And now for something completely different: good news from Europe. A new European Commission report suggests that Italy is “decoupling from Spain” and lists the differences between the two countries.The contrast is striking. Unlike Spain, the Italian government is not operating with massive budget deficits. In fact, as the FT reports, the Italian government actually ran a surplus last year, if money spent to pay off past debts is removed from the calculation. This surplus is expected to grow to 3.6 percent next year, putting Italian finances on firmer ground. Meanwhile, the bond market has been kinder to Italy than to its Mediterranean neighbors—its long-term borrowing costs are lower than Spain’s and much lower than Greece’s. And, finally, Italy’s banks are in much better shape, and appear unlikely to require extra capital from elsewhere in Europe.This is very good news indeed for Europe. While the Greek collapse is a problem, and a Spanish collapse would be significantly worse, an Italian collapse would almost certainly be catastrophic.Still, Italy’s youth unemployment remains stubbornly high, and the labor market and business reforms that are needed to make the country competitive again are slow in coming. But unlike their neighbors, Italians can see a way forward that isn’t contingent on reluctant aid from elsewhere in Europe. In the current climate, that looks like a victory.