See, this is why deficit spending is a bad idea in the first place, and why we have to find an alternative strategy for economic recovery that doesn’t involve deficit spending.
It can’t go on forever. This is how it stops.
Related material: “After Spain, the focus of the euro crisis has now shifted to Italy, which is struggling with a shrinking economy and rising bond yields.” (Italy struggles to Break out of Downward Spiral – Hans Jurgen-Schlamp, Der Spiegel)
Keep in mind that they still have not really bailed out Spain. The $125 billion went to the banks and depending upon how it all works out, will likely result in even larger debt for the sovereign…Spain is far from being bailed out so this is not particularly good timing for Italy.
Italy is so 12 minutes ago. The credit default swap guys are already setting their sights on Germany. Germany is only a safe haven as long as the Euro can be salvaged and, considering where yields are right now, there’s not a lot of “one way” left. If you don’t want to bet on the Euro, you don’t want to bet on Germany.
Who was willing to loan Italy money at less than 4% in May?
What a silly bunch of people, those EU leaders and their supporters. The situation would be farcical if so many people were not going to suffer a great deal of distress.
It reminds me of that famous newsreel of a suspension bridge (in Tacoma) beginning to sway more and more in the wind until it just comes apart and collapses (see http://www.youtube.com/watch?v=j-zczJXSxnw).
The sooner the better, the longer this drags out the worse the final results are going to be.