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The real danger for Italy is that it might be asphyxiated (kvävd) slowly by untenable borrowing costs

 ECB can either bail out Italy or save its credibility in Germany. It will struggle to do both.

It is politically impossible to keep mopping up Italy’s debt issuance under the guise of monetary policy. The euro’s crash to dollar parity has been the last straw. The Bundesbank has lost patience.

Mrs Lagarde did not attend the central bankers’ forum in Jackson Hole. The vacuum has been filled by Isabel Schnabel, Germany’s member of the executive council

“Our currencies are stable because people trust that we will preserve their purchasing power. Failing to honour this trust may carry large political costs,” she said at Jackson Hole.


It seemed like Italy’s problems had gone away but that was only because the ECB was buying more than 100pc of net debt supply. They can’t keep doing that now,” said Mark Dowding from BlueBay Asset Management.

Italy has emerged from the pandemic with a debt burden of 150pc of GDP, 15 points higher than pre-Covid and nearing the point of no return for a sub-sovereign borrower unable to control its own currency. 

It has further liabilities to the ECB’s Target2 payments nexus near 30pc GDP. 

Ambrose Evans-Pritchard Telegraph 2 September 2022


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