Yet again, the markets are spooked by the European debt crisis. By now, you may be feeling like you’ve heard more about the Greek economy than you ever wanted to know. Last month, the Eurozone members agreed to write down half of the Greek debt owned by the private sector, and recapitalise Europe’s banks.
This was seen as a step in the right direction for Europe.
Unfortunately, the ink was hardly dry when a new debt problem emerged in Italy. Beginning on 9 November 2011, panic selling in the bond markets drove ten-year yields on Italian bonds over 7% before the European Central Bank intervened. Yields have since risen again, and many European banks are said to be offloading their Italian bond holdings altogether.
Does this mean that Italy is showing itself to be a much larger variation of Greece? Not exactly.
Read this report to find out what it means for us.