EU Economic Crisis: Italy's Debt Now Second Only to That of Greece

By:  Charles Scaliger
07/12/2011
       
EU Economic Crisis: Italy's Debt Now Second Only to That of Greece

Europe’s slow-motion economic collapse continues apace as Eurozone governments and banks continue to wring their hands over what to do to postpone the inevitable Greek default. And now there’s a new wrinkle: Italy, whose level of sovereign indebtedness relative to GDP is second only to that of Greece, has suddenly appeared on investors’ radar screens. If Italy — the second largest economy in the Eurozone — goes the way of Greece, Ireland, and Portugal, there will not be enough money in Europe’s rapidly-dwindling rescue fund (the European Financial Stability Facility or EFSF) to effect a bailout.

The impasse over Greece is bad enough. Several countries in the European Union, including the Netherlands and Germany, expect private holders — large European banks — of Greek bonds to share some of the burden for the next Greek bailout, reckoned at some €110 billion. But European megabanks, given the precedents set with numerous recent taxpayer-funded bailouts on both sides of the Atlantic, are refusing to consider losing any of their own money. And all sides are finally awakening to the realization that a Greek default in the form of some kind of debt restructuring is inevitable. As Julian Toyer and Dan Flynn of Reuters report:

Europe’s slow-motion economic collapse continues apace as Eurozone governments and banks continue to wring their hands over what to do to postpone the inevitable Greek default. And now there’s a new wrinkle: Italy, whose level of sovereign indebtedness relative to GDP is second only to that of Greece, has suddenly appeared on investors’ radar screens. If Italy — the second largest economy in the Eurozone — goes the way of Greece, Ireland, and Portugal, there will not be enough money in Europe’s rapidly-dwindling rescue fund (the European Financial Stability Facility or EFSF) to effect a bailout.

The impasse over Greece is bad enough. Several countries in the European Union, including the Netherlands and Germany, expect private holders — large European banks — of Greek bonds to share some of the burden for the next Greek bailout, reckoned at some €110 billion. But European megabanks, given the precedents set with numerous recent taxpayer-funded bailouts on both sides of the Atlantic, are refusing to consider losing any of their own money. And all sides are finally awakening to the realization that a Greek default in the form of some kind of debt restructuring is inevitable. As Julian Toyer and Dan Flynn of Reuters report:

Click here to read the entire article.

 

The JBS Weekly Member Update offers activism tips, new educational tools, upcoming events, and JBS perspective. Every Monday this e-newsletter will keep you informed on current action projects and offer insight into news events you won't hear from the mainstream media.
JBS Facebook JBS Twitter JBS YouTube JBS RSS Feed