U.S. Markets closed

Italian Debt Crisis Has Global Markets on Edge. Here’s Why It Matters to You

Daily Ticker

European politicians are running out of time. After more than a year of failing to sufficiently handle the the Greek sovereign debt problem, the crisis is spreading to Italy in a meaningful way. Italy's cost of borrowing rose to its highest rate today - with two-year yields rising to over 6% -- since the country adopted the Euro.

The financial situation is leading to a political crisis in Italy. Prime Minister Silvio Berlusconi is facing mounting to pressure to resign at home. Meanwhile, international markets are looking for the country to take bold steps to get their spending under control.

Why does this matter?
That's the topic in the accompanying video segment with The Daily Ticker hosts Aaron Task and Henry Blodget.

1. Italy is the third largest economy in Europe, and by some estimates is the third largest issuer of debt in the world.

2. Italy has EUR167 billion in debt coming due next year alone, the WSJ reports. While they can probably roll that debt over, the question is can it be done at a reasonable interest rate?

3. No one knows that global bank exposure is to European debt. As Henry mentions in the video, it's nearly impossible, even for the banks to calculate their derivative exposure to European sovereign debt.