Italexit is the new Australian dollar downdraft

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Via Martin Wolf at the FT:

Italy is not Greece. But not all the differences are encouraging. Its economy is 10-times bigger. Its €2.3tn public debt is seven-times bigger, which is the largest in the eurozone and fourth largest in the world. Italy is too big too fail and may be too big to save. The question is whether its new government will trigger such a crisis and, if so, what might follow?

…It may be too late. The spiral of populism is: unhappy voters; irresponsible promises, bad outcomes; even unhappier voters; still more irresponsible promises; and worse outcomes. The story is not over. It may have just begun.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.