Five Reasons Not to Fear Deflation: Which Ones Make Sense?

In a post earlier this week, I explained why a majority of economists fear deflation. They argue that deflation disrupts the operation of financial markets and labor markets in a way that risks touching off a downward spiral. At the same time, they say, deflation weakens the power of monetary policy to reverse the downward […]

European Doldrums

European economies are faltering.  The German economy contracted in the second quarter, as did those of France and Italy. Growth in Spain and the Netherlands was not enough to offset the slowdown in the Eurozone’s largest members.  An escalation in the confrontation with Russia would send shockwaves rippling from the Ukraine westwards that world worsen the situation. […]

Renzi’s Day

The Chamber of Deputies approved the electoral reform bill that Renzi and Berlusconi had negotiated before Renzi squeezed out Letta to become Prime Minister of Italy. The bill goes to the Senate now. That Renzi got the lower chamber to approve the bill is a minor victory, after all he enjoys a majority. There was some fear […]

Italy: The King is Dead, Long Live the King

Florence Mayor Matteo Renzi has been formally offered the opportunity to see if he can put together a government that can win a vote of confidence>  It is not much of an issue in the Chamber of Deputies, where the PD has a majority, but in the Senate where it does not.  The market, which […]

Two Charts That Show the Challenge Facing Italy’s New Prime Minister

Matteo Renzi is poised to take over as Italy’s youngest-ever prime minister. He has a clear mandate to get the Italian economy back on track, but everyone, including Renzi himself, knows that he faces a daunting task. Here are two charts that show just how far Italy’s growth and living standards have slipped and how […]

Italian Events Spinning Away From the Letta and Alfano Government

Political developments in Italy are happening faster than Prime Minister Letta can maneuver.  The economy he is overseeing is the poster child of ECB President Draghi’s assessment of a weak, fragile and uneven recovery in the euro area. While Spain’s Target2 imbalances are gradually declining, Italy’s are edging higher.   The economy is lagging behind Spain in […]

Can Italy Double Its Oil Production?

By Rory Johnston: Beneath the ancient groves of Italy’s Basilicata region lies something more valuable to modern Italy than olives—oil.  The region represents the “instep” of Italy’s iconic boot and contains the largest inland oil reserves in Western Europe. Possessing over 1.4 billion barrels of crude, Italy stands as the third-largest European holder of oil […]

Electoral Reform: Italy’s Soap Opera Takes New Turn

Italy finds itself in a proverbial catch-22.  Its electoral system has been gutted by the Constitutional Court, but it needs an election to sort out the changes that have taken place.  These changes have included the split in the center-right, the formal ejection of Berlusconi from the Senate, and a new head of the center-left. […]

A Few Last 2013 Developments: France, Italy, Turkey, China

In the last full trading session of the year, the US dollar is little changed against the major currencies and a bit softer against many of the freely accessible emerging market currencies.  Asian equities mostly firmed, with the MSCI Asia-Pacific Index gained a little less than 0.5%, while the Dow Jones Stoxx 600 is little […]

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