Posted on 11/09/2011 2:40:36 AM PST by AnAmericanAbroad
Jeez, in that one he looks like Simon Cowell. Medvedev is the invisible man.
You make excellent points, and I hope that your conclusion about a technocrat government appointed by President Naplitano is correct.
Unfortunately, logic doesn’t always move markets. Quite often, it’s emotion based. Even though I didn’t always agree with former Fed chairman Greenspan, I do agree with his observation about “irrational exuberance.”
It works both ways; in this case, hysteria. There’s the market’s perception (and cultural stereotype) of typical post WW2 Italian politics, i.e., bumbling, corrupt, fractious and inept.
There is a significant divide between Northern/Central Italy and the South. The North/Central regions are actually doing well; it’s the South that’s the overall drain on the rest of the country.
And shortly after this photo was taken, did Silvio and Dimitry go to a bunga-bunga party?
What happens in London, stays in London.......
Do you not think Italian bondholders watching Greece bondholders being forced to agree to take a 50% haircut would have a significant risk of exposure to a similar fate on Italy’s $2.6 trillion debt? I would think a $1.3 trillion haircut exposure would make me want a much higher bond rate yield to entice me enough to buy Italian debt, JMO.
The post-WW2 italian political crisis is at least 50 years old: a different government each year, with no real alternation (since the largest left-wing party was communist: mainstream parties corruption was publicly uncovered only after the fall of Berlin Wall). I hope this will change. One of the reasons of Berlusconi being voted was that he brought something similar to a two-party system.
In any case, even if italian risk drops, the financial crisis will go on. They would likely target Portugal or Ireland again, or Spain (22% unemployed) or add a new country like Belgium, which suffers from some “italian” issues (regional dualism, high public debt, political instability).
"Ask it, Professor."
"You are rich?"
"Immensely rich, sir; and I could, without missing it, pay the national debt of France."
- "Twenty Thousand Leagues Under the Sea" by Jules Verne
Well cash flow doesn’t lie, they either are deficit spending or they are not. And if they are not, can they and will they increase tax revenues to cover the deficit? Or reduce spending for the same result?
I’m doubtful.
FWIW, thanks for pointing out that the northern area of Italy is like the red states area of USA. Productive and hard working. Southern part is the problem from what I can recall.
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