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The ECB throws Italy and Spain to the wolves

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posted on Aug, 4 2011 @ 06:57 PM

The European Central Bank has abandoned Italy and Spain to their tortured fate.

Its refusal to act in the face of an existential threat to monetary union has set off violent tremors across the global financial system, raising the risk that the crisis will spiral out of control.

Bank shares crashed in Madrid and Milan, with Intesa Sanpaolo down 10pc and Italy's MIB index reduced to its knees with a one-day fall of 5.2pc. Share trading was suspended at a string of bourses across Europe.

Yields on 10-day US debt fell to zero in a replay of panic flight to safety seen during the onset of the Lehman-AIG crisis three years ago. ...

Mr Buiter said Europe risks a disastrous chain of events and the worst financial collapse since the onset of the Great Depression unless Europe's central bank steps in with sufficient muscle to back-stop the system.

"The ECB has yet so show it understands that it is the only institution that can save Italy and Spain from fundamentally unwarranted defaults. Everybody is afraid and real money investors are dumping their holdings. The ECB must step in to cap the yields at 6pc or 6.5pc and put a floor under the market," he said.

The ECB throws Italy and Spain to the wolves

Amid the stock market turmoil is the concomitant Eurozone turmoil, where things are looking frankly ugly. I honestly don't know how on earth they are going to come out of this. I'm sure the ECB can buy some time but a solid sustainable resolution to the crisis I don't see coming.

Have a look not only at the story cited, but these as well and tell me the Eurozone is crumbling away...

Eurozone countries are failing to stop the “contagion” of the debt crisis, the President of the European Commission warned yesterday.

José Manuel Barroso’s warning came as stock markets plunged around the world amid growing fears of another global recession.

Mr Barroso called for an emergency strengthening of Europe’s bail-out mechanism. He said he had “deep concerns” about the faltering Spanish and Italian economies.

Debt crisis: Global markets plunge as eurozone contagion speads

European Commission President Jose Manuel Barroso has warned that the eurozone sovereign debt crisis is spreading from the smaller debt-laden nations to Italy and Spain, the currency area's third- and fourth-largest economies.

he head of the European Commission urged the 27 European Union leaders to begin a "rapid reassessment" of the bloc's rescue mechanisms.

He said governments should rapidly review "all elements" including the size of the €440bn European Financial Stability Fund (EFSF) and the €500bn European Stability Mechanism to "address the current contagion" in the eurozone.

"It is clear that we are no longer managing a crisis just in the euro-area periphery," he said, adding that markets remain to be convinced that the EU is taking the appropriate steps to resolve the crisis. ...

Investors have pushed yields on benchmark Italian and Spanish government bond to 14-year highs, reflecting "a growing scepticism among investors about the systemic capacity of the euro area to respond to the evolving crisis", he said.

EC president Jose Barroso warns eurozone debt crisis is spreading from smaller nations

Clearly European leaders and the ECB are scrambling to rescue the debt laden Eurozone from an increasingly unresolvable crisis as contagion threatens to take to region into a collapse.

posted on Aug, 4 2011 @ 07:28 PM
Just a side note thats off topic some, but damn asia market is getting crushed, which will drop europes market which drops US, tomorrow shall bring another huge drop in the market should be exciting.

posted on Aug, 4 2011 @ 07:40 PM
reply to post by thegoods724

Exciting is not the word I would use. I cannot say I am surprised. I feel bad for the average joe. His pension is tied up in a casino that he believes is an investment. He has no idea his future is in a giant casino where the house always wins.

We will see if the markets find some support somewhere. 11,000 is pretty important for the DJIA. If not, than we have a 2008 situation all over again. Sadly, this time it is an even bigger bubble.

Gold and silver will be interesting to watch. I guess I am a little excited for a possible opportunity to buy more of both. Silver dropped a staggering 7% today. Whenever the crushing of both silver, and silver mining stocks, ends it will be quite an opportunity.

Gold is more stable. Anyone with any sense is realizing that the Euro and the Dollar are unstable. Those in charge of them are unable to adequately react to the crisis. I will watch gold like a hawk for an opportunity.
edit on 4-8-2011 by stephinrazin because: (no reason given)

posted on Aug, 4 2011 @ 08:19 PM
reply to post by thegoods724

US Markets don't generally reflect Asian or European markets unless something horrible happens. Like today.
I expect Europe to continue it's decline, naturally given the situation, and US markets will rebound unless the jobs report is negative.

posted on Aug, 4 2011 @ 08:31 PM
unless the job report is negative, are you kidding me there is like no possibility of it being good unless they fudge the data.

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