We fell short of our Fall Fundraiser goal of 2,500 donations. Help us catch up ⏩ Give Now

Cost of borrowing in Italy hits record high

Marketplace Staff Nov 9, 2011
HTML EMBED:
COPY

Cost of borrowing in Italy hits record high

Marketplace Staff Nov 9, 2011
HTML EMBED:
COPY

Steve Chiotakis: Interest rates on Italian bonds have reached a mark that economists worry about. The yield on 10-year Italian debt is now above 7 percent, which could make the country’s debt next to impossible to pay back. Already, the Italian prime minister Silvio Berlusconi is poised to step down after the country implements economic reforms.

Guy Dinmore is the Italian correspondent for the Financial Times newspaper and he’s with us now from Rome. Hey there Guy.

Guy Dinmore: Good morning.

Chiotakis: Even with the prime minister stepping down, the cost to borrow has still gone up — into what some are saying is an unsustainable level. What is the government, and the Italian economy, do now?

Dinmore: Yes, the markets are trying panicking and this has shocked the entire political establishment here who thought the deal last night — whereby the prime minister, Silvio Berlusconi would resign — would be enough to appease the markets.

There’s now a great concentration in the minds of everyone in Italy to pass this reform legislation as quickly as possible, which would then be followed by Mr. Berlusconi’s resignation. The trouble is that he is pressing for elections to follow and the markets are completely spooked by the idea of several months of paralysis and no action and an uncertain outcome. And would much prefer that Italy has an emergency government in place — possibly led by a technocrat from outside parliament — who would try and restore market confidence.

Chiotakis: I know we have market reaction and government reaction — what are people are the street saying?

Dinmore: It’s very mixed. A lot of people are very skeptical that Berlusconi will carry out his promise to resign once these reform measures are passed. I think there’s quite a lot of doubt and confusion in the streets, which mirrors what’s going on within political circles.

Chiotakis: Financial Times correspondent Guy Dinmore in Rome. Guy, thank you.

Dinmore: My pleasure.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.