EURO GOVT-Italian 10-year yields hit 7 percent

Source: Reuters

Nov 9 (Reuters) - Italian 10-year bond yields hit the 7 percent level that is widely deemed unsustainable after an increase in the cost of using the country's bonds to raise funds offset hopes for more reforms in Italy as its prime minister agreed to step down.

The rise in the 10-year yield on Wednesday are reflecting investors' concerns that they may not get their money back -- a worry that was also reflected in two-year bond yields and the cost of insuring against Italian debt default.

Read more: http://www.reuters.com/article/2011/11/09/markets-bonds-italy-idUSL6E7M92MX20111109

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Italy's cost of borrowing has touched a new record, a day after Prime Minister Silvio Berlusconi said he would resign once budget reforms are passed.

The yield on Italian 10-year government bonds reached 7%, the highest since the euro was founded in 1999.

The debt was pushed up as a clearing house asked for a larger deposit to trade Italian bonds - to cover the increased risk of non-payment.

http://www.bbc.co.uk/news/business-15652708

for many market watchers and analysts: at this point, a nation's debt becomes overwhelming. Bad news, as it potentially means that Italy may need a bailout next, and the Europeans don't have the €€€ to cover it.

For many, this is nightmare scenario. Greece, Italy, Portugal, Spain.....if they start toppling like dominoes, one after the other, the EU is finished. At some point, the stronger EU countries (particularly Germany and France) may decide its better for them to walk away, washing their hands of the whole affair, or throwing the lesser-performing countries out of the EU.

Looks like the EU dream is waking up to a nightmarish reality.

total interest payments are less than the net GDP growth they can be easily sustained by a growing economy. In the past, when countries were not
so indebted as they are now, paying such (and higher) interest was the norm and caused no concern. It is still not a problem for countries with
low debt-to-GDP ratios like Australia which easily pays >6% interest on its bonds. For the countries like Italy, whose debt exceeds their GDP,
7% interest would mean that they pay more every year to service the debt when they gain from the economic growth. In fact, currently in the
case of Italy, ten times more. That is definitely not sustainable. To make it sustainable, the debt principal has to be cut, because it is unrealistic
to expect growth rates >4% from a developed economy. There are only two way to cut the debt: (i) austerity (paying it off) or (ii) default (refusing
to pay it off). Or some combination of the two as offered to Greece. Either way, applied to Italian economy, which is almost ten times the size
of Greece's those measures are almost certain to cause a severe recession in Europe and beyond.

there's no time to wait 60 or more days to the elections in February. There needs to be a technical government in place with someone who can regain the trust of the markets and the Italian people.

He said he'd resign as soon as the austerity measures were passed.

an analysis, from either BBC or FT, that it makes no difference who ends up in charge; there's no-one on the Italian political scene that can pull an economic rabbit out of the hat.

Then there's this, from Tyler Durden over at Zerohedge:

http://www.zerohedge.com/news/barclays-says-italy-finished-mathematically-beyond-point-no-return

There's a link to the referenced report, as well as a PowerPoint presentation from Barclay's that lays out the case pretty effectively.

No matter how you look at it, it may well be time to say, "Ciao, bella!" to Italy.

the world can recover. I have no hope. I see no future.

Italian PM Silvio Berlusconi says he will not stand if Italy holds early elections, after promising to resign as soon urgent budget reforms are passed.

"I will resign as soon as the law is passed... I see elections being held at the beginning of February and I will not be a candidate in them," he said.

http://www.bbc.co.uk/news/world-europe-15650842

....do you still have those old printing presses? Pay off your debt in Lira pegged at a million to the Euro. Stop borrowing money like an addict. Don't punish yourself, you've done nothing wrong. Your crooked politicians and international banksters are to blame, they're raping you.

....anyone with 2000 years of history that can make fantastic high-performance sports-cars and delicious pasta dishes will always have a bright future....(as soon as you cut yourself free of the global capitalist menace)