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A decision by management of the Ginori porcelain tableware company near Florence, Italy, to compete at the low end leads to its bankruptcy. Ginori was considered a prestigious maker of porcelain tableware since 1735, and hired top designers. The decline in formal dining led to a decline in demand. The decision to move to the low end is considered by workers to have been a mistake as low end Chinese imports have dominated the market in Italy. The difficulty of competing at the low end and the need to come up with a product and technological advantage that commands a higher price is a challenge facing Italy's manufacturing industry.

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Spain's Constitutional Court suspended a planned Nov. 9 referendum in Catalonia. Arturo Mas, the head of the regional government of the Convergence and Union coalition, says he will go ahead with the referendum. One possibility is for new elections to be called in Catalonia, in which case a party Republican Left more determined to win independence could be elected. The political uncertainty is likely to affect Spain's recovery from a long recession and high unemployment. About 25% of Spain's exports come from the Catalan region. A large clock in the centre of Barcelona does the countdown of hours till Nov. 9, 2014, and Catalans are planning more unity demonstrations.

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Faces in the continuing foreclosure crisis in Spain in 2014 include Xacobo Rodriguez and his mother in Madrid. Foreclosures continued at a high rate in Spain into 2014. The Bank of Spain reports that 38,961 primary residence homes were foreclosed in 2013, a decline of only 1% from 2012. If second residences are included the number of foreclosed house increased by 11% in 2014. This is six years into the housing crisis in Spain with no end in sight. The government has declared a 2 year moratorium on eviction of families that meet hardship criteria- a member of household disabled, expired unemployment benefits, very young children. A Social Housing Fund with 6000 units which provide places to live was created but only a small number of units are given out so far. The social advocacy groups say not enough is being done. The government points out that 90% of houses taken by banks were unoccupied at the time. Bank Association spokesperson says there is an understanding of the depth of the crisis with 6 million people out of work, that action is taken to reduce the stress on homeowners. And point to the data showing only 1% of homes were taken by banks in 2013 of the 6 million home mortages outstanding, with one third of these done with an agreement to have debts erased for the homeowners. Women and immigrants are affected to a larger degree, according to Human Rights Watch. Social housing in Spain is only about 2% of the housing stock making things more difficult, by comparison it is 17% in France, 21% in the UK, 35% in the Netherlands, according to Human Rights Watch. Meanwhile the Spanish government of the Partido Popular under Mr Rajoy, continues a policy of trying to be responsive to the homeowner crisis, and at the same time helping the banking system recover following a $56 billion bailout loan taken by Spain from the European Union. ...

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Italy's debt sustainability analysis shows how critical it is to improve prospects for growth and competitiveness and avoiding any lowering of growth from current forecasts. Equally critical is lowering of borrowing rates. And vital to setting the right tone for this is the future of the Monti government and nature and committment of the new government after spring 2013 elections.

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Bloomberg Business Week's Matthew Winkler interviews Greece's prime minister George Papandreou.

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

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New Democracy has 22% and Pasok 18% in polls before the Greece elections. A New Democracy-Pasok coalition is one possible outcome of the election. New Democracy leader Samaras sees a coalition government as tying his hands for policy actions, and feels he can win another election if it took place later this year. By then the thhinking goes Greeks will have vented their anger and will be looking for a stable government. Both parties have seen supporters shift to fringe parties with 22% unemployment and rising taxes.

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Athens is far from being her normal self with high unemployment, shuttered shops and periodic violence. Unemployment at about 23% and the worsening economic crisis is leading to dwindling support for the main parties Pasok and New Democracy. Support is growing for fringe parties, including neo-nazi type parties. The mood is shifting in Europe, with the presidential elections in France and the likely election of Socialist candidate Hollande, who has described the EU's handling of Greece as deplorable. New elections will take place later in 2012 in the Netherlands.

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With high unemployment at 11% in France, only 41% of the people in a Pew Research Center poll gave favorable impressions about the European Union. This is down from 60% in 2012. In Germany 60% of those polled gave a favorable impression of the EU in 2013. The number remained steady in Britain at about 43%.

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Foreign investors make up only 7% of Russia's domestic bond market compared to 30% for similiarly rated Mexico. Russia is rated BBB by Standard & Poor's. Moody's Investors Services rating is one notch higher. The yield on Russia's 10 year government bond is about 7%, compared to 4.35% for Italy and 1.8% for U.S. Treasurys. Russia's deputy finance minister, Alexei Moiseyev, says he hopes changes will raise the foreign holdings to about 33%. Martin Gilman, a former IMF representative to Russia in 1998, and now a professor at Moscow's Higher School of Economics, says rates will go higher because of appreciation in the ruble and large monetary easing in Europe and the U.S. The situation has changed completely from the 1998 Russian default on debt payments of $160 billion. The IMF estimate is for overall debt to be about 11% of GDP by the end of 2014.

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Krugman questions whether the assumptions behind the austerity policies are true- that they would inspire confidence in economic recovery, or that in the absence of austerity policies borrowing costs would go through the roof. The recent events in Holland with the collapse of the government in the Netherlands- when a party leader supporting the government said he did not want to hurt pensioners in the Netherlands just to satisfy German opinion- and the mood in France with economic anxiety vote going to Marie Le Pen and Francois Hollande in the first round of presidential elections, shows that very little confidence has been created. High unemployment and economic anxiety are leading to a reappraisal of austerity cuts that depress the economy and reduce tax revenues, but Krugman says no changes are taking place to correct these policies. This is true for Spain with its high unemployment, and Britain which now has two quarters of negative growth.

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Speaking at the annual meeting of Italy's banking association on July 11, 2012, prime minister Mario Monti calls the struggle he is leading to change the economic performance of Italy, and especially against structural vices in the economy, "a very tough war." He added that the plan to reduce Italy's borrowing rates with the agreement to use the ESM or EFSF, the EU's rescue fund, "must be consolidated both in its substance and the way it is communicated." Bank of Italy governor, Ignazio Visco, said the spread between Italian and German bonds and the borrowing rates approaching 7% for Italy compared to about zero for Germany and France, were "far above what would be justified by the fundamentals of our economy." Deputy finance minister, Vittorio Grilli, is taking over the role of finance minister which Monti had assumed earlier. Monti will lead a new economic and financial policy committee which includes Mr. Grilli and development minister Corrado Passera.

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Prime minister Renzi of Italy resigns after defeat in a referendum to change the constitution. Renzi had said he would resign if there was a "no" vote on constitutional changes to make it possible to pass further reforms. The results show the "yes" vote with about 41% of the vote, and 59% saying "no." About 65% of 47 million registered voters voted. The referendum called for cutting the size of the upper house Senate eliminating some constitutional bodies, and increasing powers at the federal level. Renzi may have made the mistake of making the vote for or against constitutional change a vote for his democratic left party, and not understanding the depth of public skepticism of established parties. Parties such as 5 Star M5S  have appealed to a public skeptical of how economic reforms would help bring more prosperity to the middle class, and a desire to try out new options. Virginia Raggi of M5S was elected mayor of Rome recently and Renzi's referendum move similar to the way prime minister Cameron moved for a referendum on an old issue of euroskeptisim, may have failed to grasp grassroots changes. The irony is that in 2014 elections to the European parliament Renzi's democratic left party won 40% of the vote and was seen at the time as a success, and the same size vote in the referendum is seen as a failure. In a referendum all other parties votes are added together from right to left parties and new parties. In the Brexit vote the Labor party "no" vote including Labor voters who never voted added to the votes of Brexit supporters and the newer UKIP party giving Brexit the slight edge needed. The singular feature of the trend is that working class voters are combining with right leaning voters to upset established parties, in the midwestern U.S., in the north of England, and in the north of France. In the medium to long run this means the left parties are likely to move to realign themselves with their base of support. ...