Martin Armstrong is back with an analysis of the Euro debt crisis, stating that Italy is TOO BIG TO BAIL.
Armstrong correctly identifies and points out the recent trend of funds and brokerages not only selling Italy's bonds, but publicly announcing the fact in an attempt to maintain the confidence of their depositors.
Stop for a moment and think about the effects this paradigm shift will have on the Euro situation. Not only are funds dumping Euro bonds, they are making sure everyone is aware they have done so. Is it any wonder why the Telegraph reported Saturday that the EFSF had to purchase its own bonds!?!
In France, SocGen scraps its dividend to meet a capital shortfall it has suffered while the Greek precedent of taking a 50% haircut exposes European banks to the Sovereign Debt Crisis and now brag how they are selling Italy. Not even the ECB can save Italy and Europe now. Europe’s Sovereign Debt Crisis has expanded with the yield on Italian 10-year bonds exceeding the 7% level. The Eurozone is severely destabilizing the global debt situation as Italy is now the world’s third largest bond issuer and one of the original six founders of the modern European project that created the Euro. This is a debt that is now TOO BIG to be bailed out.
What is unraveling even more quickly is the fear that banks will be hit with panic runs because of their holdings in sovereign debt. After a 50% haircut in Greek bonds, now it has become trendy not only to sell Italian bonds but also to publicly announce they have done so to try to maintain CONFIDENCE of their depositors.
Bankers are finding it increasingly difficult to maintain that CONFIDENCE after the Greek haircut and now Italy is the THIRD LARGEST debt in the world that is TOO BIG to be bailed out even at a 50% off sale.
Government is Living in a State of (Debt) Denial