Italian Bond Yields Surge On Surprising Expectation That This Will Be The Sex Scandal That Brings Down Berlusconi

Karima Keyek

Berlusconi’s belly dancer

What’s really driving investors out of Italy?Bloomberg cites fears of Berlusconi’s resignation as the main factor driving CDS spreads up to 182 basis points, and the yield premium on 10-year bonds to 152 basis points over German bonds.

The latest sex scandal involves a 17-year-old belly dancer whom Berlusconi allegedly paid to get out of prison — and somehow this story also involves various prostitutes, planes filled with marijuana, and offensive comments. None of this, however, represents anything new or surprising for Berlusconi, whose wife divorced him last year for partying with another 17-year-old girl.

So we wonder if investors are just looking for an excuse to get out of Italy, while Ireland, Portugal and Greece are suddenly hitting the fan once again.

About those debt concerns, via Bloomberg:

Italy accounts for more than a third of the 71 billion euros ($100 billion) of bonds EU governments will sell in November, HSBC Holdings Plc estimates. With the EU’s biggest debt at almost 120 per cent of gross domestic product last year and the euro zone’s third-largest economy, Italy’s financing needs dwarf the other peripheral nations. Next year Italy will sell more than 225 billion euros of bonds, more than Spain, Portugal, Greece and Ireland combined, ING estimates.

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