Italy Too Big to Bail Out as Crisis Enters a ‘New Phase’: Chart of the Day
July 13 (Bloomberg) -- Tobias Blattner, an economist at Daiwa Capital Markets Europe Ltd., discusses the European debt crisis. He talks with Andrea Catherwood on Bloomberg Television's "Last Word." (Source: Bloomberg)
July 13 (Bloomberg) -- Mario Draghi, governor of the Bank of Italy and incoming president of the European Central Bank, discusses the European debt crisis. He spoke today at a conference in Rome. (This report is an excerpt. Source: Bloomberg)
July 13 (Bloomberg) -- Marco Annunziata, chief economist at General Electric Co., discusses the outlook for Italy in the euro-region's debt crisis. Italian stocks and bonds have been roiled on concerns about the country’s ability to trim debt after warnings by Moody’s Investors Service and Standard & Poor’s and infighting in Silvio Berlusconi’s government over a budget-cutting plan. Annunziata speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
The euro’s fate may lie in the hands of Italian bondholders as the region’s debt crisis threatens to envelop the Mediterranean nation, according to Credit Agricole Corporate & Investment Bank.
The CHART OF THE DAY shows Italy’s government debt burden, the euro area’s largest at 1.8 trillion euros ($2.6 trillion), dwarfs those of Greece, Ireland and Portugal, which already received bailouts, and Spain, which has the next-highest borrowing costs. German Chancellor Angela Merkel is under pressure from coalition partners to limit its contribution to sovereign bailouts. The European Financial Stability Facility currently has a lending capacity of 250 billion euros.
“If Italy gets to the point where its debt auctions start to fail and it loses access to the market, it becomes difficult to imagine who would have the kind of money that would be required to rescue it,” said Luca Jellinek, head of European interest-rate strategy at Credit Agricole CIB in London. “It’s undoubtedly bigger than the current scope of the EFSF.”
European Central Bank incoming President Mario Draghi said yesterday that the euro-area’s debt crisis has “entered a new phase” and policy makers must come up with a “clear” response to stop the contagion that threatens the survival of the region’s single currency.
Italian 10-year bond yields surged above 6 percent on July 12 for the first time since 1997 after Moody’s Investors Service and Standard & Poor’s said the nation may be unable to trim its debt burden.
To contact the reporter on this story: Garth Theunissen in London at gtheunissen@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
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