Tuesday, 8 November 2011

Ciao Silvio

“…because the problem for Europe and the markets, correct or not as it may be, is in fact you.”  These stark words were attributed to Giulio Tremonti, the Italian Finance Minister, in a conversation with Silvio Belusconi, the Prime Minister.  The pressure on Italian finances has increased significantly in the wake of the “will they, won’t they” referendum debacle in Greece

To put this into some context, the British Government is currently borrowing money for two years at just over 0.5% (which probably tells you as much as you need to know about the future direction of interest rates in the UK).  For the US, the equivalent rate is just under 0.25% and for Germany 0.4%. 

For the Italians, this rate is around 6%.  George Papendreou’s resignation as Greek Prime Minister at the weekend, the announcement that Señor Zapatero would not be standing for re-election in Spain, the fall of the Socrates government in Portugal and the continuing unpopularity of M. Sarkozy in France all highlights the perilous position of Europe’s leaders at the moment.  And in Italy, things have come to such a state that Signor Berlusconi has even been forced to delay the release of his latest album of Neapolitan Love Songs.  Dark days indeed.


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