Italy’s Fanciful Coalition Draft Draws Investors’ Incredulity—For Now

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Not so long ago a document as radical as the draft Italian coalition program that surfaced on Tuesday night would have sent the markets into meltdown, The Wall Street Journal reported. It revealed that the 5 Star Movement and the League were still discussing this week proposals that included a demand that the European Central Bank cancel €250 billion ($297 billion) of Italian government debt. They sought tax cuts and welfare spending increases that could raise the government deficit by as much as 6% of gross domestic product, and wanted to renegotiate Italy’s contributions to the European Union budget and change the bloc’s treaties to allow countries to quit the euro. The draft deal, leaked to Huffington Post Italy and now out of date, both parties say, was a recipe for eurozone turmoil. Yet the market’s reaction was remarkably muted. Read more. (Subscription required.)