Well, this was really what I had been waiting for, not that I welcome the news, obviously, but simply that as far as I am concerned it is far from unexpected. People have been ‘writing off’ Italy’s grave structural problems far too easily IMHO:
Industrial production in Italy declined 0.9 percent month-on-month in October for an annual drop of 2.7 percent, national statistics agency ISTAT reported today.
The fall was driven by a 3.6 percent year-on-year drop in intermediate goods production and a 3.1 percent reduction in consumer goods output.
OTOH, the German Investor Confidence Index published by the ZEW Center for European Economic Research spiked dramtically upwards today showing how strong growth in China and the US and the falling euro is boosting expectations in Germany’s export sector. This is, I think, pretty much what we can expect to see from Germany in the months and years ahead: strong export growth when the global economy is booming, and weak domestic demand keeping overall growth tepid.