Earlier PIIE research examined whether rising interest rates might unleash a debt crisis in Italy. The answer was "no," under two conditions: First, that rising interest rates reflected economic recovery; and second, that the Italian government would be prepared to cooperate with European authorities—the European Union, the European Stability Mechanism (ESM) and the European Central Bank (ECB)—to manage a loss of market confidence. Ten months later, these conditions no longer hold. Political backlash to slow growth and immigration has produced the least cooperative government imaginable, a coalition between the ... (full story)