The Serious Problems Now Shift to Italy; Yields Reach Record

After Greece and the Euro had been ":saved" yesterday (nothing was saved), Italy's borrowing costs jumped to record levels today, "underlining its vulnerability at the heart of the euro zone debt crisis".
10-year bonds were paying 6.06% yield at an auction, the highest since the launch of the euro.
"Italy, the euro zone's third largest economy, is once more at the centre of the debt crisis, with fears growing that its borrowing costs could rise to levels that overwhelm the capacity of the bloc to provide support amid chronic political instability in Rome.

Berlusconi in a speech in Rome said the record yield would weigh on the country's finances, but insisted Italy would meet its target of balancing the budget by 2013".

Exasperation.
"France and Germany have expressed open exasperation at a succession of unfulfilled reform promises by Berlusconi and fear the crisis in Italy could spark a wider emergency that would threaten the very existence of the single currency.
Berlusconi called the Euro a "strange currency".

"There is an attack on the euro which, as a currency has convinced no-one because it belongs to more than one country but does not have a bank of reference and guarantee,"..

French President Nicolas Sarkozy said that "If we had allowed Greece to fall, and the speculation shifted on to attack Italy, the markets would then have said we will allow Italy fall too, and that would be the end of the euro,"

It is not clear it would have made a difference given today's yields.