Thread by @AshokaMody

In summer 2018, I predicted that Italy would fall into recession later that year. World trade was slowing rapidly--and by my back-of-the-envelop "model"--a recession seemed very likely.
1/8
independent.co.uk/news/business/…

I protested against Mattarella's folly--his attempt to replace an elected government with a technocrat. Financial markets also reacted adversely, knowing that Matteralla's actions would only raise temperatures and elevate uncertainty.
2/8
bloomberg.com/opinion/articl…

Once Italy fell into a recession, the ECB, I said, would be able to do little to help Italy.
3/8
marketwatch.com/story/italy-ne…

Once Italy fell into recession, its fragile banks would once again be in trouble, possibly in serious trouble.
4/8
bloomberg.com/view/articles/…

Hence, I argued that the only way to prevent a debilitating recession was fiscal stimulus. The Italian government's proposed stimulus was not crazy. The size and composition should be debated, I said, but not the fact that Italy needed a stimulus.
5/8
bloombergquint.com/politics/italy…

European Commission leaders reacted with more shrill warnings, raising the temperature and scaring markets. Austerity had become part of the official European identity. Common sense and the likely perverse rise in debt burden were disregarded.
6/8
prospectmagazine.co.uk/economics-and-…

Well, Italy is in a technical recession. Indeed, with continuing slowdown in world trade, the eurozone is in a synchronized slowdown.
If my logic in forecasting an Italian recession was right then that logic says Italy's reception will deepen.
7/8.
theguardian.com/business/live/…

If my logic is right, Italian banks will wobble again, possibly mightily. Watch MPS. Government debt-to-GDP will rise. Banks and the government could interact virulently in a "doom" loop. The ECB will be able to do little to help.
The race is on, make your bets.
8/8.