Today I was interviewed by a Danish journalist about the Italian banking crisis (read the interview here). He asked me a very good question that I think is highly relevant for understanding not only the Italian banking crisis, but the Great Recession in general.
The question was: “Lars, why is there an Italian banking crisis – after all they did NOT have a property markets bubble?”
That – my regular readers will realise – made me very happy because I could answer that the crisis had little to do with what happened before 2008 and rather was about monetary policy failure and in the case of the euro zone also why it is not an optimal currency area.
Said, in another way I repeated my view that the Italian banking crisis essentially is a consequence of too weak nominal GDP growth in Italy. As a consequence of Italy’s structural problems…
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Utopia, you are standing in it! 
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