London Daily

Focus on the big picture.
Wednesday, Oct 08, 2025

Italy is about to hijack the eurozone

Italy is about to hijack the eurozone

There is still some debate about who came up with the adage that ‘if you owe the bank $100 that is your problem. If you owe the bank $1 million dollars that is their problem’. It is usually attributed to the oil tycoon J. Paul Getty, which may help explain how he became the richest man of his era. Occasionally, and in a slightly modified form, it is attributed to John Maynard Keynes in his advice to the British cabinet after world war two. And yet in truth, it should probably have been coined by an Italian. Why? Because the country now owes so much money to the rest of the eurozone it looks about to hijack the whole system.
With Italian debt soaring as it pays for one of the worst outbreaks of Covid-19, on the back of one of the world’s weakest economies, calls are being made for that debt to be ‘forgiven’. Riccardo Fraccaro, the Prime Minister Giuseppe Conte’s closest aide, has started demanding the ‘cancelling of sovereign bonds bought during the pandemic or perpetually extending their maturity’ (which is sort of the same thing, since a debt with a ‘perpetually extended maturity’ is a polite way of saying it is a debt you don’t plan to ever repay). In other words, a huge slice of Italy’s outstanding €2.2 trillion (£1.9 trillion) of debt would simply be magicked away.

When you owe that much money, you can hijack the system
Not surprisingly, that is causing a certain amount of unease among the other countries in the eurozone. The President of the European Central Bank Christine Lagarde has already said it would be illegal under the treaties. The Governor of the Bank of France, Francois Villeroy de Galhau, described it today as a 'very dangerous path’, while his Portuguese counter-part Fabio Panetta argued it would have ‘destabilizing consequences’. Well, maybe it would. But what exactly is anyone going to do about it? In truth, the ECB and the eurozone are about to be put in a very difficult place.

Italy already owes vast sums of money, which its shrivelled, shrunken economy, battered by 20 years inside a dysfunctional monetary union, won’t be able to cope with. Of its €2.2 trillions of debt, the third-highest in the world in absolute terms, the majority is now owned either by the ECB, which has bought up virtually every new issue this year, or else by Italian and other eurozone banks.

Cancellation, or the more fudged ‘perpetual maturity’, is the only option left. In effect, Italy is now turning the tables on Germany, and ‘frugals’ within the eurozone. The debt will either have to be taken onto the books of the ECB or else reneged on, which would collapse the banking system.

The Germans will be outraged by that, and so will the Dutch and the Finns, and perhaps too the French. But then again, President Macron may soon be having a quiet word with his central bank governor to point out that France’s debts will soon be the third highest in the world in absolute terms. France isn’t close to Italy when it comes to debt as a percentage of GDP, but as a bigger economy it will soon owe more overall and its debt is far more widely held around the world. So perhaps, from a French perspective, cancellation isn’t such a terrible idea after all.

In truth, when you owe that much money, you can hijack the system, and the debtor can take control. Lord Keynes or J. Paul Getty, if they were around, could have pointed that out to the founders of the eurozone right at the start — but now it looks as if they will have to relearn that lesson for themselves.
Newsletter

Related Articles

0:00
0:00
Close
France: Less Than a Month After His Appointment, the New French Prime Minister Resigns
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Sarah Mullally Becomes First Woman Appointed Archbishop of Canterbury
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
US Prosecutors Gained Legal Approval to Hack Telegram Servers
Macron Faces Intensifying Pressure to Resign or Trigger New Elections Amid France’s Political Turmoil
Standard Chartered Names Roberto Hoornweg as Sole Head of Corporate & Investment Banking
UK Asylum Housing Firm Faces Backlash Over £187 Million Profits and Poor Living Conditions
UK Police Crack Major Gang in Smuggling of up to 40,000 Stolen Phones to China
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Trump Proposes Farm Bailout from Tariff Revenues Amid Backlash from Other Industries
FIFA Accuses Malaysia of Forging Citizenship Documents, Suspends Seven Footballers
Latvia to Bar Tourist and Occasional Buses to Russia and Belarus Until 2026
A Dollar Coin Featuring Trump’s Portrait Expected to Be Issued Next Year
Australia Orders X to Block Murder Videos, Citing Online Safety and Public Exposure
Three Scientists Awarded Nobel Prize in Medicine for Discovery of Immune Self-Tolerance Mechanism
OpenAI and AMD Forge Landmark AI-Chip Alliance with Equity Option
Munich Airport Reopens After Second Drone Shutdown
France Names New Government Amid Political Crisis
Trump Stands Firm in Shutdown Showdown and Declares War on Drug Cartels — Turning Crisis into Opportunity
Surge of U.S. Billionaires Transforms London’s Peninsula Apartments into Ultra-Luxury Stronghold
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
×