The EU vs. Italy. Brussels has kicked off the formal process of taking Italy’s new populist government to task. On Thursday, the European Commission sent Italy a warning letter asking it to make changes to its draft budget plan by Oct. 22. The document called the plan, which would hike Italy’s fiscal deficit and boost welfare spending, an unprecedented deviation from EU fiscal rules. If Italy doesn’t comply, Brussels could effectively reject the budget by Oct. 29. Things will only get trickier from there. If Italy takes a hard line and its government can survive the resulting standoff with the EU, it will put Brussels in a difficult position. If the EU gives in, it will undermine its own authority. But if it tries to treat Italy the way it did Greece, there might not be much of an EU left to govern.
A long time coming. China’s economic crunch is starting to show up in its official data. Growth in the third quarter dropped to 6.5 percent – the lowest level since the 2008 g