Mention Italy and most investors probably think of corruption, bureaucracy and the eurozone crisis, not to mention the problems an ageing population brings.
However, some experts argue that Italy has changed. Putting aside the eurozone upheaval for a moment, the exit of Silvio Berlusconi last year has led to a new era. Under new prime minister Mario Monti, the legacy of the 'bunga-bunga' years is being put to rest.
So who is right? And is there a way to make money from Italy, even if it does quit the euro?
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Italian politics is messy, but sometimes it does the job
Most of the time Italian politics rolls along slowly. The 1948 constitution split power between a president, prime minister and two strong houses of parliament.
This meant that all the major interests had to agree before a policy was passed. Although it kept the Communists out of power, it also made it hard to take tough decisions.
This has helped various special interest groups to cut some good deals for themselves. Laws shield many occupations from competition; the pension age is low; and tax is easy to dodge.
However, every party has to come to an end.
The country's low birth rates have created a crisis. Unless the pension system is reformed, it will be entirely unable to cope, and the country will go bust. There is also agreement that growth has to rise from the low trend rate of the past two decades.
The Italians have shown that they can drive through change when needs must. Similar problems in the early 1990s led to Carlo Ciampi becoming PM. His government solved the fiscal crisis and led Italy into the euro.
Already Monti is making changes. He has put up the pension age and changed the way that pensions are adjusted for inflation. Properties are being revalued for tax purposes, which should boost revenue.
This latter reform is important because Italians hold a huge amount of their net wealth in housing. They also have little mortgage debt so there is no risk that people will be forced to sell by rising tax rates.
This is not just about balancing the budget. The way that both the labour market and businesses work is being changed. Occupations that used to be closed, such as taxi drivers, are now being opened up.
A crackdown against cross-shareholdings and interlocking directorships is also planned. This will shake up Italian boardrooms and force firms to compete against each other.
Although there have been a few protests, most of the reforms have been accepted. Experts agree that this is a good sign. Indeed, one person at a recent roundtable discussion on Italy I attended said that, "in the past, someone who tried these things would have been kidnapped".
A euro exit still seems likely for Italy
However, a euro exit and partial default for Italy is still a high possibility. At 120% of GDP, Italy's gross debt levels are simply too high to deal with. Lombard Street Research (LSR) estimates that by the end of next year this level could reach 140% of GDP.
If bond yields rise again, the interest payments needed could cause the deficit to expand. LSR also points out that if Monti does manage to balance the budget, the effect on demand caused by the austerity measures required to do so, could be equally catastrophic.
Monetary policy is already tight, as far as Italy goes. Although across Europe, the M3 measure of money supply is growing again, Italian broad money fell by 3.4% in January, year on year. To cut a long story short, when broad money is shrinking, the economy tends to follow.
Both of these factors mean that the country will miss its growth targets. This will push up the deficit and force further cuts. Given that five-year Italian bonds only yield 250 basis points more than German bonds, this makes them look bad value.
Italian stocks are cheap
So, if Italy is likely to leave the euro anyway, should you also avoid the stock market?
No. It's possible to be bearish on Italian bonds, but still like the stocks.
The reforms taking place mean that when and if the lira does return, Italy will be better able to take advantage of a better exchange rate. It will also mean that holders of the debt are forced to take smaller haircuts than would otherwise have been the case. This will mean Italy can return to the capital markets more quickly.
Both these factors will mean that growth will be strong and should more than compensate investors for the fact that the profits will now be in a weaker currency.
The only downside is if Italy stays in the euro. Even then, it is likely that the exit of other peripheral countries (such as Greece and Portugal) would force the European Union to restructure debts in a way that cuts the overall burden. This would reduce the impact of austerity.
The best ways to buy Italian shares
There are two ways to invest in Italian equities. The first is simply to buy a tracker fund for the whole market. Given that the p/e ratio on the market is pretty low at the moment (around nine), there's nothing wrong with this as a way to get exposure to the market.
iShares runs two trackers. There's the UK-listed iShares FTSE MIB (UK: IMIB), or the US-listed iShares MSCI Italy Index Fund (US:EWI).
However, there are also potentially some great bargains to be had by investing directly. The car company Fiat (Italy: FI) should benefit from a more flexible labour market and should it materialise - a cheaper lira. It is trading on a p/e of 4.5, which looks cheap.
