I have never been one to think that regional or global currencies are a good idea. And in 1999 I predicted that Italy would be the first country to bail on the Euro and reintroduce their own currency.
(Bloomberg) — Italian assets were roiled yet again after a prominent euroskeptic said that the nation could resolve its debt problems with its “own currency.”
The yield on the nation’s 10-year bonds touched the highest level in more than four years after Claudio Borghi, head of the lower house budget committee, said the euro was “not sufficient” to solve Italy’s fiscal issues. Though he played down his comments subsequently, the euro declined.
Borghi’s comments come at a time of intense vulnerability for Italian assets, which have been battered amid investor concern over the country’s proposed budget deficit of 2.4 percent for 2019. Plans by the populist coalition to boost spending to fulfill campaign pledges are fueling speculation over the sustainability of the nation’s debt load.
The Italian 10-year sovereign yield is climing as their bond prices nosedive.
The Euro is taking a hit as well.
But Credit Default Swaps are stable, indicating that this is not a credible threat … for the moment.
Lucrezia could have skipped the poison and just used Modern Monetary Theory.