Not that it’s a surprise to everyone, but it’s official now that Italy began a recession last quarter.
Obviously this is related to the debt crisis, but not in the way that people think. A country that’s borrowed more than it can afford faces the problem that in the future it will have to do even more work than it was doing in the past, even while consumption stays constant or even falls. That’s bad times. People don’t enjoy it. But doing more work in exchange for less or equal consumption does help you pay off a debt burden. What a recession means is that Italy is doing less work than before. Not only is that bad times, it makes the debt situation worse.
