Brazen About Italy, Just The Start

Even I’ve become numb over the years to some of the blatant mischaracterizations. Looking at any small positive number for whatever small economic account and declaring it the mark of a strong economy is standard procedure nowadays. But it’s the brazenness with which “they” are now attempting to discount the sudden reappearance of the minuses.

I’ve said all along that Economists had staked everything on 2017 and globally synchronized growth. Inflation hysteria was emotion not analysis. It had to be true… because.

Finding out in 2018 that it really wasn’t is a discredit too far. Economics may never recover, so we’ve been treated to the outright transformation into propaganda. At least with globally synchronized growth, it was technically true, the deviousness being in framing how this was to be interpreted.

As expected, Italy’s economy shrank for a second straight quarter according to estimates released today. Since it wasn’t supposed to go this way, people are confused and some are asking how and why. The Economist (of course it’s the Economist) just outright lies about them.

Italy’s recession is partly home-grown. In September 2018 its populist government unveiled budget plans for 2019 that defied the European Union’s fiscal rules. As the row with Brussels worsened, government borrowing costs rose sharply.

Notice there is nothing about Q3’s contraction, which started this “technical” recession before there ever was a populist budget to blame. The real kicker is how this political “row with Brussels” is supposed to have brought down the economy:

A survey of lenders by the European Central Bank found that in the fourth quarter of 2018 Italian banks became more fussy about whom they lent to, even as credit standards in other large euro-zone countries eased.

Sounds somewhat plausible; higher interest rates on the Italian risk-free, perceptions of risk, banks cutting back lending. And that’s just what has happened. Only, it started long before the populist budget.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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