Italy Downgrades Itself
The government announces that Italy’s growth will be weaker than hitherto predicted and the deficit will be commensurately worse.
Verdana;mso-bidi-font-family:Verdana” lang=”EN-US”>Reuters: “Italy slashes growth outlook, hikes deficit, debt goals mso-fareast-font-family:Verdana;mso-bidi-font-family:Verdana” lang=”EN-US”>”
“The government forecast that gross domestic product would shrink this year by 2.4 percent, twice as much as the previous projection of a 1.2 percent drop, made in April. The weakening economy is badly hurting fiscal consolidation efforts. The government hiked its forecast for the 2012 budget deficit to 2.6 percent from 1.7 percent, and more than tripled the 2013 target to 1.8 percent from 0.5 percent.
Until April, the government was pledging to balance the budget in 2013”
Sounds like they might need a bailout sooner than expected. However, Italy seems too big to bail, so that would surely disturb the current happy complacency.
ESM Conditions Stipulated by Court Accepted
That went faster than expected – apparently an accord has been signed in which euro area members accept the stipulations for ESM ratification demanded by Germany’s constitutional court:
Der Spiegel: “Euro Zone Changing ESM to Satisfy German Court”
Citigroup Warns on Ireland
Irish government bonds were among the best performing bonds on the planet over the past year. Now Citigroup is warning that the euphoria may be slightly premature (as an aside: we happen to have heard that most of the bonds were bought by a single large investor – and you know how it is when you become the market…).
Bloomberg: “Citigroup Warns Irish Investors to Plan for Losses”