Beautiful Virgin Islands

Tuesday, Jun 24, 2025

Italy is about to hijack the eurozone

Italy is about to hijack the eurozone

There is still some debate about who came up with the adage that ‘if you owe the bank $100 that is your problem. If you owe the bank $1 million dollars that is their problem’. It is usually attributed to the oil tycoon J. Paul Getty, which may help explain how he became the richest man of his era. Occasionally, and in a slightly modified form, it is attributed to John Maynard Keynes in his advice to the British cabinet after world war two. And yet in truth, it should probably have been coined by an Italian. Why? Because the country now owes so much money to the rest of the eurozone it looks about to hijack the whole system.
With Italian debt soaring as it pays for one of the worst outbreaks of Covid-19, on the back of one of the world’s weakest economies, calls are being made for that debt to be ‘forgiven’. Riccardo Fraccaro, the Prime Minister Giuseppe Conte’s closest aide, has started demanding the ‘cancelling of sovereign bonds bought during the pandemic or perpetually extending their maturity’ (which is sort of the same thing, since a debt with a ‘perpetually extended maturity’ is a polite way of saying it is a debt you don’t plan to ever repay). In other words, a huge slice of Italy’s outstanding €2.2 trillion (£1.9 trillion) of debt would simply be magicked away.

When you owe that much money, you can hijack the system
Not surprisingly, that is causing a certain amount of unease among the other countries in the eurozone. The President of the European Central Bank Christine Lagarde has already said it would be illegal under the treaties. The Governor of the Bank of France, Francois Villeroy de Galhau, described it today as a 'very dangerous path’, while his Portuguese counter-part Fabio Panetta argued it would have ‘destabilizing consequences’. Well, maybe it would. But what exactly is anyone going to do about it? In truth, the ECB and the eurozone are about to be put in a very difficult place.

Italy already owes vast sums of money, which its shrivelled, shrunken economy, battered by 20 years inside a dysfunctional monetary union, won’t be able to cope with. Of its €2.2 trillions of debt, the third-highest in the world in absolute terms, the majority is now owned either by the ECB, which has bought up virtually every new issue this year, or else by Italian and other eurozone banks.

Cancellation, or the more fudged ‘perpetual maturity’, is the only option left. In effect, Italy is now turning the tables on Germany, and ‘frugals’ within the eurozone. The debt will either have to be taken onto the books of the ECB or else reneged on, which would collapse the banking system.

The Germans will be outraged by that, and so will the Dutch and the Finns, and perhaps too the French. But then again, President Macron may soon be having a quiet word with his central bank governor to point out that France’s debts will soon be the third highest in the world in absolute terms. France isn’t close to Italy when it comes to debt as a percentage of GDP, but as a bigger economy it will soon owe more overall and its debt is far more widely held around the world. So perhaps, from a French perspective, cancellation isn’t such a terrible idea after all.

In truth, when you owe that much money, you can hijack the system, and the debtor can take control. Lord Keynes or J. Paul Getty, if they were around, could have pointed that out to the founders of the eurozone right at the start — but now it looks as if they will have to relearn that lesson for themselves.
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
“You Have 12 Hours to Flee”: Israeli Threat Campaign Targets Surviving Iranian Officials
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Airlines Evaluate Flight Cancellations Amid Escalating US-Iran Tensions
Starmer Invites Innovators to Join Government Talent Scheme
UK Economy’s Strong Opening Quarter Shows Signs of Cooling
Harrods Seeks Court Order to Secure Al Fayed Estate for Victims
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
WATCH: Israeli forces show the aftermath of a massive airstrike at Iran's Isfahan nuclear site
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
We have new information and breaking details to share about what is shaping up to be a historic air campaign tonight
Six Massive Bombs Dropped on Fordow; Trump: 'A Historic Moment for the U.S., Israel, and the World'
Fordow: Deeply Buried Iranian Enrichment Site in U.S.–Israel Crosshairs
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Pakistan to nominate Trump for Nobel Peace Prize.
BBC Demands Perplexity AI Immediately Stop Using Its Content
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
Political Turmoil Resurfaces in Belgium Amid Economic Concerns
Fed policymakers divided on timing of interest rate cuts
Trump signals imminent agreement with Harvard University
Inheritance tax referendum alarms Swiss billionaire community
Japan cancels bilateral security meeting amid US defence demands
AI skeptic Emily Bender warns that ‘the emperor has no clothes’
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
EU Proposes Ban on New Russian Gas Contracts
×