ITALY is once more acting as a brake on the rest of the euro zone. On October 29th Antonio Golini, the acting head of the national statistics office, said the economy had continued to shrink in the third quarter. That contradicted the government’s view that the country’s longest recession since the second world war had already bottomed out. On the same day the finance minister, Fabrizio Saccomanni, revised downward, from -1.7% to -1.8%, his prediction for the economy’s performance in 2013. Even if growth returns in the fourth quarter, all sides agree that it will be anaemic. The lack of economic growth will make it more difficult for the government to hold its deficit-to-GDP ratio below the euro zone-mandated 3% ceiling and prevent its whopping debts of €2 trillion ($ 2.8 trillion) from rising above today’s level of 130% of GDP.Italy’s depressing outlook is having scant impact on the media and the markets. Only one leading Italian daily chose to report Mr Golini’s bucket of cold water. And the next day investors bought 3 billion of ten-year Italian treasury bonds with a coupon of just 4.11%. The markets seem convinced that America’s central bank will keep money…
The Economist: Europe
