What the heck is going on in Italy?

[DeAnna]

just caught a glimpse of CNN. Italy is bankrupt/broke; they have resorted to selling ad space in their most valuable historical treasures - the monuments.

3 story ad on the Tower of Pisa, anyone?

 

[LVG]

At the fundamental level, what's happening in Italy is essentially what's been happening in Greece. Both countries have been running too high a deficit for too long. Since neither has power over the currency that they use (unlike the US and the UK) both countries are dependent on going to the markets to finance their debt.

The problem is that investors want to get paid back. If investors perceive a higher risk in the Italian bond market, then that makes the costs of the Italian debt go higher. Eventually, the costs of financing this debt become too much, and Italy must either cut back services & entitlements (this is called austerity) or default on it's debt obligations (called - wait for it - default).

Italy is another country in the PIIGS group - Portugal, Italy, Ireland, Greece, and Spain. These euro-zone countries are seen as the "most risky" in the zone, and that's what everyone is keeping an eye on. Most of the noise has been made in Greece, but with financial problems coming up in Italy, there's real concern about the overall stability of the Euro-zone.

One of the problems is that all of these countries are interconnected somewhat. So what happens in Greece affects what happens in Spain, which affects what happens in Italy, which affects what happens in France, the UK, and Germany. This is the "interconnectedness" of the system that I've posted about in the past.

The real concern is that a quick default by one of the PIIGS leads to another cascading series of problems in the financial sector, which would then either result in some serious problems in various financial companies around the world, or additional bailouts. That may strain, to the breaking point, the EU as a whole. Further, it may significantly damage the EU and world economy. Which is why everyone, including the US and the Chinese, are watching this intently.

Here's some good articles from the BBC if you want to read up further...

http://www.bbc.co.uk/news/business-15429057

http://www.bbc.co.uk/news/business-15575751

http://www.bbc.co.uk/news/business-13798000

 

[conraddobler]

Essentially IMO the central bankers who've built this mess operate IMO like the mafia and a countries national debt ends up operating like what you owe a gangster.

They use this to start basically gutting your operation, when played out on a country sized level this is represented by the removal of one government replaced with a new banker friendly government which then sells out to the bankers which in our example would be like getting an inside guy to puke up assets to the mob.

So you can go on making a case that this is just happenstance and the inevitable conclusion of silly monetary policy by each member nation or you can see objectives embedded inside all this.

IMO the ultimate objective in Europe is to put the whole continent on such an untennable footing that power will be consolidated towards a German centric new European union that will wield total control over the member states much like our own system.

I'm not sure at all this will work but I do believe this is the plan, and to achieve this they pretty much have to ruin Europe to do it and that's on schedule.

Eventually the goal is to so interconnect all economies through excessive debt that everyone owes the company store so much that essentially we all throw up our hands and allow/beg for a new centralized world government born out of a lethal monetary and economic crisis.

I really don't buy into all the one worlder stuff but you can see obvious signs that people are IMO deliberately attempting to consolidate financial and economic power into fewer and fewer hands and so far they've been wildly successful.

That's the theme of all this, it's an economic theft, graft, corruption, consolidation of power, that's all this is, the debts were rung up in full view of central bankers if they weren't complicit it never gets rung up.

Most of this is played off as just terrible political mismangement, and that's the goal to get everyone to blame everyone else but the true original source of all this and that's bankers selling debt, that's all they sell.