Why Markets Are Not Panicking About Italy (Yet)
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Uncertainty is a familiar part of Italian politics, and investors are already looking at what a new government could bring.
A country with one of the scariest debt loads on the planet slips into political chaos. The market reaction: a shrug.
At first glance, it makes no sense that Italian bond yields edged lower after Matteo Salvini, the leader of the populist, right-wing League party, provoked the collapse of the Italian government Tuesday.
Investors and economists have viewed Italy as a crisis waiting to happen because of its toxic combination of astronomical government debt, chaotic politics and dysfunctional economy. You wouldn’t think that a political meltdown would make market players more eager to lend Italy money.
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