"There are no jobs. The factories are closing and they're sending the work off to China or India or wherever. No one is spending any money and we don't know what to do."
The words could have been spoken by a frustrated Canadian or American but on this day they came from Luisa, our guide at one of Italy's new and very expensive wineries in the up-and-coming Bolgheri district on Tuscany's Mediterranean coast.
What was once malaria-infested swampland has now become the home of Bordeaux-style Super Tuscans, wines such as Ornellaia and Sassicaia that sell for hundreds of dollars a bottle. Big name producers like Piero Antinori and the Frescobaldi family have spent tens of millions of dollars planting new vineyards of Cabernet Sauvignon, Merlot, and Cabernet Franc and constructing state of the art production facilities.
But while field workers are always needed, high-paying jobs are scarce. Antinori's fabulous new Martello winery, an underground glass and steel temple to Bacchus, requires only two people to run it! You wouldn't know it by looking at the well-tilled farms and tidy villages of Tuscany but Italy's economy is in deep trouble. While the whole of the European Union managed to grow by 0.2 per cent in the first quarter of this year, Italy's economy contracted by 0.1 per cent. That's significant because, after Germany and France, Italy is the EU's third-largest economy.
This economic malaise is nothing new. Between 1960 and this year, Italy's GDP has grown by an average of only 0.62 per cent annually – a miniscule amount. The country's official unemployment rate is 12.6 per cent but among youth aged 15 to 24 it is a shockingly high 43.3 per cent.
"The young people are leaving the country," Luisa lamented. "They're going to Australia, Canada, anywhere they can find jobs."
The International Monetary Fund projects that Italy will end 2014 with a modest GDP growth rate of 0.6 per cent but that will do very little to ease the unemployment problem within the country. The inflated value of the euro, which makes Italian products more expensive in foreign markets, doesn't help, although the European Central Bank took steps last week to try to push the euro down.
But despite all the economic problems, some unusual things are happening. For starters, unlike neighbouring France, most Italians are keeping the faith as far as the EU is concerned. The pro-Europe Democratic Party of Prime Minister Matteo Renzi took over 40 per cent of the vote in last month's elections for the European Parliament in what was seen as an important victory in the face of growing Euro-scepticism in other countries.
Even more surprising, the Italian stock market has been one of the top performers in the world so far this year with a gain of 15.1 per cent as of the close of trading on June 2 according to data compiled by Yardeni Research. That's well ahead of the 4.3 per cent average for Europe as a whole and suggests that Italians may feel that despite all their problems the country is starting to turn around.
Investors in iShares MSCI Italy Capped ETF (EWI-N) have been reaping the benefits of this unexpected surge in Italian stocks. Over the year to April 30, the one-year total return on this exchange-traded fund was 40.6 per cent. But that is clearly an aberration – the average annual compound rate of return over the past decade is only 2.04 per cent.
I love Italy as a country and it's encouraging to see what appears to be a return to political sanity there after the calamitous reign of media mogul and serial seducer Silvio Berlusconi.
But despite the astounding recent performance of EWI, I would not advise risking any money in their stock market at present. It's going to be a long, hard road back to economic respectability and there will inevitably be some major setbacks along the way.
If you really want to invest in things Italian, buy some bottles of high-end Super Tuscans and lay them down for a few years. They'll appreciate much faster than almost any Italian stock you might purchase.
Gordon Pape