Tuesday, 12 July 2011
Monetarist economic policies fail to solve European escalating debt crisis
World stock markets fall as Italy struggled to avoid being sucked into the debt crisis. David Jones, chief market strategist at IG Index says ‘‘the banks are biggest fallers, because of concerns that the European crisis is spreading to Italy and Spain’’. The FTSE 100 index slumped by 133 points at one point in London, on the Bond Markets, the yield or interest rate on Italian 10 year bonds approached 6% the highest in at least a decade. Spanish yields hit 6.2%. Milan market fell by 4 per cent, with Fiat Industrial, Intesa SanPaolo Bank and Telecom Italia among the worst performers. Italy is the third largest nation in the single currency area and with a GDP about the same size as Britain. Greece, Ireland and Portugal, together account for just 6% of euro GDP whereas Italy represents about 16%.