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That's exactly the distinction being made. Italy's debt is highish but manageable; it budget deficit is small. If it can borrow at reasonable rates for the next
by cwp 15y ago
That's exactly the distinction being made. Italy's debt is highish but manageable; it budget deficit is small. If it can borrow at reasonable rates for the next few years, it's not in danger of default. That's illiquidity. Compare to Greece, which, even if it could get loans at low interest, is never going to be able to repay what it already owes. That's insolvent.
- bd_at_rivenhill 15y agoSo the only thing that really separates Italy from Greece is the market's expectation that Germany won't let any of the other sovereign nations default. Absent that expectation, Italy and Spain are one good speculative attack (a la Soros vs. the British Pound) away from insolvency.