Mario Draghi did not mention Italy by name, but his threat Undermining EU Budget Rules Carries High Price For All was well understood by the bond markets.

Speaking to European Union leaders at a summit devoted to euro zone integration, Mario Draghi said EU budget rules, the Stability and Growth Pact, had to be respected in the interest of all, one official with insight into the summit said.

“There is no evidence that to undermine all the rules will lead to prosperity, but it will carry a high price tag for all actors,” the official reported Draghi as telling 27 EU leaders — all except Britain which is due to leave the EU in March 2019.

“Rules must be respected in the self-interest of all parties, especially the weaker ones,” Draghi told the leaders.

Paper Tigers

France and Spain repeatedly ignore budget targets. Little is said and nothing is done. Germany has a huge account surplus and little is said and nothing is done. Germany itself violated budget rules for long periods of time and little was said, and nothing done.

Italy 10-Year Weekly Chart

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