Italy Bond Attack Breaches Euro Defenses, Contagion Worsens

[RedEarth]

Source: bloomberg

The euro-region’s defenses are being breached.

Investors today propelled Italy’s 10-year bond yield to close at a euro-era high of 7.25 percent after the promised exit of Prime Minister Silvio Berlusconi failed to convince them that his country can slash Europe’s second-largest debt burden.

The biggest signal yet that the single currency’s third- largest economy is falling prey to its two-year debt crisis forces German Chancellor Angela Merkel, European Central Bank President Mario Draghi and their peers to decide just how far they’re willing to go to defend the euro.

“The market is testing the commitment of the euro zone’s stewards,” said Eric Chaney, Paris-based chief economist at insurer AXA SA and a former official in the French Finance Ministry. “Italy is the real crisis battleground.”

At 1.9 trillion euros ($2.6 trillion), Italy’s debt exceeds that of Greece, Spain, Portugal and Ireland combined, though unlike those nations, it has systemic importance as the world’s third-largest bond market and eighth-biggest economy. Berlusconi’s offer to quit has still left his nation struggling to produce a government stable enough to deliver austerity after LCH Clearnet SA raised the deposit it demands for trading Italian securities.



Read more: http://www.bloomberg.com/news/2011-11-09/italy-bond-attack-breaches-euro-s-defenses-as-region-s-contagion-worsens.html

[xchrom]

1. Recommend

[Turbineguy]

2. By "investors"

they mean predatory speculators.

[truebrit71]

3. Winner!!

...investors aren't driving this market, quick-buck, snap-trading speculators are...

[dipsydoodle]

6. Its gone past the point at which

it matters what you call them but in this instance its the likely absense of investors which has pushed the yield up.

Would you loan money to someone who would use the funds simply to pay off an earlier debt? Italy will need
c. 360 billion Euros next year just to roll debt over.

[Poll_Blind]

12. +1

PB

[DeSwiss]

4. K&R

[DocMac]

5. And this is why the people

at OWS are exactly where they should be. I've heard the MSM saying they should be in DC, but the politicians may even fear for their lives when you consider the power behind Wall St. and the powers that be.

How many times have we called our politicians tools? This may be the very reason you have all these nutcases in the GOP running for President. It's like dealing with "Tony two toes" lol.

[BeyondGeography]

7. What a fucking dumb way to live

This is going to end in dictatorship someday. The military takeover will be of the exchanges. It's the only thing that will stop them.

[TygrBright]

8. Currency trading: It's all fun and games until someone loses an eye... or an economy... n/t

[PassingFair]

9. “Italy is the real crisis battleground.” I thought GREECE was the REAL crisis battleground!

Go Greece!

:wtf:

[Owlet]

10. Cool interactive map from Reuters on debt woes

"That’s a huge problem because, well, Italy is a huge country, the world’s eight-largest economy. Reuters has created a handy interactive chart showing what other nations’ banks are most exposed to Italian debt:

You can play with the map to see bank exposure for all European countries. Notice that U.S. banks have relatively little exposure to the five most troubled nations (Portugal, Italy, Ireland, Greece, Spain), something Treasury Secretary Tim Geither has stressed. But that hardly means we’re in the clear. As Desmond Lachman, a former IMF official, told me last week, “We may not have much direct exposure to the periphery, but we’ve got exposure to bets in Europe that have exposure to the periphery. And that means we’ve got exposure.”

washingtonpost.com/blogs/ezra-klein

[dipsydoodle]

11. I think you'll that your exposure

relates to about US$500 billion of sovereign debt CDSs. That was what concerned Obama at the G20 meeting amongst other things.

[JackRiddler]

13. Oh, for fuck's sake, just default already. All of you.

[Prometheus Bound]

14. All in good time. All in good time.