The End Of The World: ITALY: Financial Impact Could Dwarf Problems in Greece...

Alicia Badilla By Alicia Badilla, 19th Sep 2011 | Follow this author | RSS Feed
Posted in Wikinut>Business>Investment

With S&P downgrading Italy today many are saying there may be large repercussions because Italy having the 3rd biggest bond market in the World is a lot bigger than Greece.

Bad Italian debt: A contagious virus.

By Alicia Badilla - Mon, Sep 19, 2011 6:35 PM

Standard and Poor's moments ago, downgraded Italy by one notch to A/A-1. Italy has 1.8 trillion of goverment debt.

There are only 3 enormously biggest of the big bond markets on the planet. Italy is third on that list. America and Japan are one and two. Many fail to realize how big of a problem Italy actually is.

Rumor has it that Geitner was recently made fun of and ignored by EU finance authorities in his recent meetings with them and his warnings about Italy.

Avoid default at any cost will be the motto of EU gov officials as the meet with IMF and global financial authorities.

In the short term the market may focus on this news as being Euro negative and dollar positive. Don't be alarmed if you see the dollar up as a result of this with Gold up as well on trading Tuesday September the 20th 2011.

The two main problems with Italian Debt are: low growth & high government debt. Italy’s debt to GDP for the last 20 years has been over 100% with average growth rate for the Italian economy at just 1%.

Italy represents 24% of European government bond indices and a default would cause a run on European banks and pension funds. This is why Italy is too big to fail because it would cost more for Europe if it failed than the gazillion Euro bailout package that would be needed to avoid default. The domino effect on other AAA economies in Europe would be painfully devastating. It would hurt the US economy as well. Heck, some economists say it may even be the end of the world. It makes me want to go for a drink after work. Who is with me?

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Debt Problems, Greece, Italian Debt, Italy, Short Sell Italy, The Price Of Gold

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author avatar Alicia Badilla
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I'm a Traveler/Writer/Investor At times I interview interesting professionals. Thank you for reading.

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