So, everybody on the political side seems to be quite satisfied this week with the outcome of the so called "manovra di agosto", that will add a further improvement of more than €50 billions to the national accounts during the next three years. Indeed, given the premises, the outcome of over three weeks of negotiations between the two main government parties (PDL and Lega), has been better than what could be reasonably feared. But is better enough? Are the headline numbers credible? Is the adjustment really so crucial? On the first issue, its quite ascertained that a lot more work needs to be done and a lot more difficult decisions need to be taken, in order to restore Italy's credibility on the financial markets. What are the chances that this will happen in the current political environment? Let me answer with a couple of examples. The proposal of merging council's administrations for villages with less than 1.000 inhabitants (hardly a drastic measure), was met with huge resistance and had to be modified. Even the decision to reduce national and regional holidays, in order to increase labour productivity, had to be watered down and many councils are now advocating their own "exception to the rule" (between them also Milan and Naples). From these anecdotical evidence, it seems to us that Italian politicians and indeed Italian people do not seem to grasp the seriousness and risks of the current situation. On the second issue (numbers credibility), although official comments from both Italian and european authorities have been kindly superficial, uncertainties seem to be extremely high, especially on the saving's side. The July and August measures include savings for€24 billions through removal of various tax reliefs, about €20 billions of cuts to certain minister's expenses and about €10 billions of cuts on transfers to local institutions. Yielding from previous experiences, coming down from headline numbers to details on who will bear the burden could be very difficult. On the revenue's side, the obvious big question mark is whether Italy will be able to avoid recession, in case it wont the estimates of higher revenues for the years 2012-2014 could prove way too optimistic (as in the case of Greece for 2011). Finally on the third issue (real relevance of the adjustment), we cannot avoid in highlighting that european authorities (whether at national or community level) seem always to be "one step behind". Up until a few months ago, the focus of investors was indeed on the balancing of national accounts, as economic growth did not seem to be a problem. Now though its the fear of recession that is taking centre stage. So everybody, on the political and authorities side, seem to be focused and satisfied with measures that will probably hurt future economic growth, at a time when the main concern of the investors is starting to be the risk of recession. So what can Italy do to calm the markets? Truth is that the structural changes needed to restore the nation's credibility and competitiveness, would take at least a couple of years to define and implement, and a few more to have a full positive impact. In the mean time only a miraculous change of mind of the markets, or a strong and unlimited support from Europe (i.e. Germany). Today's news don't seem to go in this direction, in Italy more than many other european countries its reasonable to expect that things are going to get a lot worse before they get better.