Any other business: Bond markets are telling Italy that the comedy is well and truly over

What are bond markets saying about Italy? With my usual proviso that markets are best understood as shoals of piranhas, communicating moods of panic, indifference, bloodlust and satiety rather than coherent ideas, the relatively clear message earlier this week was that Italian government bond yields were perilously close to the threshold of panic.

That threshold is widely deemed to be 7 per cent, more than 4 per cent above benchmark yields for German, French and Dutch debt. Let me try to put this in perspective. The incremental interest cost to the Italian treasury is about €2 billion per percentage point per year, which doesn’t sound too terrifying. Italy has more debt than Spain, Portugal, Ireland and Greece combined, making it too big to be bailed out with the resources at the EU’s disposal, but unlike Greece it also has a productive private sector and a primary budget surplus before debt costs.