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The Editorial Board of the Washington Post on the challenges facing Mario Monti, the new prime minister, and the Italian people in 2012-2015.

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Moody's lowered long term ratings on Unicredit, Intesa Sanpaolo, Banco IMI by 2 notches to Baa2. Moody's recently lowered Italy's rating to Baa2. Moody's cited the high direct exposure of Italian banks to sovereign debt of Italy and risks that the Italian government may not be able to provide financial support to Italian banks in the event banks need help.

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The head of Italy's statistics agency Istat, Enrico Giovannini, says Italy's manufacturing sector has performed quite well, and the problem is with the services sector, in lagging sectors such as transport, communications, tourism, retail and social services. The manufacturing sector is only one sixth of the economy. He says productivity is poor and there is lack of investment in human capital and information technology for the services sector. IT's contribution to growth in Italy's labor productivity is the lowest in Europe, according to the European Investment Bank. Italy's total efficiency gains declined one half percentage point from 1995-2005. Retail and tourism sectors lack the needed productivity gains. This means actions taken by prime minister Monti to change labor laws and related changes will not be enough to generate confidence in the economy and economic growth. Giovannini says investment in human capital and productivity is badly needed, and shifting education and training to where there are new job opportunities....

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The European Central Bank left all its interest rates unchanged on September 7, 2016. No changes were made to asset purchase program, which will run until March 2017 or beyond as needed. The ECB left interest rates at 0% for its lending operations, and for overnight deposits at 0.4%.  Inflation is a special concern, as inflation was at 0.2% for August. Business activity and investment in the EU and in the U.S. is weak, and Brexit is still a concern.

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Chancellor Merkel's now widely quoted words were made in Munich on May 27, 2017, after a NATO summit meeting in Brussels and a Group of 7 meeting in Italy, in which she was disconcerted by U.S. president Trump's positions on NATO, Russia, climate change, and trade. These words "the times in which we could rely fully on others - they are somewhat over." Merkel added "This is what I experienced in the last few days." After the election of Emmanuel Macron in France, Merkel expressed great relief at the outcome of the French election with Macron winning about two thirds of the vote, setting the stage for the election in Germany after several months of difficult watching and waiting. Now there is new confidence in Germany shaping its own future, with France and the rest of the European Union without Britain. Merkel says she "experienced this" meaning that she had undergone a transformation in these few months, and visibly in the last few days. She was also sending a message to Germans and people of the European Union - "we have to know that we must fight for our future on our own, for our destiny as Europeans." This also complements tactically to form the approach of Germany and France at the leadership of the EU, as French president Macron said at the end of the Group of 7 conference that multilateralism was intact, and the U.S. and EU shared many common goals.   ...

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Laurence Peter of the BBC News describes a meeting of EU leaders in December 2016. The new Europa building with its space egg shape will be the location of the next summit in 2016, adding to a sense of history that the EU idea has witnessed since the 1950's, even optimism about far it has come at a time of a few setbacks.  He points out that Theresa May was not without persons to talk to at the meeting, though some video clips showed her looking lonely. EU president Martin Schulz said he was emotional seeing students crying after the Brexit vote, but that it was time to find solutions and not be emotional today. Lunch was offered at the meeting by Spain and Portugal, to mark the 30 years since they joined. People forget how much the European Community meant to the two countries after decades of suffering under fascist dictatorships- it meant new hope and an opportunity to set things right. Problems facing the EU today include, the frustration at the carnage in Aleppo, Syria, how to deal with Britain and Brexit, setting up an asylum system that will work, dealing with Ukraine and Russia without making the situation worse, and remaining concerns about the Greece debt crisis. ...

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The strong showing by National Front leader Marie Le Pen and her focus on the economy in France, and the lack of growth with austerity measures, is likely to change the way the eurozone countries respond to the deficits and German insistence on austerity cuts. Marie Le Pen's economic positions for more government spending to reduce unemployment and provide additional benefits is closer to Socialist candidate Hollande's position. The right wing party in Holland also voiced the same concern recently- that it did not want to hurt Dutch pensioners with austerity cuts- when it refused to support the Dutch government leading to its collapse and new elections.

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New rules enacted after the Reserve Primary Fund broke the buck in the 2008 financial crisis would help prevent another problem for money market funds. Money market funds must keep 30 percent of their holdings in securities that can be converted into cash in 7 days. Another factor mitigating the impact of U.S. money market funds holding about 50% of their assets in European bank debt, is the action taken by the money market funds to reduce their holdings of this debt and shorten maturities. According to S&P estimates of the 500 U.S. and European money market funds rated by S&P, 80% of European bank holdings is limited to 3 months or less, and 95% to 6 months or less. Vanguard's chief investment officer says the situation would have to be one of a very rapid decline, and not just Greece but also impacting Spain and Italy for these debt holdings to result in losses for U.S. money funds.

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Sergio Marchionne, CEO of Chrysler Group, is known to take personal responsibility for getting it right for the small details of quality of Chrysler cars. When one test showed a defective door handle for a revamped Dodge Charger engineers reported on the status of the fix every couple of hours to Marchionne. He believes that if one wants to run the business right one has to get involved at this level. Marchionne has 23 people reporting to him at Chrysler and 25 more at Fiat in Italy. For Marchionne this has helped the two companies to work closely. Chrysler under Marchionne has spent $1.1 billion on revampig 14 models which are now in production. This was the only way to boost sales, as customers did not want the old models. His way to judge the performance of the revamped 2011 Jeep Grand Cherokee was to drive it 3,500 miles through Quebec, New Brunswick and New England.

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Italy will get 6 billion euros in savings from lower interest rate charges on its debt as a result of lower borrowing costs in capital markets. Italy's borrowing costs were at record low of 2.08% for debt issued in 2013. The new budget fails to provide relief in payroll taxes that would help reduce high youth unemployment. A payroll tax cut will increase take home pay of lower income workers by about 15 euros a month. Carlo Cottarelli, IMF expert, has the task of doing a spending review to cut 32 billion euros in public spending within 3 years. The Letta administration is looking at which tax credits to eliminate. These tax breaks range from aftershool sports programs and veterinary costs and amount to 130 billion euros a year. Automatic measures to reduce spending are part of recent Italian legislation and act to keep spending down. limits in the event the political system fails to produce agreement.

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Unemployment in Spain edges up to 23.6% with 4.75 million unemployed in March 2012.

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This report from Italy by Jason Horowitz of the NYT, shows the Five Star Movement as having emerged as Italy's leading political party, and making efforts to tackle its inexperience in politics with charges from other parties that its candidate for prime minister Mr. DiMaio, 31, is a complete novice. Here he is shown to have inflated the qualifications of a candidate with a pro-EU background, Italian Ms. D'Alessandro who lives in Berlin, Germany. She is one of many candidates from the professional class recruited by the Five Star Party to polish its image and show it is capable of governing. Ms. Alessandro was presented in the Southern region of Italy by Di Maio as an "economist" and someone close to Merkel's CDU. In elections on March 4, the governing Democratic party is presenting older candidates in their fifties with family and political connections in contrast to the young people like Ms. D'Alessandro who is only 27 years old with a masters degree in public policy from a German University.  The Five Star Movement hopes to gain from Italy's proportional system and the voter dissatisfaction with existing parties. A similar situation led to the untested and untried En Marche Movement in France winning the national elections. A separate report in the Economist magazine shows the Five Star Movement retaining its popularity even after other parties accused it of inexperience, improper financial dealings of candidates, plagiarism, anti-immigration views of specific candidates.  ...

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S&P downgrades France's credit rating from AA+ to AA. Government spending at 56% of GDP remains at the second highest level in the EU, second to Denmark. President Hollande has reduced the deficit mainly by raising taxes which is seen as having reached its limit. The French economic growth was at 0.5% for the second quarter of 2013 compared to the first quarter, unemployment is high at 11.1%.

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Manuela Mesco's interview with Giovanni Ferrero, CEO of Italy's chocolate company, Ferrero SpA, in Nov. 2013. Ferrero outlines his plans to double the company's sales by expanding outside of Europe where it now gets 80% of sales. Euromonitor estimates show Ferrero with 8% share of the world chocolate market compared to Nestle's 12%. Ferrero SpA's sales are 8 billion euros for 2013. The company started with a small store in Alba, near Turin, Italy in 1942. Its hazelnut and chocolate spread Nutella is a popular product in Europe. Ferrero has expanded by about 45% since 2006, with rising sales of the Nutella and Kinder brands. A path Ferrero plans to take is expanding sales in China and other Asian markets, following up on the popularity of its Rocher brand of chocolates in China. The problems Ferrero faces in the U.S. is the presence of big established competitors Hershey and Cadbury, a fragmented distribution chain, and the uphill task of convincing peanut butter users to try Nutella for breakfast, and snacks. Ferrero is a family owned company and Giovanni Ferrero plans to keep it that way, seeing new opportunities in the chocolate and food market that the Italian company can take advantage of. In doing so he hopes to generate enough growth to compete effectively as an independent family owned company with Nestle and Hershey....

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A look at the automobile market in the U.S. in October 2014 shows a large increase in SUV sales. Sales of the Jeep brand increased by over 50%, and Dodge Ram by 33% in Oct. 2014, compared to the month in 2013. Sales of the Honda Civic declined by 9%. Chrysler gained market share reaching 13.3%, with sales concentrated on the RAM and Jeep brands. Japanese makers had about 35% of the market, compared to about 46% for American brands Ford, GM and Chrysler. GM had 17.7% share in the U.S. market, Ford 14.7%, Toyota 14.1%.