Italy

ECB Intervention Does More Harm Than Good

Intervention from the ECB helped Italy keep its head above the water. However, it also increased France, Australia and Belgium’s borrowing costs to record highs. This caused their debt to raise up 9-14 basis points, respectively. The ECB has been becoming more aggressive with their interventions with Italian bonds. This is expected to cause more tension in financial segments and, eventually, a downward revision of growth forecasts. Italian economists are urging the eurozone to accelerate structural reform before it’s too late.

The ECB’s intervention with Italy has significantly raised the debt levels for three countries. Although France isn’t Italy, their current economic weaknesses are relatively similar. If the ECB continues with their recent interventions, this could eventually put the entire eurozone in jeopardy. With a currency that is only becoming weaker, further intervention would cause more problems for Italy despite the fact that they are better for the time being.

Realist

http://www.repubblica.it/economia/2011/11/10/news/la_bce_interviene_sui_btp_italiani_tagliate_le_stime_sulla_crescita_ue-24768333/

http://www.telegraph.co.uk/finance/financialcrisis/8882084/Italian-borrowing-costs-ease-as-ECB-wades-in.html

November 10, 2011 at 4:24 pm