The Italian media are calling it “Black Friday.” On July 8, Italian stocks sunk and interest rates soared. The yield on Italian 10-year bonds rose to 5.28 percent. The ftse mib—Italy’s main stock index—plunged 7 percent over the five sessions last week, its biggest fall in 14 months. “We can’t go on for many more days like Friday,” Reuters quoted a senior European Central Bank official as saying. “We’re very worried about Italy.”
On Monday it got worse. Yields on 10-year bonds hit 5.6 percent. Spain suffered too, as its 10-year bonds rose from 5.7 percent to 5.9 percent. Many experts believe that when it gets this expensive for countries to borrow, their economies are close to collapse. “The bond markets of both countries are replicating the pattern seen in Greece, Portugal and Ireland before each spiraled into insolvency,” wrote Ambrose Evans-Pritchard on Tuesday.