Got a tricky question? Receive an answer from students like you! Try us!

Italy Too Big to Fail and Too Big to Bail - Essay Example

Only on StudentShare
Ph.D.
Author : chaag
Essay
Finance & Accounting
Pages 4 (1004 words)

Summary

Is US listening is very relevant to the European debt crisis. This article focuses exclusively on Italy and not other nations like Greece, Ireland and Portugal which were most affected by the economic situation…

Extract of sample
Italy Too Big to Fail and Too Big to Bail

The huge economic deficit resulted in the restructuring of their debts. .The deficit could have reduced by austerity measures in former years, without considerably affecting the GDP. Lack of such foresight in fiscal matters has brought about the present crisis in countries like Greece, Ireland and Portugal. -Italy is a developed industrial country that arose rose from a sound agricultural background prevalent in the earlier years. Over the years,it had emerged into a developed industrial economy that was enviable even to superpowers like Germany and Greece. The debt crisis prevalent in in countries like Greece, Italy and Portugal the proved to be contagious to Italy also. During the second week of September 2011, Italy the third largest economy in the Euro zone plunged in to a debt crisis of slow growth in GDP and high debt. Italy has more than $1 trillion government debt which is in a high proportion compared to the total national output of $1.2 trillion. In this article, the author explores the present trend of higher rate of yielding of bonds that put the economy in such a serious condition necessitating to raise new bonds or to approach other financial institutions for a bail . The investors found it too risky to maintain their deposit in such a state of fiscal affairs. There was clear evidence of illiquidity in the financial market causing threat to investors.
Italy’s economy is in a risky position now. In a regular circumstance, during the period of financial crisis in Eurozone countries, it is European Central Bank that takes the emergency measures to help the countries to overcome the crisis. ...
Download paper

Related Essays

Is management remuneration too excessive?
In an article published in Business Week, In 1980 it was established that the a Chief Executive Officer working at a any foremost organization, on average, makes approximately 42 times compared to what a worker works on a normal hourly pay. …
12 pages (3012 words)
The Financial Crisis
Although greatly linked to the sub-prime mortgage crisis, the causes of the 2008 recession are complex and multi-varied. This essay discusses the role of government policy, the role of mortgage originators, securitization, and moral hazards. Additionally, it presents an explanation of how the following work as well as what role they played in the crisis: subprime mortgages, mortgage backed securities, credit derivative obligations, credit default swaps; the consequences on U.S. financial markets; and the U.S. government response. Finally, it presents the authors own perspective on the…
6 pages (1506 words)
Mega Banks vs. Community Banks
They play a crucial role in development of economy across length and breadth of the US. They remain very important in small-business sector and agricultural lending. The paper aims to explore the contrasting roles played by Community banks and large banks in the national economy and the regulatory burden that “Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010” is likely to put on them impacting their performance in the national economy. Small Business Lending Small businesses account for a huge share of total economic output and employment. Small business with fewer than…
4 pages (1004 words)
The ouster of Vikram Pandit, and what that means for big banks.
This paper will address Pandit’s ouster, and describe how this major event in Citigroup will influence the future operations of Citibank, as well as other banks in the same industry. Mr. Pandit took over as the bank’s CEO in 2007 when the bank was in a financial turmoil, but slightly recovered the profitability of the bank in 2010. Under Pandit’s management, much of Citi’s resources were devoted for future profitability. Expanding market to the developing countries was a prospective Pandit held (David, Suzanne, and Dan 1-2). The reasons offered for Pandit’s ouster emanate from…
4 pages (1004 words)
Principles of Banking and Finance
The attractive mortgage lending was based on a faulty premise that the house prices would continue rising, thus over-lending by the banks, in total disregard of the likelihood of repayment. When the false bubble in the mortgage lending finally burst, the financial crisis began taking its toll, many loans were unrecovered by the banks and the banks become bankrupt. The third force behind the credit crisis was global imbalances; the developing Asian exporting countries had large current account surpluses, a situation that has been defined as “global savings glut”. This situation led to an…
8 pages (2008 words)
U.S. Government Bailouts
The transport industry, for example, is the American economic backbone. The industry sustains trade and the travel of people throughout the fifty-two states. The country therefore requires an efficient and elaborate transport industry that does not face any serious financial challenges, which may weaken its operations (Muolo 41). To ensure this, the government provides tax reliefs and financial incentives to bigger corporations in the transport industry, which include oil companies, airlines among other stakeholders in the industry. The bailout is a maritime term inferring to the process of…
7 pages (1757 words)
Chinese Yuan vs. US Dollar
The use of the two currencies in trade began in 1985 on a bilateral arrangement between the two countries. In 2008, the volume of imports from China hit the $337.8 billion mark. The China government has increased the use of the Yuan in foreign trade over the years leading dynamism in its exchange rates with other world currencies. According to economists, the China government is suspected to devalue the currency in order to increase the competitiveness of their local industries. In addition, the Chinese Yuan is less flexible with respect to the exchange rate against the US dollar and other…
8 pages (2008 words)