Posted on 07/10/2011 8:26:21 PM PDT by bruinbirdman
Once again Europe's debt crisis has metastasized, and once again the financial authorities face systemic contagion unless they take immediate and dramatic action.
If the ECB's Jean-Claude Trichet is right in claiming that Europe was on the brink of a 1930s financial cataclysm a year ago - and I think he is - it is hard see how the threat is any less serious right now.
Fall-out from Greece flattened Portugal and Ireland last week. It is engulfing Spain and Italy, countries with €6.3 trillion of public and private debt between them.
Yields on Italian 10-year bonds hit a post-EMU high of 5.3pc on Friday. This is not just a theoretical price: the Italian treasury has to roll over €69bn (£61bn) in August and September; it must tap the markets for €500bn before the end of 2013. The interest burden on Italy's €1.84 trillion stock of public debt is about to rise very fast.
Spanish yields punched even higher, through the danger line of 5.7pc. The bond markets of both countries are replicating the pattern seen in Greece, Portugal, and Ireland before each spiraled into insolvency. And the virus is moving up the European map. French banks alone have $472bn (£394bn) of exposure to Italy and $175bn to Spain, according to the Bank for International Settlements.
"We believe the European sovereign crisis might be entering a new phase with contagion reaching the larger economies," said Jacques Cailloux, chief Europe economist at RBS.
"It is unclear to us how this latest negative shock to confidence is going to be undone in the absence of a 'shock and awe' policy response."
Italy's premier Silvio Berlusconi has chosen this moment of acute danger to undermine his own finance minister, Giulio Tremonti, the one figure in his cabinet respected by global bond vigilantes. "He's
(Excerpt) Read more at telegraph.co.uk ...
Maybe he has a guru there or was taking Ayahuasca
I like yr yacht on yr homepage
No one's gonna die. Basically even in countries like Ireland, salaries have been cut, and the economy is doing well but the cost of borrowing is sky high.
The Euro mayyyy go, but I doubt that, the German economy is too strong.
True for Spain, but Italy’s Berlusconi is not a leftist. he’s a comedian...
there’s no lira. it hasn’t existed for years...
Those numbers munin posted are disgusting if true. What's funny is the productive Euros having to prop up the Speedo wearing loverboys.
“When the New Mark is issued, buy it and other assets dominated in it. Or buy something else substantial.”
Germany uses the Euro the way China uses the yuan - as a way to keep its exports cheap. That’s why they’ve been willing, so far, to underwrite the PIIGS — it keeps their exports competitive.
;^)
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