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U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Italy Enters Debt Crisis High Bond Yield Danger Zone?

Interest-Rates / Global Debt Crisis Nov 09, 2011 - 04:32 AM GMT

By: DK_Matai

Interest-Rates

Best Financial Markets Analysis Article1. Equity markets euphoria notwithstanding, Italy could yet drag the Eurozone and world financial markets into a new and formidable out-of-control crisis;

2. Even if Berlusconi goes, it is unlikely that any parliamentary consensus will emerge in the short term to cut Italy's massive debt and boost growth;


3. There is no agreement amongst the political parties on either a national unity or technocrat government to get Italy out of the mess it finds itself in;

Italian 10-year bond yields

4. Yields on Italy's 10-year benchmark government bonds spiked close to 7 percent on Tuesday, a sign that markets are questioning the country's ability to service and pay its debt;

5. The spike in Italian bond yields resulted in a spread of almost 500 basis points to German bunds;

6. Italy's government debt bond market is the third biggest in the world, behind the US and Japan;

7. Italy is reaching the point where Greece, Ireland and Portugal were forced to seek a bailout from the IMF and EU;

8. Increased European Central Bank (ECB) bond buying, albeit within a limit, has so far failed to halt the spike in Italian bonds yields;

9. Italian bond yields are now at that dangerously elevated level from which no other Eurozone government bond market has ever recovered;

10. Unlike Greece, Ireland or Portugal -- all of which received financial lifelines -- Italy has too much government debt of nearly two trillion euros -- to be rescued by its European neighbours;

11. Given the Eurozone's inadequate bailout facilities, many argue only an unlimited ECB commitment to buy Italian bonds can prevent the debt crisis spiralling out of control;

12. ECB has repeatedly said it has no mandate to act as lender of last resort to countries. To do so would break European law;

13. New ECB President Mario Draghi has stressed the ECB's bond buying is limited and temporary; and

14. Italy has the third-biggest economy in the eurozone and its debt worries are a huge threat in the wider crisis facing Europe's single currency.

Conclusion

Bond market yields can cross a point of irreversibility and after breaching that point-of-no-return, the cascade of selling accelerates. Has Italy entered that danger zone?

What are your thoughts, observations and views? We are hosting an Expert roundtable on this issue at ATCA 24/7 on Yammer.

By DK Matai

www.mi2g.net

Asymmetric Threats Contingency Alliance (ATCA) & The Philanthropia

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ATCA: The Asymmetric Threats Contingency Alliance is a philanthropic expert initiative founded in 2001 to resolve complex global challenges through collective Socratic dialogue and joint executive action to build a wisdom based global economy. Adhering to the doctrine of non-violence, ATCA addresses asymmetric threats and social opportunities arising from climate chaos and the environment; radical poverty and microfinance; geo-politics and energy; organised crime & extremism; advanced technologies -- bio, info, nano, robo & AI; demographic skews and resource shortages; pandemics; financial systems and systemic risk; as well as transhumanism and ethics. Present membership of ATCA is by invitation only and has over 5,000 distinguished members from over 120 countries: including 1,000 Parliamentarians; 1,500 Chairmen and CEOs of corporations; 1,000 Heads of NGOs; 750 Directors at Academic Centres of Excellence; 500 Inventors and Original thinkers; as well as 250 Editors-in-Chief of major media.

The Philanthropia, founded in 2005, brings together over 1,000 leading individual and private philanthropists, family offices, foundations, private banks, non-governmental organisations and specialist advisors to address complex global challenges such as countering climate chaos, reducing radical poverty and developing global leadership for the younger generation through the appliance of science and technology, leveraging acumen and finance, as well as encouraging collaboration with a strong commitment to ethics. Philanthropia emphasises multi-faith spiritual values: introspection, healthy living and ecology. Philanthropia Targets: Countering climate chaos and carbon neutrality; Eliminating radical poverty -- through micro-credit schemes, empowerment of women and more responsible capitalism; Leadership for the Younger Generation; and Corporate and social responsibility.

© 2011 Copyright DK Matai - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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