6th
The Bond Vigilantes Spared Italy. Why?
I am quite astonished that Italy was mostly left out of the government government debt scare of the past two weeks. Today I even saw a blog post where the “I” in PIGS meant mostly Ireland … Even Paul Krugman initially forgot about how bad our situation is. With public debt above 100% GDP and for over 50% financed by foreign investors, I would argue that we are in a shakier position than Spain. Fortunately our deficit of about 5% range looks austere compared to our other club med fellows.
I just hope those deficit figures are for real. Corruption and waste of public money in Italy look definitely worse than in Spain and Greece. At the same time it is true that the banking system held up quite well and unemployment figures are better than elsewhere, although propped up at least temporarily by government support to redundant workers (“cassa integrazione”). Personally I will not buy Italian government bonds and if there was a way to short them as a retail investor, I would do so.
