Posts Tagged ‘Italy’
Daring Draghi
Last week the ECB, finally, agreed to make unlimited purchases of Spanish and Italian short-term bonds if the countries ask for help and agree to make “changes” to their economies. While this will buy time for politicians, it does nothing to solve the deep structural problems including the persistently low productivity of the Southern European…
Read MoreEuroland, no Disneyland
To keep Spain and Italy in the euro, the ECB must buy Italian and Spanish bonds, as nobody else will. And, it can only do so if Merkel allows it. Separately, there’s the possibility that the German Constitutional Court will prohibit Germany from contributing to the European bailout fund. Assuming Germany green-lights everything, Italy may…
Read MoreUnfunded Liabilities
Advanced economies with aging populations have made lavish spending promises that are unafforadable absent huge tax increases. In Canada the “unfunded” amount is 7 times GDP. In Korea it is 6.8, in Spain it is 6.5, here in the USA it’s 5, in Australia it’s 4.8, in the UK 3.3, in Germany 2.8. France 2.7,…
Read MoreBorrowing and Bail
Borrowing costs for Portugal, Ireland and Greece have hit highs amid concern that Europe will not take action to dispel fears of sovereign defaults. Long term rates for Spain came close to setting a record and Italy’s cost rose above 5% for the first time since 11/08. Portugal was forced to pay a much higher…
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