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Bonds  |  August 17, 2012 07:17:37

Europe's per capita debt, or when saving further indebted (and debt)

The public debt of Italy in June rose to a record 1.973 trillion euros, and the budget deficit for the half year increased by 1.1 billion euros to 47.7 billion euros. According to the Italian central bank may consider a great European paradox - Italy, despite the austerity measures implemented, more and more leveraged, and it had to be based on European agreements to send money to help other indebted countries in the euro area have already applied for foreign lifeline - Greece, Portugal and Ireland.

10-year government bond yields, Italy

Italy at the ten-year loan interest paid on the market about 6%, and for several months. Long-term repayments so high they can not lead to anything other than the higher cost of repayment. You need to be financed somehow. Italy already saving, "where the" solution will thus further loans. So the "solution".

Password: rent (a)

Italian public debt is currently around 123% of GDP. It is the second highest rate in the European Monetary Union - after Greece. The Italian economy is in recession yet - in the second quarter year on year GDP fell by 2.5%.

Budget deficit in the first half of 2012 was 47.7 billion euros, an increase of 1.1 billion higher than a year ago. According to the Italians for it may in particular their obligation to pay into the common European "funds" to save the other countries that have already applied for it.Prior to Italy for the first half sent "to Europe" 6.1 billion euros this year for the first six months of the year has 16.6 billion euros.

Hope for Italy is currently the intervention by the ECB (and ESM) in the bond market, which Italy would reduce interest on loans. Other possibilities are a quick start economy (unlikely) and a request for international assistance (to become the European money, but certainly a strong supervisory and other wave-saving steps).

Finance Minister Vittorio Grilli admitted that he seems unable to reduce this year's budget deficit to 1.7% of GDP from 3.1% last year. Not expected, however, the need for further cost-cutting measures, said the situation could "only" unforeseen depth of the recession.Once the recession ends apparently, Italy will be able to reduce its public debt to GDP by 20 percentage points over five years.

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