Italian threat to Europe

Italy on brink of banking crisis as debt costs spiral following battle with EU

The Telegraph reports online today that Italy is on “the brink of a dangerous banking crisis as the red-blooded showdown” between Brussels and Rome pushes the country’s borrowing costs to a five-year high.  Yields on Italy’s 10-year debt spiked to 3.62pc after the Lega strongman and vice-premier, Matteo Salvini, vowed to sweep away the existing European order. He called Jean-Claude Juncker and his Commission aides “enemies of Europe barricaded inside their Brussels bunker.”
The furious outburst followed the leak of a stern letter from the Commission rejecting the deficit spending plans of the insurgent Lega-Five Star government, and more or less ordering Rome to go back to the drawing board. The ‘risk spread’ over German Bunds is entering treacherous territory after jumping 45 basis points over the last week to 310.  “At this point it risks going hyperbolic,” said Carlo Bastasin from the Brookings Institution.
Yesterday the Guardian reported that global stock markets staged a sharp sell-off amid growing concerns over a budget showdown between Italy and the EU and the prospect of weaker growth in the Chinese economy. “Italian borrowing costs jumped and the euro dropped on foreign exchanges as the war of words between Rome and Brussels escalated”, while shares on Wall Street and other major international markets declined amid growing concerns over the US-China trade war.

8 thoughts on “Italian threat to Europe”

  1. Well at least it takes the focus off Brexit for a few hours.

    Funny that nobody mentions Greece anymore. They are in a worse state than Italy and can never repay their debts.

  2. Some counties best to stick what they good at and politics is not for some. Going by history books Britain will come out tops as normal and well, if they a crash.

  3. This is playing into the hands of the Eurosceptics and for what? Italy is not saying it is going to exceed the stupid 3% borrowing limit, which it has been proved is based upon flawed economic statistics. If the German banks did not lend this money they would not be on the mess they are. It always annoys me intensely when these “bridging loans” by the ECB are referred to as “bail outs”. They are only bailing out the German banks. The country supposedly being “bailed out” is simply having its debts transferred from a bank to the ECB. Often this means that bonds bought up by speculators on the cheap due to their “junk” status suddenly have to be repaid at their full original value, this, if not illegal, should be seen for what it is, profiteering at the expense of a people who had no input in the decisions made. There should be a jubilee for these debts and the people should not be forced to pay for the crimes committed by their own politicians, who like the corrupt bankers who lent them the moneys in the first place, should be the ones facing prosecution and gaol. It seems yet again that the banks are not just too big to fail but also too big to gaol. The dangers of public unrest is being increased by a blinkered hard line commission wedded to a failed policy.

    • So very true and well explained. If only all those who voted for brexit and those kicking against it had all the true facts to hand and understood them. I think the referendum would have come out with an even higher vote to leave.

  4. I can recommend the book “Adults in the Room” by Yanis Varoufakis, the leather-jacketed, motor cycle riding Finance Minister for Greece during their bail-outs by the Troika. As Michael Litten says, the bailout loans were actually bailing out the banks (German and French in the case of Greece) that had loaned to Greece rather than the country itself.

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