Italy is fast becoming the next Greece. The country has 120% debt-to-GDP ratio, and its debt now stands at $2.2 trillion.
While a disorderly Greek default looks increasingly likely and has been hurting global markets, the Italian economy is nearly seven times as big as Greece’s, and it’s fast looking like the next domino that could fall.
10-year government bond yields are at 6.14% now, up from the 52-week low of 3.6%. And there was the dreadful PMI number showing contraction in Italy’s manufacturing sector. Under pressure prime minister Silvio Berlusconi is trying to usher in reforms but no one thinks he can turn the economy around.