Italy Votes for Chaos and the Euro Crisis Is Back

Italy’s parliamentary election could not have gone worse for the country or the euro area.

It is now possible that in the coming months the currency zone’s third-largest economy will need a bailout from international creditors, at a time when Italy will have no government in place to ask for, or negotiate, a rescue. In case you had any doubts, the euro-area crisis is back. Read more of this post

Italian Election Can’t Produce Both Stability and Reform

Next week’s parliamentary election in Italy is a make-or-break vote for the country, which for several years has been teetering on the brink of a fiscal crisis.

If Italians choose a government that won’t push ahead with economic reform, or rolls back recent changes that were designed to make the economy more competitive, the country’s ability to repay its debt will be in question.

That would be terrible news for Italy and the euro area as a whole, which might not be willing or able to bail out its third-largest economy. With days to go before the vote on Feb. 24-25, only this much is certain about the outcome: The next government in Rome may be stable or reformist by Italian standards, but it will not be both. Read more of this post

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