Cover

Rumours that Italy, in the wake of Spain, may demand financial assistance from the EU have been vigorously denied, in particular by the head of government. “Italy is not in danger,” reads La Stampa’s headline, quoting Prime Minister Mario Monti.

The day before, Monti had icily dismissed remarks made by Austrian Finance Minister Maria Fekter, which suggested that Italy could suffer the same fate as Spain. Following Spain’s request for assistance for its crumbling bank system, share prices plummeted on the Milan stock exchange while the rates of interest on Italian public debt surged above the psychological threshold of 6%. Adding his voice to Monti’s, German Finance Minister Wolfgang Schauble affirmed inan interview also in La Stampa that “Rome is not in danger” on condition that it “perseveres on the path taken by the government”.

“The idea that just because the Spanish banks have had to be bailed out the Italian banks will also need to be rescued is patently absurd,” points out Stefano Lepri. The La Stampa journalist continues —

There is no data to justify growing concern about our country, which is safe provided that there is no confusion about its policy. […] The problems in the Eurozone have been neglected to the point where the bad faith of those who speculate against Italy has tainted everyone’s fears. In the space of a day, the irrationality of the markets has succeeded in transforming the positive development of the latest intervention on behalf of Spain into bad news.

It is a view that is also shared by Il Sole 24 Ore

Those who thought that Eurogroup’s timely and for once preventive intervention on behalf of the Spanish banks would for once result in — if not calm — at least a few days of truce have been proved to be gravely mistaken. The markets are fed up with Europe’s reluctant firemen. They are less and less convinced by half-measures and the progressive solidarity that aims to achieve a quick fix with a minimum of resources, which inevitably falls short of radical, definitive and most importantly credible intervention. And it is for this reason that contagion continues to be a serious threat to the single currency. In the wake of Greece, Ireland, Portugal and Spain, it will shortly be Italy’s turn. In the meantime, we will likely see a fifth episode in the series of bailouts when Cyprus requests assistance for its banks in the next few days.