BBC News
October 5, 2011
The basic situation this Wednesday morning, with markets yo-yoing and default insurance costs for major banks astronomic, is as follows:
1) Greece remains on the edge of default. Its revised budget deficit numbers on 3 October (8.5% deficit in 2011) were expected, but they mean any disbursement of the 8bn euro tranche by the Troika has to be done using the fig leaf of "we have plans to close the gap next year").
2) Italy's problems are equally strategic: its rating was downgraded last night by Moody's, citing three reasons:
a. Stress in the eurozone because of Greece
b. Low growth
c. Implementation risks due to political uncertainties - viz, the country is ruled by what traders in the City of London technically term "a muppet".
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