What does an interest rate of 7% actually mean for Italy?
At the time of writing this note before retiring for the night the yield on Italian government 10 year bonds was around 7.3%. Probably the drop from the high for the morning of 7.48% was the result of the European Central Bank buying bonds to try and stop the rot.
So what does an interest rate above 7% actually mean for Italy?
Well as best I can discover it would mean the Italian government would need to come up with an extra €60bn a year–an extra 4.3% of GDP in taxes.
On that cheerful note, to bed with thanks that I am an Australian and not an Italian
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You can always afford to borrow just a little bit more money…
… until you reach that point when you can’t and all those little bits become one great big pile of debt.
by John64 on Nov 10, 2011 at 5:44 am