Actual Headline: "Italy Approves Austerity Plan in Confidence Vote"

Presumably What Italy Is Confident About is that the Economy Will Contract

Italy and Greece are alike in many ways, particularly in their history and culture.  Now they are trying to be alike in their economic policy.  In order to reduce the budget deficit the Greek policy of austerity was introduced.  It didn’t allow the country to meet deficit targets, but it did result in a contraction of the economy, high unemployment, civil unrest and the prospects of more of the same to come.

Now Italy, apparently wanting to continue the historical trend of getting its culture and history from Greece is adopting similar policies. 

Lawmakers passed the confidence vote, which virtually assures passage later in the day of the package of €54 billion ($74 billion) in tax increases and spending cuts over the next three years, with 316 votes in the 630-member lower house. The final vote is scheduled for late Wednesday but its outcome is no longer in doubt.

It turns out there is at least one European Economist who knows basic macro economics.  Citing Société Générale economist Vladimir Pillonca the news said that



Agence France-Presse/Getty Images

Italian Prime Minister Silvio Berlusconi

reacts during a session of the

 Italian parliament Wednesday



He expects that debt to be 117% of gross domestic product in 2013, barely down from 119% today, even though the fiscal cuts are twice as large, because the austerity is likely to push Italy into recession by the end of next year, lowering GDP and so keeping the debt ratio high.

The economist went on,

The irony, Mr. Pillonca said, is that while the euro zone's sovereign debt crisis has focused attention on public finances, "the budget deficit is simply not one of Italy's many problems."

Growth is the main challenge for Italy, where household incomes have in the past decade grown only half as fast as GDP, which itself expanded at the euro area's slowest rate.

So, Europe’s march towards non-lethal suicide continues.  Film at 11.