City Crime
Italy’s PM To Resign Over Financial Crisis
Italian Prime Minister Silvio Berlusconi said he would resign after the country’s budget is passed. The 75-year old Berlusconi has been a dominant force since forming the Forza Italia party in 1994, and his pending departure marks the end of an era for Italian politics.
But while the political spectacle that came with Berlusconi could now fade, the financial show might be just beginning. The pricing – set by traders who are selling Italy’s bonds – hit 7.3% by mid morning after breaking through 7% a short while earlier. “It’s like tectonic plates,” a desk analyst told CNN. “You have this pressure and then it breaks.”
To put Italy’s bond yields in context: Ireland bond yields were just over 8% before the country was bailed, Greek yields touched 10% and Portugal’s hit 9%.
Italy and Spain – the eurozone’s third and fourth largest economies – are those often referred to as too big to fail. So far, the eurozone countries and the European Central Bank have actively kept the bloc’s struggling economies afloat.
But their powers may be limited when it comes to Italy. The numbers are huge, and the political – and financial – capacity to continue supporting the bloc’s weak will face a mighty test should Italy stumble.
The numbers are brutal. Italy’s economy makes up 17% of the eurozone. Combined, Greece, Ireland and Portugal – the countries currently living off Europe’s bailout fund and the International Monetary Fund – make up less than 6%.
Italy’s debt stands at €1.9 trillion ($2.6 trillion), or 120% of gross domestic product. Compare that to the combined Greece, Ireland and Portugal’s debt – around €640 billion as at full year 2010, according to Eurostat, the statistical office of the European Union.
Italy faces around €380 billion in bond repayments and deficit costs by the end of 2012, according to Evolution Securities’ analyst Elizabeth Afseth. Its next major payment is €26 billion, due in February next year. With its funding costs now over 7%, that could prove an huge hurdle.
The oft-quoted 7% figure is, by and large, arbitrary. It is regarded as the level at which countries can no longer fund themselves – but depends on how long it stays at that level and how much the country needs to raise.
Vitally, however, it is a measurement of confidence and that – in these volatile markets – matters. When yields hit 7% it is extremely difficult to pull them back. According to Afseth, it is seen by investors as a “point of no return.”
And Italy’s situation is probably worse than the bond yields suggest, with the ECB’s intervention keeping the price of its funding down. According to Evolution Securities, the ECB began buying Italian and Spanish bonds on August 8 this year, after yields hit 6.08%. The following week, the ECB settled €22 billion of purchases. Last week, the bank settled €9.52 billion in purchases – the bulk of which were most likely Italian bonds, according to Afseth.
While the ECB – whose presidency has just been taken up by Italy’s Mario Draghi – has proved a key player in the survival of the eurozone to date, its patience appears to be growing thin. This week Yves Mersch, the governor of Luxembourg’s central bank and a member of the ECB’s governing council, told Italy’s La Stampa the bond buys should be “limited in quantity and in time.”
He said if the bank’s interventions are being undermined by a lack of effort from national governments, “we should ask ourselves about the problem of incentives.”
If Italy is forced to turn to Europe’s bailout fund, the outcome looks ugly. The fund is being enlarged to a lending capacity of €440 billion. Of that, around €140 billion has been committed to the bailouts of Greece, Ireland and Portugal, according to Afseth.
That leaves €300 billion – a sum that Italy would suck up, before needing more.
Plans to leverage the bailout fund, part of the triple-pronged attack on the crisis revealed after European leaders’ crisis meeting in October, will also suffer from the market’s plummeting confidence.
And so the markets watch and wait, as Italy’s “too big to fail” economy teeters on its financial tightrope.
The National Emergency Management Agency (NEMA) has warned against the practice of scooping fuel from accidented tankers, noting it has led to the loss of many lives and property.
The agency’s Head of Operations in Ibadan, Mr Kadiri Olanrewaju, cautioned during a sensitisation programme on tanker fire accidents, held on Wednesday at Akinyele Local Government Area (LGA) of Ibadan.
The News Agency of Nigeria (NAN) reports that the programme was held in collaboration with the Oyo State Emergency Management Agency (OYSEMA) in Akinyele LGA and other stakeholders.
Olanrewaju said Akinyele LGA was selected for the awareness campaign because of its strategic location as a trailer route from the northern to the southern part of the country.
“These agencies felt that it was necessary to bring this important message to critical stakeholders in communities under the Akinyele LGA, where we have major trailer parks.
“The campaign kick-started in Ogun; we will soon move to Osun.
“The focus is to drive strong sensitisation against the scooping of fuel at the grassroots level, especially for local governments along the trailer routes to reduce needless loss of lives and property,” he said.
He charged the Federal Road Safety Corps (FRSC) and other relevant agencies to enforce the laws against underage driving and ensure the proper certification and retraining of drivers.
The Administrative Secretary of OYSEMA, Mrs Ojuolape Busari, said that Community Development Associations (CDAs) were involved in the campaign to reach a larger number of people.
Busari noted that people still scoop fuel from accidented tankers because there had not been any serious punishment attached to the offence.
She, therefore, called for stiff penalties for anyone caught perpetrating the act.
“Apart from the risk of fire outbreak that may occur during the practice, it is stealing, which is a serious offence,” she said.
Earlier, the Executive Chairman of Akinyele LGA, Hon. Akinwole Akinyele, suggested that fuel transportation should be handled through the rail system, while leaving tankers for intra-city fuel transportation.
The chairman called for an urgent review of laws and policies related to fire services and road safety to meet the urgent and modern demands.
He said that the implementation of stricter fuel transportation regulations, vehicle maintenance, drivers’ training and retraining, and safer fuel handling practices remained crucial to the fuel distribution system in Nigeria.
“The attendant costs of tanker fire accidents have been huge, both in terms of the high number of fatalities and the loss or destruction of property, environmental damage, and public infrastructure,” he said.
NAN reports that the event featured technical sessions, lectures, and presentations from the FRSC, Nigeria Security and Civil Defence Corps (NSCDC), Fire Service, traditional and market leaders, among others.
…To Confer National Honours On Select Lawmakers
President Bola Ahmed Tinubu will deliver a presidential address before a joint session of the National Assembly today as part of events marking Nigeria’s Democracy Day celebration.
The event is scheduled to be held in the House of Representatives chamber of the National Assembly Complex, Abuja.
This was confirmed in a statement released on Sunday by the spokesperson of the House of Representatives, Hon. Akin Rotimi.
The statement referenced an internal memorandum issued by the Clerk of the House, Yahaya Danzaria, officially notifying lawmakers of the proceedings.
According to the memorandum, the special joint sitting will begin at 11:00 a.m. with preliminary activities before the arrival of President Tinubu, who is expected at noon.
Democracy Day is observed annually on June 12 in remembrance of the 1993 presidential election, widely regarded as Nigeria’s most credible poll since independence.
The election was won by Chief Moshood Kashimawo Abiola but was annulled by the military government led by General Ibrahim Babangida (retd).
The theme for the 2025 celebration is “26 Years of Democracy: Renewing Our Commitment to National Development.”
President Tinubu is attending the event as the Special Guest of Honour and is expected to use the platform to reflect on the state of Nigeria’s democracy and present his administration’s vision for the future.
The session will also feature goodwill messages from former presiding officers of the National Assembly.
Meanwhile, the President will confer national honours on select legislators in what organisers describe as part of efforts to recognise contributions to democratic governance.
The National Assembly views the event as an important marker of Nigeria’s political evolution.“This joint sitting represents a significant moment in Nigeria’s democratic journey,” the statement read.
“It underscores the pivotal role of the National Assembly in safeguarding democratic values, fostering accountability, and advancing national development over the past 26 years of uninterrupted civil rule.”
Lawmakers also used the occasion to urge Nigerians to reflect on the country’s democratic progress and to renew their commitment to national unity and inclusive governance.
“The House of Representatives calls on all Nigerians to embrace the spirit of Democracy Day as a time for reflection, renewed patriotism, and commitment to building a more inclusive, prosperous, and united nation,” the statement said.
Meanwhile, the Federal Government has declared today as a public holiday, to commemorate this year’s Democracy Day celebration held every June 12.
June 12 was officially designated as Nigeria’s Democracy Day in 2018, to honour the annulled 1993 presidential election, widely considered the freest and fairest in the nation’s history and won by Chief MKO Abiola.
In a statement announcing the holiday, the Minister of Interior, Dr Olubunmi Tunji-Ojo, on behalf of the Federal Government, congratulated citizens on the occasion of 26 years of uninterrupted democratic rule in the country.
“June 12 represents our historic journey to building a nation where truth and justice reign, and peace is sustained and our future assured,” Tunji-Ojo stated.
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