Italy Moves Into Debt-Crisis Crosshairs After Spain!

• So much for the €100B Spanish banks bailout. The euphoria lasted not even for a day! Contagion is spreading like wildfire. Nothing has been resolved. Bailouts (more debts actually) are a fraud. It is creating an even bigger problem!
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  Italy Moves Into Debt-Crisis Crosshairs After Spain! 
  by Andrew Davis and Nadine Skoczylas, http://www.bloomberg.com/ 
  The 100 billion-euro ($126 billion) rescue for Spain’s banks moved Italy to the front line of Europe’s debt crisis as an initial rally in the country’s bonds fizzled on concern it may be the next to succumb.
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  Italy’s 10-year bonds reversed early gains today in the first trading after the Spanish bailout and declined for a fourth day, sending the yield up 7 basis points to 5.84 percent.
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  “The scrutiny of Italy is high and certainly will not dissipate after the deal with Spain,” Nicola Marinelli, who oversees $153 million at Glendevon King Asset Management in London, said in an interview. “This bailout does not mean that Italy will be under attack, but it means that investors will pay attention to every bit of information before deciding to buy or to sell Italian bonds.”
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  Italy has 2 trillion euros of debt, more as a share of its economy than any developed nation other than Greece and Japan.  The Treasury has to sell more than 35 billion euros of bonds and bills per month — more than the annual output of each of the three smallest euro members, Cyprus, Estonia and Malta.
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  Spanish Economy Minister Luis de Guindos said on June 9 that he would request as much as 100 billion euros in emergency loans from the euro area to shore up a banking system hobbled by more than 180 billion euros of bad assets. Mounting concern about the state of Spain’s banks and public finances drove the country’s borrowing costs to near euro-era records last month, pushing up Italian rates in the process.
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  Reversing Gains
  The euro initially gained as much as 1 percent and the yield  on Spanish and Italian 10-year bonds fell 12 basis points and 15  basis points. Both then gave up their gains as the euro faded.
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  “The problem for Italy is that where Spain goes, there’s always the perception that Italy could follow,” Nicholas Spiro, managing director at Spiro Sovereign Strategy in London, said in an interview. “There is insufficient differentiation within the financial markets. It is clear as the light of day and has been that Spain’s fundamentals are a lot direr than Italy’s. That hasn’t stopped Italy suffering from Spanish contagion.’’
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