Italy Too Big to Fail and Too Big to Bail

Italy Too Big to Fail and Too Big to Bail  Essay example
Ph.D.
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Finance & Accounting
Pages 4 (1004 words)
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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…

Introduction

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. ...
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