Italy means risk-off yes, but contagion will remain limited

A quick follow up here on Italy just for the more financially-minded of you. I don't see anything existential happening in the near-term because of Italy. We are seeing a flight to safety and that supports the US dollar and safe assets like US government bonds or German Bunds. But Italy is not going to have much further contagion given where we are in the business cycle.

If you look at the rest of the periphery in Europe, Spain's gross domestic product rose by 2.9% year-on-year in the first quarter of 2018. Portugal's grew 2.1%. Ireland's last numbers I have are for Q4 2017 and that number is 8.4%, though the accounting is problematic. Even the Greek economy grew 1.9% in 2017.

That's a very different position than we were in in 2009, when (Dubai World and later) Greece started the first ...


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