The pretence that Italy could be turned round without precipitating an even worse crisis in the eurozone is now over. With bond yields reaching 8 per cent this morning the message was clear: Italy is a basket case, and institutions are increasingly reluctant to buy its toxic debt.
An old adage comes to mind. If you owe the bank a million, it’s your problem. If you owe a billion, it’s the bank’s. Italy owes €1.9 trillion. Bloomberg now estimates that to service this debt next year could cost over €362 billion. And as bond yields go up, the price of paying off Italy’s debts goes up with it.
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