Forget Three Months: Italy May Have Two Weeks Tops, As It ‘Already Is Where Spain Is Heading’

Forget Three Months: Italy May Have Two Weeks Tops, As It ‘Already Is Where Spain Is Heading’

The cost of Italian sovereign debt has pushed the nation on the brink of insolvency as Italian politicians continue to pretend they can kick the can down the road.

Yesterday, Austrian finance minister Maria Fekter ruffled the unelected Italian PM’s feather by saying “forget Spain, Italy is next in the bailout line” – a statement which as expected was promptly loudly refuted, mocked, and scorned by everyone possible: the type of reaction that only the truth can possibly generate in Europe. So far so good: after all the typical European reaction to any instance of the truth is loud screams of “lies, lies” and promptly sticking your head deep in the sand. However, this time around Italy may not have the benefit of the doubt, nor the benefit of some sacrificial replacement of a prime minister: Silvio is long gone, and at this point switching one banker figurehead with another will do precisely nothing. Which is why this morning’s assessment from Bloomberg economist David Powell is spot on: “Italy would probably be forced into receiving a bailout if it were to face another two weeks like the last seven days.” But the punchline: “The bad news for Italy is the country’s stock of debt is already as large as Spain’s may become after years of fiscal turmoil. In other words, Italy already is where Spain may be heading.”

Surely Powell must be joking: has he not heard that Spain is not Uganda, and that there is “no risk” Spanish contagion will shift to Italy? Apparently not: which is actually what happens when one does the math and relies on facts instead of bluster, rhetoric and propaganda.

Categories: ECONOMY

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