Europe

The euro zone periphery was a sideshow. This stuff with Italy is the real deal. With yields at 6.7% and rising, it’s game over for the euro zone. The extend and pretend stuff ain’t gonna work.

So how do we explain the European crisis? One theory is that the European crisis was caused by the moral turpitude and spendthrift habits of lazy Europeans along the periphery, in sharp contrast to the hard-working and thrifty countries of…

European shares have given back early morning gains as Berlusconi denies resignation reports. Market attention will remain focused on political developments in the euro zone; Italy likely to overshadow Greece now. Light US data is likely to…

That’s what Philipp Rösler, the leader of the junior partner in Germany’s coalition government, is saying. Barry Eichengreen says that this kind of talk is counterproductive.

Let’s talk about credible government bond backstops for a bit.

If a central bank guarantees investors credibly that they can invest in certain debt instruments and not suffer principal or interest repayment risk, but only currency and inflation risk, some investors are almost definitely going to buy…

Yesterday I was on RT with Demetri Kofinas (@CoveringDelta) talking about the future of the euro zone. Lauren Lyster asked us where this was headed and we both agreed that it really was all about Italy. I just posted on why questioning…

Last week we witnessed a flight to quality within the euro zone government bond market. The yield on 10-year German government bonds dropped a record 35 points last week. They now yield 1.82 percent. Meanwhile, the yield on 10-year Italian…

Now it's on to a Greek coalition government with the FinMin at the helm. Get ready for more austerity!!

So what is the trade? If Italy continues to blow out and a big bazooka EFSF bailout fund is not attainable, the EU will be faced with certain death or massive ECB bond purchases. We think they will choose the later, which makes the Euro a…