Time for a wet blanket on the rising euro - this from an Financial Times writer
And, indeed, a useful reminder of fragility:
The Eurozone crisis left Italy with only one improbable pathway to put itself on a sustainable footing: permanent fiscal restraint and economic reform
- Back in the real world, no Italian political parties have promised serious reforms, and the two winning parties in the recent general election, Five Star Movement and the anti-immigrant League, have threatened to unleash the very opposite of fiscal restraint
- Five Star promised a universal basic income; the League wants a flat income tax. Both intend to reverse pension reforms.
- These promises are simply inconsistent with adherence to the EU's fiscal rules
So if the global economy turns down, it will take Italy with it.
... why are financial markets so calm? I think they are making two misjudgements.
- The first is that Mario Draghi is a guarantor of stability until his term ends in October next year. I would not bet that the president of the European Central Bank would come to the aid of a member state that deliberately flouts the fiscal rules
- The second misjudgment is that the Italian establishment will always find a way to keep extremists away from power
FT is gated, but if you can access it the article is here for more: Financial markets fail to reflect the eurozone time-bomb in Italy
Article is dated March 25
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The Italian 2019 budget announcement is likely to be a critical time