THERE I WAS, sitting in a hotel room in Florence, struggling with an article on the crisis in the subprime mortgage market for my weekly column for THE DAILY STANDARD, rather than taking the more sensible course of reacquainting myself with the artistic marvels of that city. I leave to my readers the question of whether this sacrifice in their interest was worthwhile.
From the hotel, I went to lunch with my wife and her art-expert guide, and a chat about the economy of Italy. It seems that while American banks, urged on by the government, were in the process of lending too much money to people who couldn’t afford the houses they were buying, the Italian banking system is in the process of denying mortgages to people who by any standard are very good credit risks, indeed. Take our guide: a good earner about to marry another good-earner, a civil engineer. But neither has the lifetime employment contract that was once the common arrangement in Italy. They now work in a labor market that is more flexible and more likely to enable Italy to compete in globalized markets as employees no longer cling to jobs in dying industries.
