4 ms·
Italy and Spain are dangerously over-leveraged in a low growth environment and thus vulnerable to a speculative attack that pushes interest rates up long enough
by bd_at_rivenhill 15y ago
Italy and Spain are dangerously over-leveraged in a low growth environment and thus vulnerable to a speculative attack that pushes interest rates up long enough for them to go into default. It is not clear yet whether the European establishment will toe the line on not letting a sovereign default on its obligations, but if they fail to do so, then such an attack becomes much more likely.
- stygianguest 15y agoItaly. Yes. Spain. No. Spain has a smaller debt 65% of GDP compared to most western countries, including the USA (92%) and Germany (83%). They do have huge economic problems. Right now the biggest danger is that outside trouble brings down their banks.
- danmaz74 15y agoOn the other hand, Italy is running a primary surplus, its families are among the less indebted in the Western world, and its banks have liquidity. To put it simply: if needed, it is still possible for the government to raise a lot of money, for example through a property tax - something that has already been done in the past and is being discussed now.