Europe’s Weakest Link: Why Italy Could Reignite The European Crisis

“The capital outflow from the emerging markets is proving as destabilizing as the previous inflows. Pundits can talk about currency wars all they want, but the real issue is the ability to cope with volatile capital flows, which is the price of integration in global economy.

In fact, the real surprise is the limited resort to outright protectionism, and surely nothing on the scale of Smoot-Hawley et.al. That fact that the World Trade Organization has been busy hearing cases is not as much a sign of insipid beggar-thy-neighbor policies as it is the functioning of a conflict-resolution mechanism to prevent a tit-for-tat escalation of a genuine trade war.”

 

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