Saturday, 12 September 2009

Facing the Ghost of Hyperinflation

(m.john16, Faces)

Here we are, September 2009. A year later the Lehman Brothers bankruptcy, with some countries announcing that their GDP is bouncing and economists debating on how and when an exit strategy has to be put into effect by the central banks in order to soak up the liquidity poured until now in the financial markets, soon before inflation becomes too sharp and late enough to allow the recovery to take place.

After recalling what happened to bring us here, we will check the conditions of the US, Europe - and Italy, of course - in order to understand what the chances are for the patients to recover (1). We will then ask ourselves how the doctors think to stop the needed injection of public money into the system before it kills the patient. In the end, we will try to explain why things will never be the same again.


What Happened?

Well, it is impossible to cut the long story short, but US citizens used to spend more than they had got, purchasing loads of consumer goods made mainly in Asia and Europe. They simply bought on credit, borrowing huge amounts of money through credit cards and mortgages. This huge global imbalance was counterbalanced by governments, businesses and private citizens worldwide investing in American bonds and shares and thus preventing the dollar from falling down as it would have done otherwise.

The financial system fuelled this dangerous game by transferring debt risk from the balance sheets of the banks into a large variety of highly-engineered financial products sold both to private and public investors. Subprime lending and credit derivatives were the main tackles which made this job possible. Pushed up by an obscure architecture, stock markets and house prices grew at unprecedented levels. Instead of preventing these dangerous bubbles from growing, the Federal Reserve kept interest rates down claiming that in the long term the invisible hand of the market would have solved the problem on its own.

Actually the market did it, but as Mr Laurent Cordonnier explained in September 2008 - while commeting on the rise of oil and food prices which came before the great turnmoil - citizens worldwide are now experiencing how the subsequent adaptation process is incredibly cruel and tough (2): "As for people, they do not adapt themselves... Neither people do it nor those economic actors for which prices are not arbitrage variables (cheese or cake?), not speculative stakes (bear or bull?), but bills determining the costs of their activities, the truth of their investment projects, the revenues whose they can dispose of, and above all their own living standars."

By the summer of 2007, while house prices began to sink, it became clear that banks were showing signs of difficulty. Northern Rock, Countrywide Financial, Bear Stearns, Lehman Brothers, Merrill Lynch, Fannie Mae, Freddy Mac and AIG are the most famous victims of what happened then, along with the state of Iceland. Credit, which had been extremely large for a while, suddenly became very short. Not trusting each other any more, banks stopped borrowing money and the whole worldwide financial system seemed to be about to collapse.

After refusing to save Lehman Brothers, on September 2008 the Federal Reserve and the US Government changed their strategy and began to bail out the banks at risk of defaulting, through a US$ 700 billion recovery plan. The Bank of England and the European Central Bank firmly sustained this effort and, as a consequence, by the end of 2009 interest rates worldwide fell to nearly 0%. In the meantime, the financial crisis had become an industrial crisis: American and European consumers, frightened by the effects on their savings, houses and pensions heavily cut their expenses. Previsions for GDPs level for 2009 fell heavily.

While the memory of the Great Depression of 1929 was wrapping up the world, in November 2009 Mr Barack Obama defeated Mr John McCain at the U.S. Presidential Elections. When in charge, the Democrats enlarged the public support to the financial system deciding an additional US$ 787 billion stimulus package and disposing the bail out of General Motors. In a context of very high volatility, by January 2009 the stock markets worldwide have first fallen 20% and then risen 40%. The main reason of this rise is the idea that the quantitative easing issued by central banks and governments could bring the world economy back to growth.


The U.S.

During the second quarter of 2009 the GDP fell -0.3% compared with the previous quarter (stats.oecd.org), proving that the recession is slowing but it is still there. In the meantime, the number of banks at risk of default rose from 305 to 416 and the fund protecting depositors came at its lowest level since 1993 (3).

In August the White House revised its previous estimates for the economy. The U.S. will run a US$ 9 trillion deficit over the next 10 years (US$ 2 trillion more than expected), unemployment will reach 10% within 2010 (it was 9.4% in July) and GDP will fall by 2.8% over this year (instead of 1.2% as previously expected) (4).

With a deficit to GDP ratio of 11.2% – the highest since 1945 – President Barack Obama may be forced to raise taxes within 2010 mid-term elections (5), a measure which is – needless to say – highly unpopular in the U.S.

The problem is that credit markets have begun to signal a risk of U.S. government default, which was something incredible just a few years ago (6). The idea of seeing the US defaulting - as Iceland unfortunately did on last October forced by the craziness of its banks and the firmness of its main creditor, the UK Government - is as threatening as a nightmare. Would the US citizens react so calmly and peacefully as the Icelandic people did? We do not know and we would not like to make the test.


Europe

As the OECD report showed in August, in the second quarter of 2009 the crisis slowed its pace in most European countries, which by the way actually kept falling. With two relevant exceptions: Germany and France, which came back to growth with a GDP higher by +0.3% than in the previous quarter. It is early to say that they are really recovering, since their annual GDP is still lower by respectively -5.9% and -2.6% compared with the second quarter of 2008, but they seem at least well on their way to do so. In the meantime, the Euro-zone interest-rate futures started to foretell that interest rates will go up earlier than expected, meaning that a recovery is possibly near (7).

As a matter of fact, both in Germany and France households didn’t get as much heavy mortgage or credit-card debt such as in the US, the UK and Spain (8) and this is by no means one of the reasons of their good reaction to the cure.

But if we focus on Germany, according to the analysts last spring’s upturn was caused mainly by government subsidies for scraping old cars and by employers keeping their workers on shortened hours instead of firing them (9).

The case of France is pretty similar. If we look at Europe as a whole, according to Eurostat, in June industrial new orders increased 3.1%, outdoing the November 2007 level. But bookings were 25.1% lower than in June 2008, showing that a lot of work is still to be done in order to come back to growth (10).

As for trade, the euro-zone countries actually showed their biggest trade surplus in two years in June, but levels of trade are still low compared with last year (11).

Eurozone bank lending to business and granting loans to households showed still low in July (12) when, as reasonably as shockingly, the Swedish Riksbank became the world’s first central bank to introduce negative interest rates on bank deposits (13).

In August the output of the private sector stabilized, ending a 14-months period of contraction, while manufacturing output showed a first increase since May 2008 (14).

In early September, the ECB decided to keep its key policy rate at 1%, pointing out that the timing of the exit strategy will be decisive to handle on the one hand the need to sustain the economy and on the other hand the aim of keeping inflation under control (15).

The problem with Europe is that, the US being its main export market, the only way to lead the recovery is developing the internal market as well as exporting more in Asia. But if on the one hand many European countries such as Germany are traditionally frugal consumers, on the other end China and India are more concerned on exporting and developing their own markets rather than lowering trade barriers.
With a social system much more stable than the US, the European Union has still to face deep differences between its members: if the euro protects the less virtous countries – mainly Portugal, Italy, Greece and Spain – Europe is not still a flexible and integrated market, with deep linguistic, legal and political barriers. Moreover, the weakness of Southern European countries can affect and weaken the more stable Northern European countries.
The Scandinavian countries, even though geographically more exposed to the weakness of the Baltic region, are definitely the model to follow: being highly competitive and flexible, and their makets being open to foreign investors, these countries have to grant high wages to workers, in order to keep the quality of their products high. Their social systems - which are collectively described as the Nordic Model - are characterized by high taxes, good public services and a fair distribution of richness.


Italy

Coming to Italy, the less ‘Scandinavian’ country of Europe, in the second quarter of 2009 GDP fell -0.5% compared with the first quarter of 2009. Italy seems tragically unable to join France and Germany in their effort to recover and lead global growth (16).

According to Confcommercio, private consumption will fall -1.9% by the end of 2009. Italian households began indeed to feel the pinch in late 2007, well before their neighbours. Since then, car spendings have fallen -15.1%, public transport -7.4%, electric household appliances -7.1%, books -9.4%, newspapers -11.3%. As for food, fish consumption has fallen -5.4%, while bread, pasta, fruit, eggs, milk and cheese have fallen -3%. Clothes have fallen -1.8%, shoes -2.2%. Barbers and hairdressers have fallen -5.8%. Private consumption has increased only in cell phones (+15.4%) gardening and house services (+15.4%) and house textiles (+4.7%) (17).

In Italy, as in any other Western country, unemployement is bound to rise in Autumn: according to CNEL 500,000 jobs are at risk, while CGIL foresees an unemployement rate of 9.3% (18).

According to Confindustria, it will take five years for Italy to recover eight years of lost GDP, while the European average is three year to recover the losses of the past four. The debt to GDP ratio is projected 117.3% in 2009, 123.2% in 2010 and 132.2 by 2014. (19).

While it becomes clear that deflation is not on its way (20), the inefficiency of Italian markets makes prices rebound more here than elsewhere (21).

Italians can hope that Germany, whose economy is bouncing back, increases its imports. But as Mr Enrico Cisnetto explains, it will take a very long time before Italy could benefit the slow restart of the European locomotive (22). The truth is that while the biggest European economies – Germany and France – are coming back to growth, Italy is sinking.

Here is the paradox of a country which, in spite of still being considered to be the seventh economy of the world, entered the crisis before the other countries and falls more than its competitors. Moreover, while you would expect prices to fall, in Italy they unreasonably grow more than elsewhere in Europe. The main problem with Italy is not the current crisis, even though it makes its problems tougher to bear.

As the chairman of the Banca d'Italia, Mr Mario Draghi, pointed out in a recent public speech: “The future of the Italian economy will depend more than ever on the solutions of its old problems. The structural problems of our economy, large and known for some time, take root in the most various fields: the formation of human capital, the efficiency of public administration, material and immaterial infrastructures, competition, territorial unbalances, the job market. Some of these problems lay also on contexts which are not economic, but which are able to influence heavily the performances of the economic system, such as social protection, justice and organised crime” (23). “Opening to capabilities, talents, worths and competition – added Mr Draghi – is the main mean to contrast corporations, unearned incomes, hangers on which bear heavily on the growth of the country” (24).

All the more reason, if an era of lower consumption is really next to come, Italy will find hard to reshape its output complying to the new context. As Mr Giuseppe Berta says, indeed, on the one hand the car industry could take advantage of it, producing mainly rather low emissions small cars. On the other hand, those sectors which traditionally focused on top spenders – such as fashion, jewelry, furniture and the Made in Italy as a whole – could suffer much more (25).

As a citizen as well as a taxpayer, I would expect that the Government would seriously work to handle the situation and remove the obstacles which prevent the country from growing. Unfortunately, instead of explaining how he will cope with the problem, the Italian Finance Minister Mr Giulio Tremonti decided to attack the economists on grounds that – as if they were magicians – they were unable to foresee the crisis and now they would be denying themselves. As a consequence, he said, they should keep silent for one year or two (26).

A solid group of Italian economists (27) answered the Finance Minister on the Corriere della Sera: “If [the Finance Minister] grant us the right to speak, we would like to debate with him: the events of Italian economy and its obscure troubles; the reasons which make him think that Italy is bound to recover better than the other countries, even though it fell into the crisis well in advance and in worst conditions. We would like to know his opinion on a stagnation, indipendent from the political cycle, which has been lasting for fifteen years. We would recall that during the years in which he was in charge of the economic policy (from 2001 to 2005, when his first economic programme promised ‘a new economic miracle’, and in 2008) Italian growth has been lower than European growth by more than 5%. In short, we would like to know how he will turn into reality his hopes for the future of the country.” (28).

When illness comes, nothing is worst than a patient that refuses the cure: the Italian Government is actually bringing the drunkard to drink. The risks for the future are clear: economic stagnation, debt default, hyperinflation, political turnmoils and the traditional Italian way to survive. The desparate emigration of the youngest generations, while at home a new dictator is found to replace the old one.


Is the Cure Really Working?

Let’s go back to the patients who are likely to take their medicines. Is the cure really working? Just partly, we must admit. Central banks and governments made an unprecedent effort to pour out liquidity on the financial markets, thus preventing a sharpest fall in world GDP as it actually happend during the Great Depression. Probably their effort has not shown all its strenght, because it takes time to make this money to turn into consumptions and investments.

The problem, anyway, is that the causes which determined the crisis have not been removed: the worldwide banking system is still as opaque and unfair as it was before. While the G20 is focusing on the more than right aim to cut down bankers bonuses, nothing has been done to prevent banks from hiding their balance holes and from spreading untrustworthy debts into the markets through securization (29).

As Mr Kenneth Rogoff explains, “The fact is that banks, especially large systemically imporant ones, are currently able to obtain cash at a near zero interest rate and engage in risky arbitrage activities, knowing that the invisible wallet of the taxpayer stands behind them. In essence, while authorities are saying that they intend to raise capital requirements on banks later, in the short run they are looking the other way while banks gamble under the umbrella of tax payer guarantes.” (30).

Here is a more effective explanation of the recent rise in the stock markets: “driving asset prices higher this year has been quantitative easing, whereby governments purchase assets, mainly bonds from the private sector. Because households in the Anglophone economies are so indebted, this has done little to stimulate consumption. Instead, it has put money into the hands of the investment institutions from which central banks have purchased bonds. This has been recycled into equities and commodities” (31).

It seems that we have forgotten history. The crisis was determined by the end of the double-bank system in 1999, when in the US the Gramm-Leach Bliley Act allowed commercial banks and investment banks to merge, leading to the current financial services industry.

The separation between commercial and investment banks had been set in 1933 by the Glass-Steagall Act, in order to prevent a Great Depression to happen again: after 66 years of difficult stability, it took only ten years for speculation to bring the world into disaster again.

Once re-established the separation between the two fields, investment banks should be forced to control risks rather than to speculate. As a consequence, the G20 should tighten regulation and Governments should consider the option of nationalising the investment banks, which at a certain extent has actually happened in the UK and the US. But the managers who failed have to be removed from their places and those who committed crimes must be severly punished. Because the world should know that if there is no justice, then there is no future.


The exit strategy dilemma

And here is the question that everybody makes. How the doctors will decide to stop the cure and raise the patient from bed before it falls asleep once and for all?

In August the vice-chairman of the Fed, Mr Don Kohn, declared that there is no contradiction between keeping interest rates low for long and taking care of inflation, altough this attitude may change if the recovery comes (32). As a matter of fact, last month the Bank of Israel was the first in the world to raise interest rates after the crisis went off, moving from 0.50% to 0.70%. With an economy rising at 1% last spring and inflation rising at 3.5% in July – the inflation long-term target being between 1% and 3% – this move was highly reasonable. Norway, Australia, Canada, India, Czech Republic and South Korea could follow quite soon if the recovery shows to be consistent (33).

Where is the problem, then? The problem is that we do not know the strenght of the supposed recovery, the time it will take to start and the inflationary reaction that could spread as a consequence of it. In order to kill inflation, the central banks could kill the recovery and bring the world back into the abyss of stagnation.

As Mr Nouriel Roubini explained, “policymakers are damned if they do and damned if they don’t. If they take large fiscal deficits seriously and raise taxes, cut spending and mop up excess liquidity soon, they would undermine recovery and tip the economy back into a stag-deflation (recession and deflation). But if they maintain large budget deficits, bond market vigilantes will punish policymakers. Then, inflationary expectations will increase, long-term government bond yields would rise and borrowing rates will go up sharply, leading to stagflation [recession and inflation] [...] In summary, the recovery is likely to be anemic and below trend in advanced economies and there is a big risk of a double-dip [W-shaped] recession” (34).

The Nobel Prize Paul Krugman is not afraid of inflation. The Fed has actually been giving large amounts of money to the banks and bank reserves have risen, but when they start to lend again, the Fed can stop providing liquidity: “If banks start to shift these reserves out of the deposits of the Fed and into the economy, then the Fed would need to soak up the money either through borrowing or by selling off bank assets it has acquired”. On the other hand, he says, the stimulus package can correct recent savage cuts in public services such as education, healthcare, fire-prevention and infrastructure: “Slashing these services made no sense from any point of view” (35).

Mr Alberto Alesina warns that “the truth is that nobody knows exactly what is going to happen within the next few months” explaining anyway that he thinks the worst is over: “I do not know, for instance, how the 787 million dollars fiscal stimulus [...] has really worked to stop the GDP from falling. That money has been appropriated, but it has been spent only partially. And it will take months for that money to really circulate and work out its effects... The good thing is that when these extra funds will be cut, there will be no great harm for the economy, as well as no great help came from them. The risk of keeping on spending too much public money would be incredibly higher for the economy” (36) .

Mr Luigi Zingales is not optimist: “The financial markets always anticipate the recovery and now there is a lot of liquidity and zero rates. But there are many elements of risk. Interest rates are so low that they could be deceptive. After the 2000-2001 crisis, Mr Greenspan kept the interest rate low for too much, and thus he inflated the mortgage bubble. Now the ECB is right in signalling that it will have to soak up liquidity, at the right time, in order to avoid inflation.” As for the impacts on the US and Europe, Mr Zingales says that “It could be even worst for the US, which pumped much more liquidity into the market. But the US have partly exported its recession abroad and this will be mainly a European problem. Once, the Americans supported the world economy with their private consumption. They bought German cars, Italian clothes, etc. Now private spending has collapsed and American economy is instead sustained by public spending, which does not support European export. Emerging markets are supporting global demand, but I do not think that this is enough for Europe.” (37).

Given for granted that the Fed – as well as the ECB and the BOE – is able to choose the right time to raise interest rates, in order to avoid a high inflation, the problem is courage. As Mr Alan Greenspan recently explained, indeed: “The Congress has almost never been favorably disposed towards a tightening of monetary policy [...] We do not recall the Fed ever receiving a letter from the Congress, imploring them to raise rates. Letters pressing for lower rates are too numerous to mention.” (38).

Thinking along the same lines, Mr Marc Faber foresees that the big crisis is ahead of us for four, five or ten years: Mr Ben Bernanke and Mr Jean-Claude Trichet will have to ration credit before it is too late. But real economy is still bad and to put a sick body under the shower you need lots of courage, since the sick could then fire its doctor (39).

Mr Warren Buffett is thus right in recalling how inflation is always the less difficult way out for politicians: in order to cut down a huge public debt, the Congress should sooner or later raise taxes or cut down expenses. But MPs, thinking on their possibilities of re-election, will probably prefer to let inflation rise on its own: this measure does not need to be voted, indeed, and no single MP can be seen personally responsible for it (40).

Mr Claudio Scardovi and Mr Stefano Gatti recall how hyperinflation worked in Italy between 1946 and 1947: coming out of World War II with an incredibly heavy public debt, Italy experienced an annual inflation of about 180%. Inflation was brought under control in a few months, but only after having almost erased the public debt. Even though this scenario is not the most probable, as the two economists admit, it is as well very unlikely that governments will be able to save money and cut public debts by raising taxes and lowering public expenses (41). This means that inflation will come back and do its work: shifting money from creditors to debtors.

The fears of inflation, which is not imminent but clearly possible and highly probable, are shown by commodities, gold, equities and long-term bond yields moving all higher, as they actually did in early September (42).

The ghost of hyperinflation is hiding behind the door. We do not know when it will come out, but we can reasonably fear it. And when it will, the weakest social groups will be strongly affected. Even if they keep on spending their whole life in supermarkets and shops, those poor unready souls who now seem to ignore the problem will unfortunately wake up in a strongly different world.


Why Things Will Never Be the Same Again

The US and the UK, whose spending fuelled previous world growth, are suffering balance-sheet recessions: their consumers realized that they are too indebted and saving is now their main priority (43).

If China and Europe do not increase their internal demand, global demand will slow down as soon as US public stimulus expires (44) .

According to the IMF, world GDP should fall -0.9% in 2009 and rise +2.5% in 2010. At the end of 2010, the world would be +1% richer than it was in January 2009. But this is not true for the most developed countries, which will be -4% poorer than before (45).

As Mr Tommaso Padoa Schioppa explains, the ties set by the economy, society and environment should push us to hope for a moderate world growth, which should be led by emerging countries in Asia and Latin America. This growth should be kept under control by a worldwide system of laws, taxes, expenses, incentives and environmental rules in order to make growth sustainable and really possible (46).

Most of us witnessed the world financial crisis and the following recession casting our minds back to Economics, the masterpiece of Professor Paul Samuelson which has nourished several generations of students. The more we went back to his plain and effective explanations, the more we had to be worried about the future. Since we still believe in that book, we think that rather than minimizing the problem, it would be better to be fully conscious of it and work to remove its causes and to face its consequences before it is too late.

As for Professor Samuelson, is old tongue keeps on spreading words as young as only truth is: “The Great Depression was more intelligible than the current crisis: that one was a traditional economic crisis; this one is still a crisis about whose nobody knows the real ramifications. The ratings have no meaning and nobody is able to keep the market under control. [...] We are dealing with a system which is based on sheer lies: even if you make control tools, without transparency you do not control anything. [...] All these rescue operations increase the monetary base. The day will come when these amounts of money – which had been brought to the USA at barely inexistent rates by countries such as China and Japan – will go back there or will be invested in other markets. Maybe it will not happen neither tomorrow nor in the following two or five years, maybe between 2015 and 2020, but at some time it will be understood that the American consumers will not be able to spend as they did in the past. At that point, a muddled escape from the dollar will take place, with catastrophic consequences for the economy and world security. I fear that we have to get ready for an era of great social tumults on a worldwide scale” (47).


"'Even so, I want you to know, brother Sancho,' [said] Don Quixote, 'that there is no memory that time does not erase, no pain not ended by death.'
'Well, what misfortune can be greater,' replied Panza, 'than waiting for time to end it and death to erase it? If this misfortune of ours was the kind that could be cured with a couple of poultices, it wouldn't be so bad, but I can see that all the poultices in a hospital won't be enough to set us straight again'.
'Stop that now and find strenght in weakness, Sancho' Don Quixote responded, 'and I shall do the same'".

(Miguel de Cervantes, Don Quixote, I - XV, translation by Edith Grossman).

_________

(1) In doing so, we will focus our analysis on the data released by the International Monetary Fund: "Contractionary Forces Receding But Weak Recovery Ahead", World Economic Outlook Update, July 8th 2009. Given that China (+7.5% GDP projected in 2009), India (+5.4%) and the main emerging markets are still growing and that the future is shifting there as it did at the end of the XIX century - when it moved from France and England to the US and Germany - it is better indeed to check at the US (-2.6%), Europe (-4.8% for the Euro Area) and Italy (-5.1%). We would not talk about Japan, which recently showed a robust quarterly growth of 0.9%, while its projected GPD for 2009 is still a deep -6.0%. Even if the recovery remains vulnerable, because export demand and fiscal stimulus by the government could not last (ft.com), after a long time of stagnation Japan is probably finding its way to become the financial capital of Asia as the United Kingdom did in Europe during the XX century (ft.com).
(2) "Les gens, eux, ne s'ajustent pas... Ni les gens ni l'ensemble des agents économiques pour qui les prix ne sont ni des variable d'arbitrage (fromage ou dessert?), ni des enjeux de spéculation (ça va monter ou ça va baisser?), mais des factures qui déterminent les coûts de leurs activités, le bien-fondè de leurs projets d'investissement, les revenus dont ils peuvent disposer, et finalement l'ensemble de leurs conditions de vie." Laurent Cordonnier, , "Est-ce la fin du 'laisser-faire'?" Le Monde Diplomatique, September 2008, pp. 6-7.
(3) Chung, Joanna, and Guerrera, Francesco, “Number of US Banks at Risk Soars”, Financial Times, August 28th 2009, page 2.
(4) Solomon, Deborah, “White House Projects Bigger 10-year Deficit”, The Wall Street Journal Europe, August 26th 2009, page 4.
(5) Rampini, Federico, “Deficit americano nuovo spettro dei mercati”, la Repubblica, August 24th 2009, page 15.
(6) Hilsenrath, Jon, “Fed Talks Aim at Threat of Deficits”, The Wall Street Journal Europe, August 24th 200, page 1.
(7) Koeppen, Nina and Roth, Terence, “Europe Outlook Brightens”, The Wall Street Journal Europe, August 14th 2009, page 1.
(8) Walker, Marcus and Villars, David-Gauthier, “Europe Moves to Join Asia-Led Recovery”, The Wall Street Journal Europe, August 14th 2009, page 3.
(9) Smith, Geoffrey T., “ECB Is Wary on Europe Despite German Upturn”, The Wall Street Journal Europe, August 26th 2009, page 2.
(10) Winning, Nicholas, “Euro-zone orders rise, suggesting output growth”, The Wall Street Journal Europe, August 25th 2009, page 2.
(11) Winning, Nicholas, “Eurozone trade surplus increased in June”, The Wall Street Journal Europe, August 18th 2009, page 2.
(12) Atkins, Ralph and Pimlott, Daniel, “Lending Fears Dent Recovery Prospects”, Financial Times, August 28th 2009, page 1.
(13) Ward, Andrew, and Oakley, David, “Central banks keep close eye on Swedish negative rates move”, Financial Times, August 28th 2009, page 23.
(14) Winning, Nicholas and Parkinson, Joe, “Output stabilizes in euro zone”, The Wall Street Journal Europe, August 24th 2009, page 11.
(15) Emsden, Christopher and Roth, Terencee, “ECB Holds Rate Steady”, The Wall Street Journal Europe, September 4 2009, page 2.
(16) De Rold, Vittorio, “L’Ocse vede la ripresa, Italia in ritardo”, Il Sole 24 Ore, August 20th 2009, page 5.
(17) Nese, Marco, “Dal pane ai libri, tagli ai consumi. Per i telefonini continua il boom”, Corriere della Sera, August 18th 2009, page 5.
(18) Petrini, Roberto, “Bce: ‘La crisi non è finita’. Commercio, allarme lavoro”, la Repubblica, August 17th 2009, page 17.
(19) Dinmore, Guy, “Italian Business Doubts Some Sectors Will Recover”, Financial Times, September 10th 2009, page 5.
(20) Smith, Geoffrey T., “Euro-zone declines in price are slowing”, The Wall Street Journal Europe, September 1st 2009, page 2.
(21) Bozzo, Gian Battista, “E per la Bce è la conferma che non c’è stagnazione”, il Giornale, September 1st 2009, page 18.
(22) Cisnetto, Enrico, “Ma quale svolta”, Il Foglio, August 14th 2009, page 2.
(23) Draghi, Mario, “Istruzione, lavoro, parità Nord-Sud: tre leve per ripartire”, Il Sole 24 Ore, August 27th 2009, page 3.
(24) Mania, Roberto, “Draghi: la crisi sta rientrando ma molte imprese sono a rischio”, la Repubblica, August 27th 2009, page 6.
(25) Berta, Giuseppe, “Non consumeremo mai più come prima”, La Stampa, August 17th 2009, page 25.
(26) Mania, Roberto, "Tremonti: 'Anche ai lavoratori parte degli utili delle imprese'", la Repubblica, August 29th 2009.
(27) Giorgio Basevi, Pierpaolo Benigno, Franco Bruni, Tito Boeri, Carlo Carraro, Carlo Favero, Francesco Giavazzi, Luigi Guiso, Tullio Japelli, Marco Onado, Marco Pagano, Fausto Panuzzi, Michele Polo, Lucrezia Reichlin, Pietro Reichlin, Luigi Spaventa.
(28) “Gli economisti e la crisi: ‘Ecco perché non possiamo restare in silenzio’”, Corriere della Sera, September 3rd 2009, page 14.
(29) Penati, Alessandro, "Per le banche è di nuovo festa", la Repubblica, September 12th 2009.
(30) Rogoff, Kenneth, "Why We Need to Regulate the Banks Sooner, Not Later", Financial Times, August 19th 2009, page 7.
(31) Plender, John, “Why the Policy Response to the Financial Crisis Falls Short”, Financial Times, August 19th 2009, page 22.
(32) Guha, Krishna, and Hole, Jackson, “Bankers content to keep rates low”, Financial Times, August 24th 2009, page 3.
(33) Sorrentino, Riccardo, “Israele inaugura il rialzo dei tassi”, Il Sole 24 Ore, August 25th 2009, page 11.
(34) Roubini, Nouriel, “The risk of a double-dip recession is rising”, Financial Times, August 24th 2009, page 7.
(35) Krugman, Paul, “Nobel Economist Calls for More Public Spending for Real Economy”, Financial Times, August 24th 2009, page 7.
(36) Grassia, Luigi, “‘La ripresa arriverà ma soffriremo ancora’”, interview with Alberto Alesina, La Stampa, August 18th 2009, page 3.
(37) Grassia, Luigi, "Ora fa paura l'inflazione", interview with Luigi Zingales, La Stampa, August 14th 2009, page 3.
(38) Wessel, David, “U.S. Economy Is Better, but Not Healthy Yet”, The Wall Street Journal Europe, August 13th 2009, page10.
(39) Fubini, Franco, “Il fantasma della nuova bolla e il dilemma dei tassi da alzare”, Corriere della Sera, August 19th 2009, page 3.
(40) Buffett, Warren, “L’America ormai è fuori dall’emergenza ma attenti al deficit”, la Repubblica, August 20th 2009, page 6.
(41) Scardovi, Claudio and Gatti, Stefano, “Dopo la crisi spunterà lo spettro superinflazione”, MF, August 21st 2009, page 7.
(42) Oakley, David, “Sign of the Times as Deflation-Inflation Debate Rages”, Financial Times, September 9th 2009, page 27.
(43) “World Recovery Is Not Yet in The Bag”, Financial Times, August 25th 2009, page 6.
(44) Munchau, Wolfgang, “How Toxic Finance Created an Unstable World”, Financial Times, August 24th 2009, page 7.
(45) Feltri, Stefano, “La crisi sta davvero finendo? Le tante ragioni per essere pessimisti”, il Riformista, August 12th 2009, page 1.
(46) Padoa Schioppa, Tommaso, “Utopie dannose e utopie utili”, Corriere della Sera, August 19th, 2009.
(47) Pontoniere, Paolo, “Ma il mercato resta fuori controllo. Colloquio con Paul Samuelson”, L’Espresso, September 17th 2009, page 124.

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