Five months is a long time in Italian politics. Back in June, we observed that Italy was too big to fail, but also too big to bail. We were also waiting for the almost inevitable clash with the European Commission over the budget. That has now arrived and we have started trading Italian risk in the new higher range for spreads.
* (Bubbling Tensions in Politics)
“We trust that the government will take all the appropriate actions” – Jean-Claude Trichet. Mario Draghi. That was the sign-off for the now infamous ECB letter sent to Silvio Berlusconi’s government during the height of the European sovereign debt crisis. Nearly seven years on, Italy has once again experienced financial market turmoil and the ECB this week will no doubt be asked many questions about the situation.