Record bond interest for Italians – Latest in Europe
Despite Italy being in way over its head with its current debt today we saw them increase their national debt by borrowing more money from various sources which could send their interest payments spiraling out of control. The Italians have been forced to sell off over three billion euros worth of five year bonds at a miniscule six percent rate which has set a new euro zone record. With figures showing that industrial production has fallen by over two percent within the seventeen countries that use the euro this has not been a good sign for many of the European countries battling it out for survival within the volatile euro zone. The markets within Europe have reacted with a great degree of uncertainty as the FTSE index fell by point five percent by the beginning of this week.
The Italians yield of their debt that was traded within the market had reached heights of seven percent in the previous week which forced the government to pass brand new austerity measures with Prime Minister Berlusconi resigning due to the overall lack of confidence within his cabinet. These high interest rates will only become an applicable problem for the Italians id they are required to pay them on the event of it issuing more debt with the seven percent rate being the highest they have been faced with paying for fifteen years. Many investors are now looking on to see if Italy can create a new successful government under the watchful eye of economist Mario Monti as over the next year there is over two hundred billion euros worth of debt that needs to be refinanced.
Although the fall in production within the euro zone has not been seen as bad as previously thought the overall production for September has increased slightly to two percent per year but this is still way short of the three percent that had been expected. Manufacturers who are within the euro zone have been finding life very difficult during this period as demand by the domestic entities has been hit by fiscal policies that are much tighter than previously thought as the euro zone continues to be hit by the global downturn. The fact that growth on production has slowed due to the crisis has not helped European business in the slightest as each companies strives for survival in these uncertain times. Italy are not the only country to see their national industrial production fall with Germany dropping two percent of their yearly roster along with Ireland, Estonia and Portugal. This decline has also affected other European countries with the French and English benchmark indices down by one percent at the end of trading last week. Many experts had foreseen the Greek and Italian share prices increasing back to where they should be with the change of governments being put in place but many are concerned that contractions could appear within the market again during the coming weeks. With all these facts in mind the overall feel around the crisis ridden zone is that the fall in to another deep depression is more than inevitable.
The future of the euro in these dark days is unsure as it does not seem to be a question of when will it recover but actually will it recover at all?
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