Italy prepares bailout request?

darkman2

http://www.bloomberg.com/apps/quote?ticker=GBTPGR10:IND


Italian 10yr bond yields have risen to 6.1% today. 5 year bonds are nearly at 6% while the 2 year bond also has surged. Italian bond auction last week failed to achieve all they were hoping to raise (a mere €8bn) and they paid over 6% interest. Despite the EU deal last week the yields continue to rise forcing Italy gradually out of the market. They cannot raise money again at these rates in the open market. It is unsustainable. It seems increasingly to be the view of economists that Italy has literally weeks left. What do you reckon? The situation is very serious now.

Greece announced it's plans for a referendum after European markets closed today. I wonder what the effect will be on Italy tomorrow morning to have this uncertainty on top.

Boskowski

I wonder is there more to this. Couldn't be a coincidence that 'the markets' are continuously targeting the eurozone. This is beginning more and more to look like an orchestrated economical attack on the eurozone.

bryaner

Looking like private investors will be able to take down the euro, sure looks like thats what they want to do..

woodoo

bryaner wrote: »

Looking like private investors will be able to take down the euro, sure looks like thats what they want to do..

I know little about economics. How would this be an advantage to the investors?

Kristopherus

bryaner wrote: »

Looking like private investors will be able to take down the euro, sure looks like thats what they want to do..

Who's backing them, then? Surely Govts have more clout than the combined private investor community.

Sticky_Fingers

Boskowski wrote: »

I wonder is there more to this. Couldn't be a coincidence that 'the markets' are continuously targeting the eurozone. This is beginning more and more to look like an orchestrated economical attack on the eurozone.

There is no need to break out the tinfoil hats just yet, the markets smell blood and are circling like a pack of hyenas. There is no grand master plan behind it, they are just acting like bunch of lemmings in expensive Armani suits following each others lead.

Kristopherus wrote: »

Who's backing them, then? Surely Govts have more clout than the combined private investor community.

Thats what the ECB have been trying to prove over the last year despite all evidence to the contrary, it hasn't worked out very well for them (or the taxpayers).

darkman2

Berlusconi urged to quit as bond yields climb
By Giselda VagnoniPosted 2011/10/31 at 4:24 pm EDT

ROME, Oct. 31, 2011 (Reuters) — Prime Minister Silvio Berlusconi faced fresh calls to resign on Monday as markets turned on Italy, pushing its borrowing costs to dangerous new levels on renewed concern about a worsening of the euro zone crisis.

http://www.newsdaily.com/stories/tre79u48b-us-italy-berlusconi/

Cavehill Red

We really ought to be getting our bailout renegotiation/partial default request in before Portugal and Italy empty what's left of the kitty.

Crazy Horse 6

Cavehill Red wrote: »

We really ought to be getting our bailout renegotiation/partial default request in before Portugal and Italy empty what's left of the kitty.

True dat

ei.sdraob

Boskowski wrote: »

I wonder is there more to this. Couldn't be a coincidence that 'the markets' are continuously targeting the eurozone. This is beginning more and more to look like an orchestrated economical attack on the eurozone.

The simpler explanation is usually the correct one

how about everyone waking up to the fact that the EUrozone has serious issues that still have not been addressed

darkman2

6.25% now on the Italian 10 year bond Opposition is calling on the President to install an emergency government or call immediate election.

A few minutes later and it's just broken 6.3%.

darkman2

6.4% today for Italian 10 year bond. 2 year bond is getting on toward 6%!

thetonynator

darkman2 wrote: »

6.4% today for Italian 10 year bond. 2 year bond is getting on toward 6%!

Considering they were expecting us to pay 5.7% on a so-called ''bailout'', surely they could be expected to stay on the bond market until it hits 7% at least?

AllGunsBlazing

thetonynator wrote: »

Considering they were expecting us to pay 5.7% on a so-called ''bailout'', surely they could be expected to stay on the bond market until it hits 7% at least?

Seems to be the common consensus that 7% is the threshold that cannot be crossed if they wish to stay out of the bail out fund.

But Italian bond rates have been on a steady upward curve for more than a week now. Even with the ECB trying to suppress the interest rates by buying Italian bonds - the 7% mark and a subsequent bail out seems inevitable.

Then the circus can up tent and move to Spain.

Voltex

Throughout the entire financial crisis Italian National debt hardly changed (even over the last 10 years).
You have to wonder why now the markets have turned on Italy1
Its still a modern, productive economy that in real terms wont default.

darkman2

It's nearly over

Italy Agrees to Allow I.M.F. to Monitor Its Progress on Debt


CANNES, France — Acceding to pressure from European leaders, Italy “invited” the International Monetary Fund to look over its shoulder to ensure that Rome is carrying out reforms devised to keep the country from succumbing to Europe’s widening sovereign debt crisis, European Union officials said Friday.

In an extraordinary move, Italy said it had offered to allow the fund to scrutinize its books every three months to make sure a $75 billion austerity package is carried out according to plan. A team from the European Commission will also travel to Rome next week to start monitoring Rome’s efforts, the president of the group, José Manuel Barroso, said.

European officials said that its leaders have been urging this step upon Italy’s prime minister, Silvio Berlusconi, for some time. But final agreement on the idea was not reached until Thursday night, when President Obama suggested that President Nicolas Sarkozy of France call together leaders of the euro zone countries for an impromptu meeting on the debt crisis, a senior United States official said on Friday. It was during that meeting, according to this official, that Mr. Berlusconi offered to submit Italy to I.M.F. scrutiny.

...



http://www.nytimes.com/2011/11/05/world/europe/italy-agrees-to-imf-oversight.html?_r=1&partner=rss&emc=rss

Meanwhile Christine Lagarde, the head of the IMF, has said Italy "lacks credibility" and she is hinting at IMF teams being on the ground within a month there.

Here is some exclusive footage of Ollie Rehn, the EU's Economic Commissioner, arriving in Rome to take charge

https://www.youtube.com/watch?v=qkeWWoWLUpw

IMF babysitter for Berlusconi

http://www.spiegel.de/international/europe/0,1518,795900,00.html

bryaner

darkman2 wrote: »

It's nearly over




Meanwhile Christine Lagarde, the head of the IMF, has said Italy "lacks credibility" and she is hinting at IMF teams being on the ground within a month there.

Here is some exclusive footage of Ollie Rehn, the EU's Economic Commissioner, arriving in Rome to take charge

https://www.youtube.com/watch?v=qkeWWoWLUpw

IMF babysitter for Berlusconi






http://www.spiegel.de/international/europe/0,1518,795900,00.html

What next the end of the world cometh?

murphaph

bryaner wrote: »

What next the end of the world cometh?

If Italy were to default it would make Greece look like a walk in the park. There would (I believe) almost certainly be some form of global depression as the domino effect would see anybody with money taking it out of stocks and into gold etc. where it does nothing to drive economies. I imagine it might be like the great depression, which was not very pleasant. People back then did actually starve because of it, so it was the end of the world for them.

ianuss

An interesting enough article on the subject of Italy and it's importance in relation to the EU http://www.eurointelligence.com/eurointelligence-news/home/singleview/article/italys-historic-responsibility.html

bryaner

murphaph wrote: »

If Italy were to default it would make Greece look like a walk in the park. There would (I believe) almost certainly be some form of global depression as the domino effect would see anybody with money taking it out of stocks and into gold etc. where it does nothing to drive economies. I imagine it might be like the great depression, which was not very pleasant. People back then did actually starve because of it, so it was the end of the world for them.

Thats why I ask, It's very hard to comprehend in such a modern technological world, I was of the thought that this type scenario was nearly impossible to repeat..

steelcityblues

When a major country in Europe allow this to happen, you start to feel very vulnerable.

steelcityblues

ianuss wrote: »

An interesting enough article on the subject of Italy and it's importance in relation to the EU http://www.eurointelligence.com/eurointelligence-news/home/singleview/article/italys-historic-responsibility.html

The fact that he is calling for a 'european' government shows exactly where he stands.

V_Moth

If I remember correctly, wasn't Italy supposed to contribute x number of Billions to the EFSF? So with Italy heading for a "bail-out" does that mean all those meetings in the last week were utterly pointless and the EFSF now a ruber duck?

ianuss

steelcityblues wrote: »

The fact that he is calling for a 'european' government shows exactly where he stands.

I don't agree with, nor advocate any of the conclusions drawn from the article. I only posted it as it had some interesting facts and figures in it.

Cannibal Ox

Who'd replace Berlusconi? He manages whats never been an altogether unified country with various extreme elements, from the far left to the mafia, through fairly shady methods. I don't like the guy, and Italy has suffered hugely under him, but he has put himself in a position that's very hard to fill.

Getting rid of him in a 'normal' time is one thing, but to do it, and to then have his successor try to implement austerity, possibly with Berlusconi sitting across from him, is a very big ask. And that's why I think they have to stick with him as long as possible. Which is a bit messed up really.

darkman2

6.2% for Italian 2 yeay bond. 6.7% for 10 year bond this morning. ECB is the only buyer of Italian bonds today. The crisis is now squarely with Italy.

Crazy Horse 6

I predict berlo to step down after much pressure from the European elites and a surge in the markets only for europe to be firmly back at ground zero within the week. If does'nt matter who's in charge if it be Greece or Italy the debt is the debt and the euro is going down the sh1tter.

maquiladora

10 year bond back up to 6.66

darkman2

Next bond auction by Italy cancelled. Acknowledgement that they can no longer borrow on the markets.

Fergus_Nash

Wahaa this is truly historic times we live in. I'm going to live under a rock for a week and emerge to the kind of destruction Cormac McCarthy depicted in "The Road".

darkman2

The next Eurozone/IMF meeting - it would be great to be a fly on the wall.

https://www.youtube.com/watch?v=dsx2vdn7gpY

kennyb3

7% this morning. Always amazed that there is hundreds of replies on 'relatively' insignificant threads about a public sector bonus and not much on this. I guess Jonny public doesn't understand or get where this is going. How this plays out will be far more important than our budget etc etc

Fergus_Nash

kennyb3 wrote: »

7% this morning. Always amazed that there is hundreds of replies on 'relatively' insignificant threads about a public sector bonus and not much on this. I guess Jonny public doesn't understand or get where this is going. How this plays out will be far more important than our budget etc etc

Oh definitely. Sure I haven't a clue what half this means but I'll 1. pretend that I do and 2. have an idea that the higher the rate, the worse it is.

It's just gonna come and hit us like a bus some morning and then we try and scamper with as much as we can.

murphaph

I found this piece an interesting little read. Italy's problems are ver different to Greece's and indeed Ireland's. Italy actually spends less each year on it's services than it takes in in taxes and has done for many years. What's crippling Italy is the interest on it's "old" debt.

If Ireland or Greece defaulted, we'd be unable to pay PS and SW at current rates and they'd be slashed immediately. If Italy defaulted it would appear it could continue on as before as far as I can see. Their growth figures are very poor anyway so not much harm could be done to them on that front.

I believe Italy defaulting would damage other countries much more than Italy herself, which would suffer the general unemployment brought on by a global depression that such a default could lead to, but would not suffer any more than that.

darkman2

The imbecile is clinging on. Bond yields soaring. Over 6.7% now for Italy to borrow for 10 year bonds. The guy is going to drive his country bankrupt.

Sticky_Fingers

darkman2 wrote: »

The imbecile is clinging on. Bond yields soaring. Over 6.7% now for Italy to borrow for 10 year bonds. The guy is going to drive his country bankrupt.

*staring into my crystal ball...

He'll be gotten rid of shortly, que a new government and a reduction in the interest and much backslapping and fanfair. Within a month the yield will creep up again once people realise that the new guys don't have any plan. Expect the EU head honchos to start pointing fingers again like little children. Rinse and repeat.

darkman2

Even if he does resign any relief would be temporary but it is relief all the same. EU very concerned now.

"Time is of the essence," says the EU's economic affairs chief Olli Rehn after the meeting of European finance ministers in Brussels."We want to help Italy through our rigorous surveillance and therefore we are sending our mission to Rome... to start work tomorrow."

Yield on 10 year bonds ended the day at 6.77%.

Italy is going ahead with a bond auction on Thursday. Surely they are already locked out of the markets?

AllGunsBlazing

Everyone knows where this is going whether Berlusconi is in office or not. Italy's debt burden is too deep and the markets don't want to lend anymore.

This time next month Spain will be the one in the market's gun sights and the process of picking off the herd will continue until they reach their ultimate goal - France.

Watching the ECB trying to halt the process by scrambling around and attempting to artificially suppress the bond rates of it's bankrupt members is like something out of a bad comedy skit. Why not just stand in front of a paper shredder and slowly feed 50 euro notes into it instead?

Sticky_Fingers

looks like he's going:

Italian Prime Minister Silvio Berlusconi has confirmed he intends to resign after key economic reforms have been approved.

http://www.bbc.co.uk/news/world-europe-15646536

darkman2

And the market does not care anymore.


10 year yields now at 7.02% - rising fast!


Italy needs a bailout. It's in a negative feedback loop. The game is up.


http://www.bloomberg.com/apps/quote?ticker=GBTPGR10:IND


Because the ECB is still trying to keep the 10 year yield down and failing spectacularly the yields are now inverted. 5 year bond is at 7.22%!

darkman2

7.4% now. This is an emergency now. What to do?

Debtocracy

As would be expected the crisis has advanced from one of deficits and interest rates to now focusing on the principal of the debt. As the credit markets continue to slow the Ponzi scheme of rolling over debt was always going to be in danger.

darkman2

7.5% on 10 year bonds now. At this rate Ireland will be able to borrow more cheaply then Italy at the end of the day.;)

bryaner

darkman2 wrote: »

7.5% on 10 year bonds now. At this rate Ireland will be able to borrow more cheaply then Italy at the end of the day.;)

Sorry for the noobish question but where would one get live data on bond yields..

kennyb3

Wow, kind of been ignoring my need o get out of euro's - time to act now tho

Zonda999

bryaner wrote: »

Sorry for the noobish question but where would one get live data on bond yields..

Ireland: http://www.bloomberg.com/apps/quote?ticker=GIGB9YR:IND

Italy: http://www.bloomberg.com/apps/quote?ticker=GBTPGR10:IND

Greece: http://www.bloomberg.com/apps/quote?ticker=GGGB10YR:IND

Spain: http://www.bloomberg.com/apps/quote?ticker=GSPG10YR:IND

darkman2 wrote: »

7.5% on 10 year bonds now. At this rate Ireland will be able to borrow more cheaply then Italy at the end of the day.;)

Kinda happy to see this tbh, shows we're heading toward the beginning of the end of this whole thing, as in when there will substantial write downs in the debt of the southern meditterranean countries, and us, hopefully.. Well either that, the end of the euro or much closer integration with the eurozone, although the latter is the least likely IMHO..

SachaJ

kennyb3 wrote: »

Wow, kind of been ignoring my need o get out of euro's - time to act now tho

Gold looking lovely....

AllGunsBlazing

As if Berlusconi staying/going was ever the real issue here. :rolleyes:

Did Nic and Angie really think they could pull the wool over the markets eyes with that tired regime change trick again? They can stick who ever they want into office now because the lending markets are done with Italy.


And it looks like Spanish 10 year yields took a bit of a jump today as well, nearly at 6%. January for their turn with the IMF at the latest.

femur61

Where does the IMF get the money from?

mike65

IMF is funded by everyone using a quota system.

http://www.imf.org/external/np/exr/facts/quotas.htm

Dirk Gently

femur61 wrote: »

Where does the IMF get the money from?

from the very countries it's now having to bail out.