The Italian government’s credit rating has been slashed by Moody’s from Aa2 to A2 with a negative outlook. The ratings agency blamed a “material increase in long-term funding risks for the euro area”, due to lost confidence in eurozone government debts. Despite Rome’s low current borrowing needs, and low private-sector debt levels in Italy, Moody’s said market sentiment had turned against the euro.
Erm, sorry but that’s not quite the full story here.
Let me expand the argument. The REASON Italy has been downgraded by Moody’s is that it’s PUBLIC SECTOR debt stood at a startling 116% of GDP last yea, the second worst after Greece. Then there is the endemic corruption. Then there is the total failure to reduce the growth of State borrowing.
So, the only surprise is that it has taken this long. The Euro dominos will fall, Merke can go whistle.