The alarmism of the last few days is not exaggerated: the markets have declared war on Italy and there is not much time left to find a solution. The ECB has just lowered the euro's key rate by 25 basis points to try to give relief to too weak growth in the euro area. Yet it remains a battle where not everyone can fight, because not everyone has the tools to do so. Small savers have only one weapon left: defense, through information. Knowing what is happening in Italy and in Europe is the only effective strategy for being able to make decisions responsibly.
Italian government bonds: The yield on bonds reached historic records: yesterday ten-year BTPs reached 6,19%, dangerously approaching the point of no return, estimated by analysts at 7%. Take or leave? It depends on everyone's risk appetite. How likely is it that Italy will declare default? European leaders say they will do anything to avoid this scenario, because breaking up the euro would cost nearly 10 times more than a Greek default. So, great deals on the Btp market. Yet few would swear that all will end well. The risk and the doubt remain.
Mortgages: Raising capital in the markets has become a difficult task for Italian banks. Amid calls for recapitalization from the EBA and concerns about the future of the euro, interest rates on loans to households could rise if the difficulties continue. So it's hard to see big business in mortgage origination these days. Furthermore, it must be considered that, even if the markets expect a decrease in the Euribor rate, it has already reached a very low level and it is probable that it will increase in the next few years.
Current accounts and deposits: All current accounts and private deposits are guaranteed by the Interbank Deposit Protection Fund which covers up to 100 euros (per person). The problem would therefore not arise in the event of default, because the Fund would guarantee the capital. The risk would exist if, in emergency conditions, the Government imposed a forced tax levy, but in that case there would not be much for the individual saver to do.
Safe-haven assets and currencies: They continue to inspire confidence in savers. Gold, which was quoted at $2009 per ounce in September 567, is now at $1.741 per tory ounce. Silver has gained 33% in one year. The yen and the Swiss franc strengthen daily against the euro, despite enormous efforts by central banks to curb excessive valuation.
