my colleagues are wearing gloves and masks but it is their own gloves and their own masks. What I do, I keep the distance from the clients. Always not one meter as people says three-four meters because I think that one meter is not enough.

Ryan Morfin:                    I’m with you.

Paolo Ravetto:                 I have a mask I use sometimes. I have a mask that I use sometimes, but I have just two. So, in 10 days two masks are not enough. But it’s impossible to buy one at the moment.

Ryan Morfin:                    You know you could be careful, but if you put it in the oven at 158 degrees Fahrenheit it should be warm enough to kill the virus, but you got to make sure it doesn’t go up and flames because some of the masks are flammable. A lot of doctors in the US are doing that. They’re putting their garments in the oven to cook them to kill the virus. You guys are ahead of the curve globally. Unfortunately, one of the first countries to go through this terrible tragedy. Does the general population think that the numbers that you’re going through are the right numbers? Are they believable or is there skepticism based on what you see from ancillary numbers?

Paolo Ravetto:                 Numbers are completely wrong. When they say in Italy we have a hundred thousand people. In fact it is true, but that maybe one million infected, they didn’t do the test. So, we don’t know if they are infected or not. What is sure is that in Italy we started to die of coronavirus since January. The first official case was in the beginning of February, and the area near Milan at the moment is the worst area. And the doctor of the [inaudible 00:08:43] said that in the second part of January they saw a massive increase of pneumonia in the last second part. About two-three times the normal and probably was already coronavirus. But if we don’t do the test, we didn’t do the test at the time. So no one can say that.

                                           But it’s sure that we start dying of coronavirus since January is true. That probably this virus is born in China since probably November but the officiality went in January. So, the numbers are much, much bigger than the official ones we get from the news and the TV and everything. And the doctor says that the 60%-70% of the people is  symptomless. So probably at the moment I have the coronavirus, but I don’t have any symptoms.

Ryan Morfin:                    You don’t know.

Paolo Ravetto:                 So numbers is sure are much bigger. We are at the top of the curve. We hope that number is going down, but the lockdown will be still long.

Ryan Morfin:                    Yeah. I think two days ago you guys had 3,800 new tested infections, and then I guess less than two days ago you guys went down to 1,650. A few days is not a trend, but I’m praying to God that it is going to continue to decrease over time. That’s very interesting about the timeline that people are starting to talk about and starting to look back at data. It would suggest there’s talk out of China that in November there was an issue at one of the facilities, the virology facilities. So we are starting not to believe the storyline that this happened at the fish market in Wu Han.

                                           I think there’s something more of that going on. We’ve talk to a lot of interesting people in Asia about that. So how has the European union, have they been supporting you guys since you guys have been the first ones to go through the crisis? Did the Italian people feel like the EU has stepped in, in a major way or have you guys been kind of on your own to deal with it as an Italian crisis?

Paolo Ravetto:                 This is another big issue. Until yesterday we can say yes. Until yesterday the European community was completely absent. Italy was asking to make more debt for paying people without work or support companies, but Italy was asking since three weeks, but basically we didn’t have an answer. Just from yesterday something is moving, but I think that something is moving after maybe 30,000-40,000 people. That for me personally, it’s a late answer. It’s a too late answer.

Ryan Morfin:                    Yes.

Paolo Ravetto:                 And so we will see what happens in the next few days, but we need to make more debt. We need to change the rules that relates all the countries in the European community. But, yes.

Ryan Morfin:                    There’s talk in finance circles about doing specialty Corona bonds for places like Italy that have been hit hard and Spain, Greece, and I’m hoping they get the support they need because you’re right. Money needs to get flowed to the people in the community that have not been able to work so they can pay their bills and buy food. Speaking of food and the grocery stores, have you guys had access to food? I mean, I love Italian food. I know Italians love their food. Have you guys had access to good food supply or has it been hard to find food over the last few weeks?

Paolo Ravetto:                 No, no, no. Restaurants and bars are closed, but we are lucky because in the supermarket we can always find good quality food. We have no problem of supermarkets are always full so for that we don’t have any problems. We have to cook at home.

Ryan Morfin:                    Yeah. But I think Italians enjoy home cooked food. You’re better at it than us Americans I would say. Well, the political component of this has the Italian government been unified as one government through this whole process, or has politics crept into the conversation on how to deal with the policy here.

Paolo Ravetto:                 Ryan, when we talk about Italian politics and stuff like that it’s always a difficult field I think. I think that at the moment we have a very good prime minister. That is a person that I’m happy to send abroad and speak about my country, and at the moment the opposition, there’s some people that I really don’t like. And I’m lucky that for the moment our prime minister is managing the difficult situation. And for sure now he is doing things step by step, little things because still we don’t have the total support of the European community. But I hope that in a few days, a few weeks, everything is going to change and we’ll have more freedom about the decision to solve this problem, this crisis.

Ryan Morfin:                    And so I hear that if you want to go outside to go grocery shopping or walk around, is it true you have to file a report with the police department online or how do you have to get a permit to go outsiders? Is there any truth to that?

Paolo Ravetto:                 Okay. Everyone that goes outside has to carry with him a little piece of paper that I declare that I’m going out and I can go out for four reasons. For work, for go to make some supermarket shopping, for medical reasons or something very important that I have to go out. And I can do a little jogging but just, this is funny, the four streets around my building. So it’s a bit boring jogging because the panorama is always the same.

Ryan Morfin:                    That’s more exercise than I’ve been getting.

Paolo Ravetto:                 Okay. It’s very boring, but if you don’t have this piece of paper the police has always the paper and take you the declaration. If the declaration is okay, you’re safe. Otherwise, you can get a fine.

Ryan Morfin:                    Are the taking temperatures of customers at retail stores? Have they started doing anything like that like they’re doing in China?

Paolo Ravetto:                 They start in some areas of that, but for the moment no. In the south a couple of places are like that happened, yes.

Ryan Morfin:                    What are the local journalists and medical professionals saying? Italy seems to be hit very hard. The way they explain it to us here in the US is that your population demographics, you have a lot of older Italians and they’re more susceptible. Is that the way that they’re describing it to you? Or is there something else going on?

Paolo Ravetto:                 Eh, no, I think it’s true. I think it’s true. We have a very old population but I don’t think it’s the only reason. But I don’t know what is the other reason. That’s a problem. For example, in Germany they have a lot of infected people, a lot. But the data are less than 1%. We are about 5% of the infected. So it’s a massive difference. It’s a massive difference. We are an old population. Yeah, yeah it’s true, but it cannot be the only reason.

Ryan Morfin:                    Well, it brings up the next question I have is the health systems are different. And I know in the UK they have a nationalized health system and we’re going to see unfortunately how that fares in a crisis like this. And then Germany has a very distributed model where it’s very decentralized. So they have a lot of independent centers. How has the health system set up in Italy? Is it one system run by one government or is it don by states or cities? How is it organized?

Paolo Ravetto:                 Okay. Let’s say until about 10 years ago, 10-15 years ago our health system was an excellence in the world and was everything managed by the government, the central government. Then in the last 15 years the staff cut everywhere. And the managing of the health and everything has been divided by region. Italy is divided in 21 regions so it’s been delegated to each region. They start to count the money to match. And now the problem is that we feel bad for intense care and the people with this Corona virus needs intense care. Now we are building new places for intense care. Our care was an excellence. Now it’s no more an excellence. Everything is turning to private like it happens in the United States or in England or in another country. So we have a problem about central healthcare.

Ryan Morfin:                    Yeah. I was in Europe for part of the financial crisis. Do you think perhaps the European union’s austerity measures that they put into Greece, Italy, and Spain maybe were too severe and they impeded the ability for Italy to continue to stand up infrastructure to really provide for a pandemic like this.

Paolo Ravetto:                 Yeah, sure. Yeah, yeah. Yeah, I think so. I think so because since the beginning of the European union we are getting poorest and poorest and poorest and poorest years by years. Absolutely. The European community is, let me say, is a German oriented community and a country like Italy, like Spain, like Greece is sometimes in a difficult situation for pay all the interest and everything. For example, Christine Laguard, the head of central European bank a few days ago said when Italy was in complete house about this virus, Central Bank is not here to manage the spread between the Italian bonds and German bonds. So, the spread went up to the stars and our stock exchange market lost 17% in one day. And then after a few days she said, well, maybe I was a bit wrong, and that’s the reason, that’s the reason. Everything is German oriented in the European community.

Ryan Morfin:                    Yeah, I believe this type of a crisis will probably wake up politicians and policymakers and the population about maybe redefining what those relationships look like. I think it’s going to be an interesting the day after this has passed us, it’s going to be an interesting economic conversation for people to have about how much control they’ve given to a Federalist body versus state’s rights. But it’s interesting. So the European banking system has been living with negative interest rates for a while. A lot of our people in America, we just can’t wrap our heads around negative interest rates. Maybe you can explain what that means. Is it customers pay the bank to keep their money there. They pay them an interest rate to keep the money safe, or how does negative interest rates affect the Main Street Italian consumer?

Paolo Ravetto:                 Yeah. The negative interest the only effect is that if you had a mortgage 15 years ago you pay 10% interest. Now you pay 1% for a loan so you would pay 15% and now you pay 4% for loans. And the gain of the bank related with the interest is very low. If you see the balance of a European bank, the end of the year balance of a European bank in the last two years, the commission part is higher than the interest part.

Ryan Morfin:                    Interesting.

Paolo Ravetto:                 And this never happened in 500 years history of banks. It never happened.

Ryan Morfin:                    And have you seen any increase in loan defaults? Obviously they’re coming. They’re coming globally because of what’s happened to the economy, but before we were getting into this crisis at the end of 2019, how was the credit market in Italy? Were you starting to see more defaults in the market or was it still pretty good growth going on?

Paolo Ravetto:                 No, we had a lot of defaults maybe related with the crisis in 2008-2009. So the bank had a lot of defaults from 2008 in the next years. But in the last two-three years they have been able to clean all the balance from these defaults. But now probably they have started to have other in their balance. So, since before coronavirus all the banks they’ve been able to clean all the bad part of these loans. But with this crisis for sure they would have others.

Ryan Morfin:                    Yeah. This inability to go to work and an inability to go out and consume is going to put a lot of companies under severe pressure. And what has the government done?

Paolo Ravetto:                 You can imagine the tourism in Italy now is zero. Zero.

Ryan Morfin:                    That’s unfortunate. We have some friends who were trying to go there right before you guys shut the country down and I was trying to tell them not to go because you don’t want to be stuck there if there’s a problem. Thankfully they didn’t go, but a lot of people were literally getting on flights almost ready to go to the airport and take off up right up into the day you guys closed the country.

                                           And so I’m sure people will be coming back to Italy. You’re going to have an avalanche of people once we figure out how to treat this virus because I think people are waking up to the fact that maybe tomorrow doesn’t come and you better seize the day and go on vacation and stop working so much. I think that’s one thing that’s kind of paused people is the fragility of life.

Paolo Ravetto:                 That will happen for sure, but at the moment I can’t say when.

Ryan Morfin:                    Yeah. It could be up to a year.

Paolo Ravetto:                 Yeah. To be honest, I’m more afraid about this virus. I’m a bit more worried thinking about the future then tomorrow, what is going to happen tomorrow? Now I’m much more afraid and worried about the future than today. What’s going to happen today or tomorrow. So I hope that what you said will come soon.

Ryan Morfin:                    Yeah, I think we’re in choppy waters. I think it’s going to be several waves that come through the global system. I mean Africa is just starting to get it and that’s going to come. South America is just starting to get it. It’s going to come back to us. So we’ve got to find a permanent viral treatment or a vaccine so we can share it to the world.

Paolo Ravetto:                 Yes, yes, yes.

Ryan Morfin:                    So the question I have for you too, is what food do you like besides Italian food? What is your number two favorite food because I’ve never met an Italian that says Italian’s not his favorite. What’s the number two favorite food?

Paolo Ravetto:                 Maybe let’s say the Oriental food because it’s very different from our foods. So they have a different taste. So maybe Oriental food. I don’t want to say Chinese because I really like even the Taiwan. No, the Tai food.

Ryan Morfin:                    Absolutely.

Paolo Ravetto:                 I’ll say Oriental.

Ryan Morfin:                    Interesting question. One of the storylines that I’ve heard from people about trying to figure out how it got to Europe and is there any truth or is there any conversations about this that it was the Milan fashion show that had brought all these people globally together and did the virus epicenter start in Italy in Milan or what part of the country did it start in? And what’s the conversation around how, it first popped up in Italy?

Paolo Ravetto:                 Okay. Yes, the area around Milan for sure at the moment is the one with the highest number of cases of coronavirus. More than the Fashion Week that for sure was the exact thing in those days. And there’s a city near Milan that is called the Bergamot where there was a massive number of people because the football team of Bergamot had an historical result in the West League against Valencia, a Spanish football team. And they played in Bergamot so there were thousands of supporters that had two days party in the street with thousands of people in the street. And so Bergamot after two weeks was really the worst city in Italy. I saw something on TV that, for me, will be very difficult to forget because Bergamot is a city of about 100,000-120,000 people. It’s a little city.

                                           And in a week they had more than one people died so there was 1,000 coughing to manage. And there was a so big number that they called the army. The army arrived with trucks and there were images of the line of trucks of the army full of burials to bring out of the city. When I saw that I said wow.

Ryan Morfin:                    That’s a sobering moment.

Paolo Ravetto:                 Yeah, yeah. The unofficial week football results and a lot of… Milan is always a couch. Many any image even in New York. There’s thousands of millions of people walking in the streets every day.

Ryan Morfin:                    Did you guys have a lot of trade or a lot of business with China because it popped up in China and then it popped up in Iran and then it popped up in Italy. What kind of economic or travel relationship with Northern Italy and China exists? Is there a very strong tie?

Paolo Ravetto:                 The relation we have is all the made in Italy. It is not just fashion, it’s furniture, quality in general. Everyone likes made in Italy so we have strong relation with a lot of countries, yes.

Ryan Morfin:                    Yeah. And speaking of Russia sent doctors and hospitals supplies. Was that, was that meaningful or was it political meaning did they really step up and, and send doctors to get involved in taking care of patients or was it just a cargo plane full of supplies?

Paolo Ravetto:                 Okay. First of all we have to say thanks to each country that helps us. The first thing you have to say is thanks. If we talk about Russia we have to specify something, because Russia didn’t send doctors. Russia sent a special corps of the army trained for bacteriological war. China sent the top they had. Someone says that most of them are doctors from the army against the bacteriological war and like that. But a lot of them are secret agents from in Italy to check out how is the situation.

                                           It’s something a little bit strange. People are talking about that. I don’t know the truth but first of all we have to say thanks because they are working for us. There’s some political reason in the back that we don’t know too.

Ryan Morfin:                    I think any help, any anybody who’s willing to put the gloves on and help out at a hospital today is a hero. So take all the help we can get. New York City is the same way.

Paolo Ravetto:                 They are more than doctors. They are special forces.

Ryan Morfin:                    Yeah, they’ve also sent, the doctors would have been enough. They sent this the special forces doctors. In New York they also sent some supplies as well and they’ve been helping out where they can. It’s good and hopefully some of the world leaders start to look at this opportunity as a way to get past differences and focus on helping each other through this crisis.

                                           Because I don’t think we’re anywhere near out of the woods yet unfortunately. Well Paulo, I really appreciate you joining us today and talking to us about what’s going on in Italy. I’m optimistic that you guys are starting to come down from the peak and we’ll be watching and praying for you guys and thank you so much and stay safe.

Paolo Ravetto:                 Okay. Thanks, Ryan. It’s been a pleasure to talk with you and a big hug to all the Americans.

Ryan Morfin:                    We love Italy in America, yes. Everything will be okay. Thank you so much. Have a great day. Bye bye.

Paolo Ravetto:                 Okay. Bye bye. Thank you.

Ryan Morfin:                    Thanks for listening to Non Beta Alpha, and before we go please remember to subscribe and leave us a review on Apple podcasts or YouTube channel. This is Non Beta Alpha. Now, you know.


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