Italy escapes a fiscal crisis despite its enormous debt

European policymakers are wondering whether they can learn something from the way Italy managed its public finances during the economic downturn, according to Der Spiegel. Italy's sovereign debt is 115.8% of gross domestic product, the highest in Europe, but the country was largely untouched by the euro zone's debt crisis. Italy has not bailed out banks, experienced a housing bubble or dealt with a bloated construction industry, Der Spiegel notes.
Der Spiegel

Weaker EU members' dependence on the ECB is at a record high

Data show that weaker members of the EU are more dependent on the European Central Bank than ever before. The revelation comes as European regulators prepare to release results of stress tests on 91 banks, part of efforts to reassure markets
about the stability of the financial sector. However, sources said some regulators are urging that results be released before the start of trading in Europe, rather than after, as planned. The Wall Street Journal

The European PIIGS problem clearly explained

Clark and Dawes ...; the equivalent to Who's on First

you gotta watchy this

Market Reflections 1/29/2009

The White House warned Thursday to expect a "staggering" contraction for fourth-quarter GDP in data to be released Friday, news that didn't help any appetite for risk. Durable goods data for December in fact showed staggering losses as did new home sales. Weekly jobless claims continue to deteriorate pointing to another month of severe payroll contraction. All the day's news sent stocks, which had shown resistance to bad news over the last few sessions, down sharply with the Dow industrials losing 2.7 percent.

Earnings news was headed by a massive $5.9 billion loss for Ford and included big losses by big and small companies alike. Earnings have proven far worse than expectations, now at -35% year-on-year vs. expectations at the beginning of the month for barely a 1% decline (data provided by the courtesy of Thomson Reuters).

Money moved back into the safety of gold which gained $20 to end back over $900 at $909.80. All the bad news isn't hurting oil where talk of a strike at Shell refineries and heavy talk of OPEC cutback compliance are keeping prices over $40. However bad conditions are here talk is building that they may be worse in Europe where questions are now being asked over the future of the euro. The dollar gained more than 2 cents against the euro to end at $1.2950.

Money moved out of the Treasury market following a poorly received 5-year auction, a massive $30 billion auction that attracted limited interest and raises questions over how many buyers are left for the government's debt. The 3-month yield rose 4 basis points to 22 basis points with the 30-year up a very steep 22 basis points to 3.63 percent.