Wednesday, December 7, 2011

All Roads Lead To Rome, But Italy Can Only Survive With Yields Lower Than 3%: The Math Does Not Add Up

Saving Italy is a Mathematical Impossibility.

BNN has a great interview today titled "All Roads Lead to Rome", however, they now turn to Greece. The Interviewee states simply that the math of the latest plans to save Europe does not add up. With a debt to GDP ratio of 120%, Italy needs a maximum yield of 3% to survive, not 5%, or 6% or 7%+.

At the current 120% ratio, a yield of 5% means 6% in relation to GDP. It simply cannot work.

With regards to the EFSF, Italy is contributing 21% to it, so in essence Italy would be insuring and paying for itself (!).

Also, being lost in translatio, ESM is being pushed to mid 2012 to handle Italy.


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