German ‘Nein’ Leaves Italy And Spain in Turmoil !

• It is an absolute certainty that the sovereign debt crisis will blow up! The Euro will collapse! I cannot tell you when with absolute certainty but it looks like it may blow up this autumn! Got gold yet? (emphasis mine)
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  German ‘Nein’ leaves Italy and Spain in turmoil
  By Ambrose Evans-Pritchard, http://www.telegraph.co.uk/
  Italian and Spanish bond yields soared to post-EMU highs in a fresh day of   credit turmoil after Germany blocked any meaningful measures to defuse the   crisis.
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  Chancellor Angela Merkel called for more “frugality” in Italy, sticking to her script that Rome can solve its woes with an austerity budget. Her finance minister Wolfgang Schäuble said any boost to the EU’s €500bn (£440bn) bailout machinery was “out of the question”.
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  Mr Schäuble denied reports that Berlin was ready to empower the fund to   purchase Spanish and Italian bonds pre-emptively on the open market, a move seen by experts as vital to halt dangerous contagion to the larger economies.
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  The market’s verdict on EU foot-dragging was instant and brutal. Yields on 10-year Spanish bonds smashed through the 6pc barrier for the first time since 1997, made worse by warnings from the Castilla-La Mancha region that its deficit had become “extremely serious”.
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  Italian yields jumped 44 points 5.7pc, a level that starts to threaten the   sustainability of the country’s finances. Markit’s iTraxx SovX Western Europe, Europe’s sovereign stress gauge, saw the biggest one-day rise ever. “Contagion was the word on everybody’s lips,” said Gavan Nolan, Markit’s credit chief.EU leaders seem unable to keep pace with the fast-moving events. Eurogroup finance ministers focused yesterday on details of “burden-sharing” for banks that lent to Greece, no longer the most urgent matter. A summit of top EU officials ended with no hint of how the crisis could be contained.
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  “We’ve painted ourselves into a corner. At this point, either someone – Germany, the European Central Bank – has to fundamentally shift position, or everything blows up,” an EU official told Reuters.
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  Berlin has resisted any move to buy or guarantee the bonds of distressed debtors, viewing it as a slippery slope towards a fiscal union and a breach of Germany’s Basic Law. The ECB in turn has refused to buy Spanish and Italian bonds, saying it is the task of EU governments.
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  The euro tumbled over two cents to under $1.40 against the US dollar. Gold rose to $1,556 an ounce on safe-haven flows. Italy’s stock market led the rout of global bourses, dropping 4pc despite moves by the regulator Consob to curtail short-selling. Italian bank shares were pummelled again. Unicredit fell 6pc, and Intesa SanPaulo fell 7pc. London’s FTSE 100 fell 1pc, while the Dow was off 1.3pc in early trading.
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  Escalating woes in Italy and Spain raise the stakes dramatically. The pair   have €6.3 trillion of total debts between them. Jean-Claude Trichet, the ECB   president, said Europe is now at “the epicentre of a global problem”.
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  …. for the full article click here!

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