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martedì 12 luglio 2011

The BCE speaks about Italian and Spanish debt. Tremonti armor maneuver

One question runs through Europe: Italy will stand or not stand the shock of speculation and doubts of the international markets on the sustainability of its public finances and its debt? The bag arrived in Milan today to lose 5%, before rebounding uncertain. The euro has suffered as a result of the state of Italian public finances. The Italian Finance Minister Giulio Tremonti, just returned from the ECOFIN meeting in Brussels, has scheduled a summit with leaders of the opposition (PD, IDV and UDC). Summit also facilitated by the stress of the head of state Giorgio Napolitano, who had explicitly asked the opposition not to give himself to obstructive practices during the maneuver.
The most likely scenario is that of a parliamentary maneuver by armor 40 billion euros, which the Italian government wants to achieve a balanced budget in 2014. The markets, after several hours of deep uncertainty, seem to trust the Italian plan, albeit in a context of profound volatility worse in the morning by growth forecasts downwards for the Japanese economy and the economic downturn because of Portugal. One of the reasons for the renewed confidence of the markets of Italy and the repayment plan for debt securities Spain, as suggested by the Spanish newspaper La Razon, could be the result of the activism of a certain European Central Bank (ECB), which would raking in international markets debt securities Italian and Spanish. With the largest debt in Europe, Italy experienced its short moment of truth and with it the whole Mediterranean Europe.
Giulio Tremonti said the other European finance ministers, including of course the German Finance Minister Wolfgang Schäuble (the real owner of the 'bag' European '), the scope of the maneuver. Schäuble said that the Ecofin outgoing Italian operation is trustworthy. With a sovereign debt equal to 120% of GDP, expressed in value 'absolute' in the stated amount of 1,589 billion euros, Italy is under close monitoring by global markets and economic organizations in Europe.

For years the idea had passed, the international markets in the major European registries, that Italy was not a member of the club PIGS, thanks to the high propensity of Italians to private saving, offsetting the economic behavior that high indebtedness of the Italian state. And yet, according to some analysts, the risk may be closer. You remember the attempts of the Minister Giulio Tremonti to pass a European-wide reconfiguration of the debt / GDP, where in the computation of the debt fell roughly the savings of private citizens and legal entities subject to fiscal sovereignty of each state.

With a public image if Milanese caught, the situation is now more difficult. One of the first financial consequences of the aggression and lack of confidence in Italy is that from now on the purchase of Italian sovereign debt refinancing by issuing new public debt securities will cost much more than did not cost above. To be clear: to ensure that buyers of government debt buy our debt, Italy would be forced to promise a higher return on investment. And 'the reasoning of some operators of international rating agencies. The istabilità policy, a policy of austerity in public finances accompanied by what many traders consider a failure to thrive, are aspects that are high enough to prevent the political context for those seeking stability.
At the risk PIGS implosion in recent months, albeit with some grievance Europe by the Germans, despite the demonstrated failure of governance and policies, had taken the shot. If Italy could not refinance its debt with dignity (this runs the risk that Italy), the European monetary system could suffer a hard blow. According to the Wall Street Journal, if Italy is not able to finance its own debt, Europe would have difficulty raising the necessary resources. This would put the ECB in a position to be the only actor able to act, through issuance of new, inflationary tendencies (the opposite of what the ECB should do by statute). Italy is the third largest European economy and the second factory in Europe. A risk that no one wants to run and that explains the expressions of support made public by German Chancellor Angela Merkel, who has pointed out that the maneuver made by the Italian Finance Minister Giulio Tremonti has to "send a signal of commitment to the consolidation and the fight debt. "
The Clinton saying "it's the economy, stupid!", In spite of us has turned to "it's the Debt, Stupid!", As suggested by the Financial Times in one of his online videos. Italy not only have to beat a hit and react.

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