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With Italy's new compromise government making moves to end austerity measures, the austerity backlash in Europe seems to be gathering momentum. Wall Street Journal Europe Editor Simon Nixon takes a look at what might be ahead for the euro zone. But he wants us to note that some European countries are now able to consider dropping austerity measures because, he argues, accepting them before has helped to lower borrowing costs. From the WSJ News Hub :

Here's a useful conversation starter from the Carnegie Council 's Global Ethics Corner . It sets up the key questions over the IMF, EU, and European Central Bank bailout of Cyprus. While Cyprus as a nation is rather singular, the issues raised by the terms of the bailout are relevant across Europe moving forward:

While we continue to watch events in Cyprus , MarketWatch 's Jim Je l ter looks at countries that might be "the next Cyprus." To be more specific, Jeiter notes other countries where the overall economy is highly dependent on the banking sector. Switzerland and the UK, for example, are two countries that are, as Jelter puts it, "most exposed to the ups and downs of their banks":

At The Guardian , Peter Frankopan laments the fact that politicians in Europe are happy to use the term "Byzantine" but seem to know little about Byzantium, the empire that ruled much of Southern Europe, North Africa, and the Middle East for over 1000 years after the fall of Rome. Frankopan, director of Oxcrord Centre for Byzantine Research, argues there are useful lessons for today's leaders, in both Byzantine successes and failures. There was no question that different parts of the empire could have different rules or different taxation policies: for the state to function with a single currency, there had to be fiscal, economic and political union; taxes had to be paid out from the periphery to the centre; and it was understood that resources had to be diverted from rich regions to those that were less well blessed – even if not everyone was happy about it. Freedom, grumbled one author in the 11th century, meant freedom from taxes. If Eurocrats could learn from the structure of the empire, then so too could they benefit from looking at how it dealt with a chronic recession, brought on by the same deadly combination that has crippled western economies today. In the 1070s, government revenues collapsed, while expenditure continued to rise on essential services (such as the military); these were made worse by a chronic liquidity crisis. So bad did the situation become that the doors of the treasury were flung open: there was no point locking them, wrote one contemporary, because there was nothing there to steal. Those responsible for the crisis were shown no mercy. The Herman Van Rompuy of the time, a eunuch named Nikephoritzes, was lambasted by an angry population faced with price rises and a fall in the standard of living, and was eventually tortured to death. Widespread dissatisfaction led to others being unceremoniously removed from position, often forced to become monks, presumably so they could pray for forgiveness for their sins. The crisis even gave rise to a Nigel Farage figure, whose arguments about why things had gone wrong sounded "so persuasive", according to one contemporary, that people "united in giving him precedence" and welcomed him everywhere with applause. He was a breath of fresh air at a time when the old guard were paralysed by inaction and by a dire shortage of good ideas. His message, that the current crop of leaders was useless, was hard to argue with. Read the full post here .

***This post has been edited to correct an inaccuracy Unemployment is still rising in Europe. According to Eurostat , the rate ended January at 11.8%, up from 11.7% at the start of the year, and up from 10.8% in January of last year. Compared with a year ago, the unemployment rate increased in nineteen Member States, fell in seven and remained stable in Denmark. The largest decreases were observed in Estonia (11.1% to 9.9% between December 2011 and December 2012), Latvia (15.5% to 14.4% between the fourth quarters of 2011 and 2012), Romania (7.4% to 6.6%) and the United Kingdom (8.3% to 7.7% between November 2011 and November 2012). The highest increases were registered in Greece (20.8% to 27.0% between November 2011 and November 2012), Cyprus (9.9% to 14.7%), Portugal (14.7% to 17.6%) and Spain (23.6% to 26.2%). Between January 2012 and January 2013, the unemployment rate for males increased from 10.6% to 11.8% in the euro area and from 10.0% to 10.8% in the EU27. The female unemployment rate rose from 11.0% to 12.1% in the euro area and from 10.2% to 10.9% in the EU27. In January 2013, 5.732 million young persons (under 25) were unemployed in the EU27, of whom 3.642 million were in the euro area. Compared with January 2012, youth unemployment rose by 264 000 in the EU27 and by 295 000 in the euro area. In January 2013, the youth unemployment rate was 23.6% in the EU27 and 24.2% in the euro area, compared with 22.4% and 21.9% respectively in January 2012. In January 2013 the lowest rates were observed in Germany (7.9%), Austria (9.9%) and the Netherlands (10.3%), and the highest in Greece (59.4% in November 2012), Spain (55.5%) and Italy (38.7%). The unemployment rate remains below 6% in Austria, Germany, and Luxembourg. The rate in Spain and Greece remains above 26%. Here's a look at the breakdown of unemployment by country: Read the full report here . ***In an earlier version of this post, we wrote that we were awaiting the Labor Department's monthly jobs report, and that it would be released later today (March 1). The March jobs report will be released on March 8.

Every year the OECD lays out five key areas for structural reform necessary for each member country (and the BRIICS nations) to spur growth. In this year's Going for Growth report, many countries get high marks for making key reforms that the OECD expects to provide more stable long term growth. The authors chalk up the changes as a response to "market pressures in the context of the euro area crisis and by discussions and co-ordinated efforts in multilateral settings such as the G20." Market pressures appear to have played an important role in the intensification of reforms, as indicated by the significant correlation between reform responsiveness and changes in government bond yields over the 2011-12 period: ● Euro area countries under financial assistance programmes or direct market pressures (e.g. Greece, Ireland, Italy, Portugal and Spain), are among the OECD countries whose responsiveness was highest (Figure 1.2, Panel A), and also where it increased most compared with the previous period (Figure 1.2, Panel B). Accession to the Euro area in 2011 – in concomitance with a steep recession – may have acted as reform catalyst for Estonia, who also ranks among the most responsive countries. ● Furthermore, as reflected in the comparison between simple and adjusted responsiveness rates, the crisis led most countries under financial markets pressure to enact reforms in traditionally politically-sensitive areas, e.g. labour market regulation and social welfare systems. ● In contrast, less progress has been achieved in other euro area countries, in particular those with a current account surplus (e.g. Germany, Luxembourg and the Netherlands). Yet, reforms are also needed in these countries, in particular in areas that may help intra-euro area rebalancing, such as boosting competition in non-tradable sectors. ● Despite exposure to financial market scrutiny, Iceland and Slovenia have made no or very little reform progress in the areas identified in 2011. While market pressures have played a catalyst role, allowing for long-overdue reforms to be undertaken, some concerns may arise over the effects of reforms in a context of strong budgetary retrenchment and weak activity. Yet, it can be argued that some of the measures taken have already helped by boosting confidence and bringing some market relief. This may have been particularly the case of policy changes, such as pension reforms, that directly contributed to restore medium-term public debt sustainability, though reforms aimed at restoring competitiveness over time will also help to underpin confidence. Still, it is clear that the broader benefits from reforms may take more time than usual to materialize in the current environment, in part due to possible delaying effects from remaining dysfunctions in financial markets. It is important to avoid such delays eroding popular support and to ensure that legislated changes be effectively implemented in order to reap the long-term gains and preserve the positive initial confidence effects. Read the full report here .

As President Obama launches into his second term, getting the economy moving remains among his top priorities. It is not the challenge he faced four years ago, when we were just months removed from the near global economic meltdown of September 2008. Rather, it may look very similar to last year: slow growth around the globe. But, according to Nouriel Roubini , there will be some "important differences , " that might lead us to prefer slow growth to the alternative. In a piece for Project Syndicate , Roubini raises concern that, "given synchronized fiscal retrenchment in most advanced economies, another year of mediocre growth could give way to outright contraction in some countries." With growth anemic in most advanced economies, the rally in risky assets that began in the second half of 2012 has not been driven by improved fundamentals, but rather by fresh rounds of unconventional monetary policy. Most major advanced economies’ central banks – the European Central Bank, the US Federal Reserve, the Bank of England, and the Swiss National Bank – have engaged in some form of quantitative easing, and they are now likely to be joined by the Bank of Japan, which is being pushed toward more unconventional policies by Prime Minister Shinzo Abe’s new government. Moreover, several risks lie ahead. First, America’s mini-deal on taxes has not steered it fully away from the fiscal cliff. Sooner or later, another ugly fight will take place on the debt ceiling, the delayed sequester of spending, and a congressional “continuing spending resolution” (an agreement to allow the government to continue functioning in the absence of an appropriations law). Markets may become spooked by another fiscal cliffhanger. And even the current mini-deal implies a significant amount of drag – about 1.4% of GDP – on an economy that has grown at barely a 2% rate over the last few quarters. Second, while the ECB’s actions have reduced tail risks in the eurozone – a Greek exit and/or loss of market access for Italy and Spain – the monetary union’s fundamental problems have not been resolved. Together with political uncertainty, they will re-emerge with full force in the second half of the year. After all, stagnation and outright recession – exacerbated by front-loaded fiscal austerity, a strong euro, and an ongoing credit crunch – remain Europe’s norm. As a result, large – and potentially unsustainable – stocks of private and public debt remain. Moreover, given aging populations and low productivity growth, potential output is likely to be eroded in the absence of more aggressive structural reforms to boost competitiveness, leaving the private sector no reason to finance chronic current-account deficits. Read The Economic Fundamentals of 2013 here .