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rescue Italy has inevitably to the last I'm afraid only the ECB's bond purchase plan (SMP) can prevent the Italian bond yields continue to climb, but it will be great challenges of the European Central Bank. Drudge since he took office in addition to unexpected interest rate cut, is to buy scale of eurozone government bonds doubled to 9.52 billion euros, and the European Central Bank bond purchase total to 183 billion euros. The face of accelerating the downside economic risks, and increasingly severe debt situation, the ECB's policy stance is about to change. Drudge American ways of doing things, is likely to allow the ECB to emulate the practices of the U.S. rescue of the financial crisis, including changes in the decades to the ECB can not buy the iron law of sovereign bonds in the secondary market, coupled with the experience of Goldman de la Kat well versed in the financial markets, leveraged Road, the ECB will be more aggressive in the future.
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liabilities of the high cost of Italy to issue new debt more difficult. Italy the next sale of bonds is November 14, Italy in November to raise 30.5 billion euros in December to raise 22.5 billion euros, waiting to be rescued in Italy is the countdown. The Bundesbank and the Bank of Italy data show that: the Italian bank's creditors, especially private creditors are worried that their money can not be guaranteed, and thus its capital from Italy pulled into safer German. But they also led to stronger dependence of these financial weak euro bank central bank financial support.
current, Italy's economic and debt situation is getting grim World steel pipe network editing . As the world's eighth largest economy, Europe's third-largest economy, Italy's economic recovery is weak in the second quarter gross domestic product (GDP), to a seasonally adjusted quarter growth of 0.3 percent year-on-year increase of 0.8%. The EU expects that this year the Italian GDP will grow by 1.4 percent, and in view of the austerity measures in Italy, the Italian economy in 2012 and 2013 is likely were unable to achieve growth. At the same time, the scale of the country's debt and the debt burden has continued to climb, up to 119.0% as of the end of 2010, the Italian public debt to GDP ratio in the euro area the second highest, second only to Greece (142.8%), Italy's debt a total of up to € 1.9 trillion, equivalent to the sum of the other four countries.
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and the current, more worrisome, even immediately reach one trillion euros through leveraged EFSF rescue, but for Italy to bear the huge debt of 1.9 trillion euros, a drop in the bucket ". Italy as the world's third largest bond market following Japan and the United States, its bond market caused by the crisis will affect the overall situation. According to Bloomberg data as of September 17, 2011, Italy unliquidated debt principal, the total size of 1.58 trillion euros, unliquidated total principal and interest of € 2.18 trillion. Among them, France, Italy exposures held by the German banking reached 410.2 billion and $ 164.9 billion, the market generally concerned about the risk is difficult to stop the infection to the banking system.
With the continuing domestic political turbulence in Italy, the Italian debt crisis has once again become the focal point of the globe. November 7, Italy's sovereign credit default swaps (CDS) interest rate differential substantially expanded by 522 basis points, a new record. Worries about the spread, the interest rate differential in Spain, France, Belgium, 5-year Treasury CDS are rapidly expanding, which means that the debt virus is continuing to antibodies core countries penetrated, "too big to fail" Italy will be Under a rescue object.According to ECB data, the end of the third quarter of this year, the total size of the European Central Bank's balance sheet reached 2 World steel pipe network editing .28 trillion euros. European financial situation worsens, the ECB's policy stance may be softening, adjust the asset side of the way to achieve quantitative easing, such as including the tightening of the bond buy-back policy, to cancel the most liquid series of financial instruments and the development of heavy valuation of accounts, or to provide additional help to provide liquidity, directly or indirectly, for the European banking system through quantitative easing.
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went to great lengths, is why the growing debt crisis in Greece, Italy and other countries? In fact, in addition to the euro-zone system defects as well as adverse political, the main thing is that the "financial accelerator" is through the asset price channel to strengthen the vicious feedback effects between sovereign debt and economic fluctuations: the sovereign debt has given way to the European real economy serious damage to the shrinking economy has led to further deterioration of the government and private sector balance sheets, countries were forced to start the process of "deleveraging"; "deleveraging" effect will allow the sector's balance sheet further contraction liquidity in the market decline led to a lack of confidence in investment capital premium risk amplification led to a substantial decline in borrowing capacity, exacerbated by economic downturn through investment multiplier. To curb the slowdown in economic recovery, the euro-zone countries to strengthen intervention in the crisis has led to the continuous expansion of fiscal deficits and government debt, so they formed a "deterioration of the balance sheet of the debt crisis to risk assets, liquidity dried up credit fully tightening recession The debt crisis exacerbated by such a vicious circle, which is Europe's debt crisis is not only no progress, but intensified the root cause.
debt crisis and the "financial accelerator" mechanism of interaction, the euro-zone countries rely on market financing channel is not smooth, the CDS premium of European debtor countries and the European banking sector continued to rise since the second quarter of this year. CDS premium rise means that the greater the risk of compensation and higher cost of debt financing. Development of Europe's debt crisis to the biggest problem today is unlikely to be from the normal channels of large-scale financing, Italy is also true. Since July, the 10-year Treasury bill rate in Italy has always been maintained at a high of about 6%, almost three times the same period in German government bonds interest rate, November 7, Italy 10-year bond yields hit a new high since the advent of the euro 6.67 %, only slightly lower than that of Greece before the European Central Bank and the IMF assistance to achieve the 7 percent level.
However, even retreated to the end, through the policy of adventure, the European Central Bank to buy bonds, still delaying tactic, as it does not really reduce debt. Italian debt problem is becoming a decisive force in the evolution of the European debt crisis next year, Italy has a huge debt expires, "too big to fail" systemic risk will continue to be staged.