Italy is likely to need an EU rescue within six months as the country slides into deeper economic crisis and a credit crunch spreads to large companies, a top Italian bank has warned privately.
Mediobanca, Italy’s second biggest bank, said its “index of solvency risk” for Italy was already flashing warning signs as the worldwide bond rout continued into a second week, pushing up borrowing costs.
“Time is running out fast,” said Mediobanca’s top analyst, Antonio Guglielmi, in a confidential client note. “The Italian macro situation has not improved over the last quarter, rather the contrary. Some 160 large corporates in Italy are now in special crisis administration.” Continue reading
Moody’s Investors Service cut the debt ratings of six European countries including Italy, Spain and Portugal and revised its outlook on the U.K.’s and France’s top Aaa ratings to “negative,” citing Europe’s debt crisis.
Spain was downgraded to A3 from A1 with a negative outlook, Italy was downgraded to A3 from A2 with a negative outlook and Portugal was downgraded to Ba3 from Ba2 with a negative outlook, Moody’s said. It also reduced the ratings of Slovakia, Slovenia and Malta.
Full article: Moody’s Cuts Europe Sovereigns Including Italy, Spain (Bloomberg)
The term Balkanization is an interesting one. By definition it refers to the process of dividing a large politico/geographic region into smaller groups of states or nations. It originally applied around the turn of the 19th century to the carving up of the formerly Ottoman-ruled Balkan Peninsula into a number of small, opposing nation-states.
The process was repeated in the1990s when Germany and the Vatican’s recognition of Slovenia and Croatia as sovereign states separate from Yugoslavia stimulated the entire breakup of greater Yugoslavia ending in its virtual colonization by the German-led EU.
A valid comparison can today be made between the breakup and colonization of Yugoslavia and a similar tactic German elites are now using to virtually Balkanize the whole EU.
The instrument they are using is the forthcoming eurozone treaty that will endorse a fiscal union of top-tier states—destined to number exactly 10—and result in a second tier of nation states enjoying lesser recognition than the 10.
On present indications, the second tier will comprise some states that willingly accede to the authority of the governing power of the 10, and others that are so economically weakened and culturally resistant to the dominating power that they will become virtually enslaved within the union. Greece risks falling into the latter category.
One observer who is quite familiar with the effects of this process is Serbian journalist Momcilo Pantelic. In a recent piece, Pantelic observed that “we have seen a flare-up between financially responsible and spendthrift countries and between the more developed and less developed members of the EU. All of this has a lot in common with the process that led to the breakup of Yugoslavia” (Politika, January 15).
Continue reading article: Germany’s Angela Merkel and the Balkanization of Europe (The Trumpet)