Markets relax, a bit, on Italy crisis

Markets relax, a bit, on Italy crisis

The consensus in financial markets today seems to be that yesterday’s drop on fears that Italy was headed to a crisis that could shake the euro were a bit overstated. This isn’t to say that markets have concluded that the crisis is over–or never existed–just that it won’t bring the end of the EuroZone as we know it tomorrow.

Here we go again on the euro: The bad news is that Italy’s financial crisis is political

Here we go again on the euro: The bad news is that Italy’s financial crisis is political

The good news is that the European Central Bank, thanks to the global financial crisis and the Greek debt crisis, has mechanisms in place to support Italian bonds, Italian banks, and the Italian financial system. The bad news is that an Italian government has to ask for that help after swearing to be fiscally responsible. At the moment there is, once again, no Italian government. A bid by the populist parties that came in ahead of the field in the latest election was rejected by Italy’s president. And these parties aren’t likely to meet the European Central Bank’s requirements for help.