Europe: New Faces, Same Problems

On FRIDAY, my colleague made the important point that Italy's crisis is not about Silvio Berlusconi. Similarly, the euro crisis is not about Italy. Italy has a new prime minister and is pushing through some reforms and fiscal consolidation measures. That's good news, but it hardly registers against the overwhelmingly negative trajectory across Europe. Greece is still struggling to put together a stable government. We learn today that Portugal's economy shrank in the third quarter and has now been recessing for a full year. Portugal isn't alone in that; euro zone industrial production dropped 2% in September. Production dipped 2.9% in Germany, 3.5% in Ireland, 1.3% in Spain, 1.9% in France, 4.8% in Italy, and 5.8% in Portugal. Italy managed to complete an auction of 5-year bonds today, but the yield on the debt rose to 6.29%.