As forecast, the antics in Greece that have dominated the international news in recent days are merely the warm up act for what lies in store;
“The Italian government’s borrowing cost has risen as fears grow over political uncertainty in Rome. The yield on Italian 10-year bonds rose from 6.37% to a euro-era high of 6.64%, before retreating to 6.53%. It is feared that Italy, the eurozone’s third biggest economy, could become the next victim of the debt crisis. PM Silvio Berlusconi faces a crunch vote on public finance on Tuesday.”
According to Bloomberg, the real point of no return for Greece, Portugal and Ireland came when the yield on the ten-year bond went above around 6.5%. “After that, it took an average of 16 days for yields to pass the unsustainable 7% level.”
So the fact that Italy’s ten-year yield is now hovering around 6.5-6.6% is really rather worrying. “The acceleration in Italy’s bond yields is very, very frightening”, Gary Jenkins of Evolution Securities told Bloomberg. “It’s surprising how quickly a difficult situation can become an impossible one. Politicians always think they have lots of time, but when the market decides to withdraw support, it can do so very suddenly.”
The tide is going out on the Eurozone and it does not matter what Merkozy thinks. This Eurozone-debacle has been brought about by the elevated hubris of a disconnected from reality Euro-elite and now, it is payback time, as the markets cut through the stupidity of the current structure. The Euro is about to slide and the ECB is about enter the fire. Rome is burning….