Next Up: Italy

As the political drama in Greece continues to play out, it is worth noting that to the west more troubles are brewing.

From the BBC:  Italy government borrowing rates hit euro-era high

The markets are viewing Italy’s ability to repay its debt as increasingly doubtful.

The spread between Italian and German 10-year government bond yields had widened to 488 basis points in early trading, its widest level since 1995.

The yield on Italian one-year bonds also jumped to 6.3% from 5.5% on Friday, though it later fell back to 6.1%.

By comparison, the yield on German one-year bonds is 0.26%.

Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers in London, said the worries over Italy were not so much about the economy but about the state of the political situation.

"This may be the beginning of the end for Berlusconi," he told the BBC.

FILED UNDER: Europe, Quick Takes, World Politics
Steven L. Taylor
About Steven L. Taylor
Steven L. Taylor is a Professor of Political Science and a College of Arts and Sciences Dean. His main areas of expertise include parties, elections, and the institutional design of democracies. His most recent book is the co-authored A Different Democracy: American Government in a 31-Country Perspective. He earned his Ph.D. from the University of Texas and his BA from the University of California, Irvine. He has been blogging since 2003 (originally at the now defunct Poliblog). Follow Steven on Twitter

Comments

  1. Ben Wolf says:

    @Steven,

    A good piece here on why accepting rescue packages or not is the wrong question for the PIIGS to be asking.

    http://pragcap.com/the-greek-referendum-and-the-role-of-democracy

  2. legion says:

    Italy should never even have been in this situation in the first place. I lived in Germany from 2000-2003, and recall quite distinctly a lot of the maneuvering that birthed the EU… They basically chose to totally ignore their own economic standards to let Italy in “the club” at all, since their economy was already so obviously crap even back then. There was never any chance it could survive the last few years’ excitement, and now more chickens are coming home to roost…

  3. Ben Wolf says:

    This should be a lesson regarding bond vigilantes: yields are spiking for countries without sovereign fiat currencies, while hitting record lows for those that do.