Translated material
The state debt in Italian
The elections have been addicted by almost a quarter.
The reaction of debt markets to the results of the parliamentary elections in Italy, ending on Monday, was not long in coming. On Wednesday, February 27, the country's government put on debt auction the next issues of government bonds totaling 6.5 billion euros. Their results were not surprised: the yield requested by the market for 10-year obligations was 16% higher than at the same auction only a month ago, in January, and for 5-year bonds-22% higher.
A day earlier, on Tuesday, world shares reacted to news from Italy by reducing its indices by 1.5-5%, and the euro exchange rate to the dollar fell by 1%per day. Investors' fears regarding the capabilities of Italy, the third in terms of volumes of the eurozone economy, to cope with the accumulated state debt, has noticeably diminished against the backdrop of saving measures that the “technical” government of Mario Monti took.
Now these fears have returned to financial markets. And with them, forecasts about whether the current funds of the European Anti -Crisis Fund (about 500 billion euros) are enough to help Italy if the country suddenly is forced to turn to the EU - following Greece, Ireland and Portugal.
After the USA and Japan
The public debt accumulated by Italy is 127% of the country's GDP, according to this indicator, only Greece (165% of GDP) is ahead of it in Europe. However, in terms of absolute volume of this debt (2.6 trillion dollars), Italy is inferior to only two countries of the world - the USA ($ 16.6 trillion) and Japan (about 14 trillion dollars).
In the United States, public debt today is 106% of GDP. In Japan, according to preliminary estimates of the IMF, - 235%! That is almost twice as much as in Italy. But the long -term crisis in Japan in financial markets is only theoretically discussed. In relation to Italy, investors are no longer up to theory.
The Japanese government easily sells its long -term bonds with a profitability of less than 1% per year in debt markets. From the government of Italy, these markets require profitability 3-4 times larger. In Japan, Japanese banks and financial companies are the main buyers of government bonds, and the main reserve for such purchases is the giant savings of Japanese families stored in them, the largest in the world. In Italy, the accumulations of citizens are simply not comparable with Japanese, as well as the general financial capabilities of Italian banks - compared to Japanese banks.
The influx in Italy investments from abroad in this sector slowed down. The share of foreign buyers of Italian government bonds (mainly large international banks and investment funds) significantly decreased: only from January 2011 to April 2012-from 43 to 33% (Thomson Reuters estimates). Accordingly, two -thirds of these bonds are now bought by Italian banks and financial companies.
Debt paradox
Until the mid-70s of the last century, public debt in Italy did not exceed 50% of GDP. A one hundred percent level was passed in the mid-80s, and after another 10 years it was actually reached today, after which it decreased markedly.
Moreover, for the period since 2000, the governments of Italy, even with such debt, made ends with such a debt without much difficulty: the deficit of the Italian state budget did not exceed 2-3% of GDP, easily fitting in the Maastricht norms for Eurozone, and only in the crisis 2009-2010 he reached 5%. Nevertheless, it became more and more expensive to occupy new money in debt markets in order to provide this “lightness”, and already the accumulated debt demanded more and large amounts. For example, in 2013, it should only pay 165 billion euros (Bloomberg estimates), that is, $ 215 billion on the account of its current service.
The growing pressing against Italy by debt markets, their participants explained a number of reasons. And the first of them is a weak economic growth. Over the past 15 years, he has been on average less than 1% per year. At the same time, it was necessary to pay many annual interest on the new government bonds.
In addition, the Italian economy is noticeably inferior to other European economies in competitiveness. According to the Eurostat agency, during the period since 1998, the costs of personnel in the cost of products of Italian companies increased by 6.6%, while on average they, on the contrary, were reduced by 6.9%. This pretext slowed down the total growth of Italian exports, one of the main components of the country's GDP.
Similar problems are in principle solved by the temporary devaluation of the national currency, but in the case of Italy it is impossible: the euro is a single currency for 17 countries of Europe.
As a result, the business began to doubt the prospects of its expansion in Italy more and more: the volume of internal investment over the past five years has declined by almost 70%. What was reflected in the ranking of attractiveness for doing business compiled by the World Bank: by last year, Italy rolled away in it for 73rd place among 185 countries of the world.
Dilemma ECB
Back in mid -2011, the profitability of Italy requested by debt markets, like Spain, reached such prohibitive heights that urgent intervention of the European Central Bank (ECB) was required. For several months, he bought bonds of these countries in the market, reducing the profitability of them to acceptable levels, at which governments could continue new borrowings, serving the debt they accumulated on their own. And in the spring of 2012, the ECB suspended this practice.
And in the summer, at the summit of the European Union, it was decided that in the future, only those “problematic” European countries that will previously apply for financial assistance to the European anti -crisis fund will be able to calculate at the European Bank ransom in the European Bank.
But recall Greece, Ireland and Portugal. Such assistance is provided only on the strict conditions of reforming the appealing countries of their own financial and budget policy, accelerated privatization of remaining state property and maximum savings in state expenses for years to come. That is, it is on the conditions that Italian voters have now voted against. And financial markets heard them.
The reaction of debt markets to the results of the parliamentary elections in Italy, ending on Monday, was not long in coming. On Wednesday, February 27, the country's government put on debt auction the next issues of government bonds totaling 6.5 billion euros. Their results were not surprised: the yield requested by the market for 10-year obligations was 16% higher than at the same auction only a month ago, in January, and for 5-year bonds-22% higher.
A day earlier, on Tuesday, world shares reacted to news from Italy by reducing its indices by 1.5-5%, and the euro exchange rate to the dollar fell by 1%per day. Investors' fears regarding the capabilities of Italy, the third in terms of volumes of the eurozone economy, to cope with the accumulated state debt, has noticeably diminished against the backdrop of saving measures that the “technical” government of Mario Monti took.
Now these fears have returned to financial markets. And with them, forecasts about whether the current funds of the European Anti -Crisis Fund (about 500 billion euros) are enough to help Italy if the country suddenly is forced to turn to the EU - following Greece, Ireland and Portugal.
After the USA and Japan
The public debt accumulated by Italy is 127% of the country's GDP, according to this indicator, only Greece (165% of GDP) is ahead of it in Europe. However, in terms of absolute volume of this debt (2.6 trillion dollars), Italy is inferior to only two countries of the world - the USA ($ 16.6 trillion) and Japan (about 14 trillion dollars).
In the United States, public debt today is 106% of GDP. In Japan, according to preliminary estimates of the IMF, - 235%! That is almost twice as much as in Italy. But the long -term crisis in Japan in financial markets is only theoretically discussed. In relation to Italy, investors are no longer up to theory.
The Japanese government easily sells its long -term bonds with a profitability of less than 1% per year in debt markets. From the government of Italy, these markets require profitability 3-4 times larger. In Japan, Japanese banks and financial companies are the main buyers of government bonds, and the main reserve for such purchases is the giant savings of Japanese families stored in them, the largest in the world. In Italy, the accumulations of citizens are simply not comparable with Japanese, as well as the general financial capabilities of Italian banks - compared to Japanese banks.
The influx in Italy investments from abroad in this sector slowed down. The share of foreign buyers of Italian government bonds (mainly large international banks and investment funds) significantly decreased: only from January 2011 to April 2012-from 43 to 33% (Thomson Reuters estimates). Accordingly, two -thirds of these bonds are now bought by Italian banks and financial companies.
Debt paradox
Until the mid-70s of the last century, public debt in Italy did not exceed 50% of GDP. A one hundred percent level was passed in the mid-80s, and after another 10 years it was actually reached today, after which it decreased markedly.
Moreover, for the period since 2000, the governments of Italy, even with such debt, made ends with such a debt without much difficulty: the deficit of the Italian state budget did not exceed 2-3% of GDP, easily fitting in the Maastricht norms for Eurozone, and only in the crisis 2009-2010 he reached 5%. Nevertheless, it became more and more expensive to occupy new money in debt markets in order to provide this “lightness”, and already the accumulated debt demanded more and large amounts. For example, in 2013, it should only pay 165 billion euros (Bloomberg estimates), that is, $ 215 billion on the account of its current service.
The growing pressing against Italy by debt markets, their participants explained a number of reasons. And the first of them is a weak economic growth. Over the past 15 years, he has been on average less than 1% per year. At the same time, it was necessary to pay many annual interest on the new government bonds.
In addition, the Italian economy is noticeably inferior to other European economies in competitiveness. According to the Eurostat agency, during the period since 1998, the costs of personnel in the cost of products of Italian companies increased by 6.6%, while on average they, on the contrary, were reduced by 6.9%. This pretext slowed down the total growth of Italian exports, one of the main components of the country's GDP.
Similar problems are in principle solved by the temporary devaluation of the national currency, but in the case of Italy it is impossible: the euro is a single currency for 17 countries of Europe.
As a result, the business began to doubt the prospects of its expansion in Italy more and more: the volume of internal investment over the past five years has declined by almost 70%. What was reflected in the ranking of attractiveness for doing business compiled by the World Bank: by last year, Italy rolled away in it for 73rd place among 185 countries of the world.
Dilemma ECB
Back in mid -2011, the profitability of Italy requested by debt markets, like Spain, reached such prohibitive heights that urgent intervention of the European Central Bank (ECB) was required. For several months, he bought bonds of these countries in the market, reducing the profitability of them to acceptable levels, at which governments could continue new borrowings, serving the debt they accumulated on their own. And in the spring of 2012, the ECB suspended this practice.
And in the summer, at the summit of the European Union, it was decided that in the future, only those “problematic” European countries that will previously apply for financial assistance to the European anti -crisis fund will be able to calculate at the European Bank ransom in the European Bank.
But recall Greece, Ireland and Portugal. Such assistance is provided only on the strict conditions of reforming the appealing countries of their own financial and budget policy, accelerated privatization of remaining state property and maximum savings in state expenses for years to come. That is, it is on the conditions that Italian voters have now voted against. And financial markets heard them.