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Trusting the Italian Economy   [Report Abuse]  

Posted by: borsa.tv     
The day after European leaders announced their new plan to save Europe's financially precarious situation, which over the past months has spiralled to crisis point, Italy's borrowing costs soared to their highest ever rate during the Euro era. In the past month alone there has been a 0.20 per cent increase on the interest Italy will pay on 10-year bonds, reaching a staggering and record breaking 6.06 per cent.
So what does this mean for Italy? The basic answer is that Eurozone members are not confident in the plan for change that Italy has outlined for the forthcoming months. There is no question that an economic turnaround is needed but the plans show an optimistic target. 120 per cent of Italy's GDP would be required to generate the €250bn needed to finance its €1,900bn debt burden. The possibility of reaching this in the short term is ambitious but not totally beyond reach. However, sustaining this kind of turnover in a long term plan would, according to the experts, require something close to a miracle.
One of the key moves by the Italian treasury is opening the debt up to private investors. Private wealth in Italy is looking healthy at an estimated €8,000 - €9,000bn; this puts it high up in European rankings. But private investment is not a proven method of relieving a countries capital debt with no record of other European successfully implementing such a technique.
Overall Italy looks to be teetering near the edge of a very uncertain financial future, and the question of whether it will follow Greece, Portugal and Ireland over the edge is yet to be answered.

Tags: Italy, Greece, Finance, Eurozone, Debt
  

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