Gunpowder, treason and… what?

Despite the Greeks managing to avoid ‘blowing up' their parliament for the time being, one wonders who will be next in the firing line. Enter Italy, stage left.

Despite the 25bps rate cut by the ECB, Italian ten-year bond yields are at record highs, having briefly blipped down on the announcement. The half-life of central bank intervention is now calculated in hours and minutes rather than weeks and months. In this case it did not take long for the markets to realise that ‘Super Mario’s’ rate cut meant American-style easing was not on the agenda at the ECB, confirmed by their threat to suspend purchases of BTPs (Italian government bonds); but for how long I wonder? The head of the International Monetary Fund, Christine Lagarde, has said Italy’s...