Italy's New Government Pursues Risky Policies, Spooking Markets and Raising Fears of Debt Crisis

Italy's new right-wing government under Giorgia Meloni is pursuing risky fiscal policies like tax cuts and increased spending, spooking bond markets.

Italy's high debt levels make it vulnerable to rising interest rates. Yields have spiked, raising concerns about a debt crisis.

Downgrades by credit rating agencies could further destabilize Italian banks and bonds.

The ECB's collateral rules worsen bond market tremors, but the ECB will likely intervene if Italy nears crisis.

In the end the EU will bend rules to save Italy, but it may require a crisis first.