The markets are understandably riveted by the drama at the ECB, but more significant for the future may be the continued unraveling in Italy, the third largest economy in the Eurozone and next in line after Spain at the bailout window.
The economy is shrinking as the second-dip recession tightens its hold on the country. Unemployment is going to jump, and young people, whose prospects have been depressed for years, will take the worst hit.
The government lacks the strength to make unpopular reforms. It is getting weaker, too, as elections approach and ministers in the technocratic government begin to pull away from the prime minister, switching instead to currying favor with the politicians who will control things after the vote.
Ever since the euro crisis began, the question of whether Italy would need a bailout has been seen as the true tipping point. Increasingly, we seem to be moving past that; it’s getting harder to see scenarios in which Italy can avoid asking Brussels for help. The question now is whether France will follow suit.
That reality means more to the future of Europe than the details of the ECB program, as important as that program may be for the immediate future of European markets.