Italy and the recession

Looking at the performance of my pension fund last week it's clear that investors are worried and stock markets are sick. I'm not sure whether it's the fear of a depression, inflation, deflation or currency devaluation that is spooking the markets. Maybe it's a worry that governments are printing money, running up debts that will take generations to pay off, and bailing out banks that can't seem to come up with a figure showing how exposed to toxic debts their (our) balance sheets really are. Maybe its a fear that despite all this hectic activity the recession is still getting worse and the old verities of balanced budgets and paying off your debts seems to have vanished out of the window. From the papers here in Italy it seems that the message that all is not well with the economy has finally got through. The Finance Minister has said that 2009 will be 'even more difficult' than last year. The government is now hinting that the economy may contract by 2.6% this year marking the third year of contraction. Around here the local builders are still working on new homes that they expect to sell to rich foreigners while the hotel in the village is completing a new wing in readiness for an influx of foreign tourists. I fear there is more pain to come.