Italy works to calm Eurozone crisis while bond rates soar

Italy’s new prime minister has made himself economic minister.

Mario Monti unveiled the new Italian government – but no politicians have been included in the new administration. It’s made up of ex-bankers and technocrats, whose task is to implement a package of austerity measures to prevent italy from being dragged deeper into the Eurozone debt crisis.

Monti says he hopes his new government will restore market confidence in Italy and calm the tense political climate. Meantime concerns over the Eurozone are driving yields on 10-year bonds from France, Belgium, Spain and Austria have all soared to record highs.

The selloff has driven up the debt yields of countries that had been considered havens, including Finland and the Netherlands. Economists think the rush was triggered by several factors, including a European Union agreement with the banks to write down Greek bonds by 50 percent, the European Central Bank’s reluctance to buy distressed bonds, and talk about member countries leaving the Eurozone.

Video: DeGroote School of Business professor Marvin Ryder on the Eurozone developments: