A political, economic and social commentary on events mostly in Portugal. The country is in a serious crisis that is not only economic. Strong austerity measures are being implemented that will have wide felt effects. Perhaps the cure is worse than the decease
Italian 10-year borrowing costs touched a new record of 6.71 percent on Tuesday. This is above the yield levels where Ireland, Greece and Portugal issued their last bonds. The massive Italian public debt is 120% of the GDP. The second highest in Europe. The Italian political system is ridiculed and the Italian prime minister a clown. Check out the reaction of Merkel and Sarkozy below:
Not even the strong companies or the rather low level of private debt of Italy may be able to save the situation. See 10 problems here.
Interestingly, Italy was not particularly affected by the financial crisis. The yearly public deficit only went up about 1%. The reason for the large deficit are thirty years of deficit every single year.
If Italy succumbs then the crisis will become much more serious. How can Europe afford a bail-out of Italy? Europe may need a new Marshall plan. But there is nobody around to provide one. When Italy goes all of the piigs will go together. It could be the end of the common currency. The end of the EU and a world wide real crisis. If you have a few euros - go swap them to gold. Then use the gold to buy a farm. Sustenance farming is the future in Europe.
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