markets

The markets were worried about the ability of Italy to repay it's debts, so it banged up the interest rates good and hard, and Italy defaults. The same had previously happened to Ireland, Greece and Portugal in the same way.

DUH!

It's like my bank. "You reached your over-draught limit, so we gave you a £25 penalty. You are now even more over the limit. We may have to give you another penalty. We are also reducing your over-draft limit. Please give us £500 immediately" So where is this money coming from? Can't you wait a week? Why are you making my life more difficult?

I'm not much good on economics, can anyone explain why the "markets" are making this self-fullfilling changes?

Power!

On the other hand, Italy and Greece know perfectly well that things will only get worse until they have stable governments. So, Berlusconi and Papandriou have both resigned, but haven't gone yet, no-one knows when they will go, or who will replace them...

It's not just the markets acting like prats.

Correction - now someone has been found that is daft enough to take control of Greece, but only until they can hold elections. Expect more pressure to be piled onto Greece in about five minutes (just wait until Germany hears about this).