You didn't think that crisis in Euroland was going to end with the Greek debt crisis did you!?!
No worries, the Italians have just stepped into the fire.
Italian bonds surpassed the 6.6% yield for 10 year bonds, while the 2 year yield approaches the 10 year. Italy has to rollover quite a lot of debt in december and can not afford 6.6% payments on the new 10 year bonds while they run their GDP at 120%, so.....expect Italian bond prices to rise as the number three economy in Europe goes bust. Zero Hedge notes here that the Italian Treasury cancelled this weeks bond auction. What will Berlusconi do? He has already refused to resign again. And we know that the Italian populace won't accept any austerity measures, so Berlusconi's hands are tied. Goldman Sachs warned the markets today that Italy might have to take "unilateral decisions" like seizing banks or stepping on the bond market, effectively taking direct control of the people's cash and assets. Fears of bank runs? No doubt. If they don't back stop this with some sort of ECP purchase of Italian bonds,
we will see the contagion burn through Euroland banks, then jumping the pond and wiping out
American banks as well. It is that critical and extremely dire.
Please note that not just Italy's feet are in the fire, France has just revealed the toughest austerity measures since World War II, in a fleeting hope to stave off losing their AAA bond ratings.
Also, please note that the Swiss have threatened to devalue the Swiss franc again and that sent the franc tumbling 2.3% against the Euro. Switzerland was once known as a safe haven for your currency. Not anymore. This is a lot of bad fiat paper racing each other to reach the drain.
The question of using Italian gold holdings to backstop Italian bonds was brought up today. Another reminder that "Gold isn't Money" from Zero Hedge. Germans didn't like the suggestion that they use their gold to back the fiat Euro either. So what is this "relic" called gold and why won't the Euro's use it to stop their financial woes? You should be asking yourself the same question. Are you backstopping your financial future with physical gold or silver?
No comments:
Post a Comment