Italy is much more frightening than Greece.


Kathleen Brooks of the Capital Index says the current budget stalemate between the Italian government and the European Union has led some to compare the situation to the Greek debt crisis, but Italy may be “much more terrible” than Greece.
In Radio 5 Live’s “Wake Up Funds” program, she pointed out that Italy’s trade ties with the rest of the European Union were much deeper than Greece’s and it was the third largest economy in the eurozone.
However, although Italian benchmark bond yields are currently around 3.5%, some bond yields hit 7% at the height of the eurozone debt crisis.
She added that the current tit-for-tat dispute between Italian and EU officials “can be quelled in a way that the eurozone debt crisis could not be quelled 10 years ago”.
The new Italian government says it has agreed to a budget that includes all the important budget deficit figures, but the market is not convinced.
Shanti Kelemen, Senior Portfolio Manager at Coutts, told Today: “The bigger problem is that we don’t really know who is in control of the government.
“We don’t know if Treasury Secretary Giovanni Tria is working on a budget now – it looks more like a coalition government, and the coalition itself is new, a little unstable, and has no record in the past, so their actual budget is uncertain.”

This week marks the 10th anniversary of the bankruptcy of Lehman Brothers, followed by the financial crisis, and financiers have been rethinking where the problem lies.
At the time, Jes Staley worked for JP Morgan, the US investment bank, and now chief executive of Barclays, which eventually bought Lehman’s UK business.
He told BBC Radio 4’s Today that one of the things that happened – “it seems obvious afterwards” – was the financial crisis of 2009.
“From January 1, 1999 to January 1, 2009, everyone, bankers, investors, regulators and journalists said sovereign bonds issued within the eurozone were a credit risk for the eurozone…” We allow the market to allow Greece to borrow money like Germany and sell it at the same rate for 10 years.
“On a magical day on January 2, 2009, everyone woke up and said,’It doesn’t make sense’.”
Despite good service performance in August, worries about the Anglo-American trade war weighed on business confidence in the eurozone.
The IHS Markit Eurozone Composite Final Purchasing Managers Index (PMI) rose slightly in August to 54.5 from 54.3 in July. But the index of optimism has dropped from 63.1 to 61.6 in the past two years.
Jack Allen, senior European economist at Capital Economics, said: “The overall PMI is quite encouraging.
“Trade wars have had some impact. So far, U.S. policy toward the eurozone has been small, but concerns about thefuture escalation of protectionism may have an impact on businesses.


Please enter your comment!
Please enter your name here