Problems Aren’t Going Away: EU Is Approaching The Danger Zone AGAIN As Spain And Italy Start To Tear Apart – The Economy Is Horrible And Governments Lost The Support of The Public – Yields In Spain And Italy Jump And Stock Markets Are Now Getting Smashed!

Suddenly, There Are Reasons To Worry About Europe Again…

Thanks to the ECB’s promise that it will backstop the government bond market, if necessary, the acute financial crisis from the past couple of years is basically over.


But there have always been risks.

For one thing, the economy is horrible, and people can only accept that before so long before society starts to tear apart.

And then there’s always been politics, and the worry that these governments will lose the support of the public, and be seen as corrupt.

That’s what’s going on now.

In Spain, a country that’s always been one of the biggest worries, there are calls for PM Mariano Rajoy to resign amid a big corruption bombshell in a Spanish newspaper.

Via Email, economist Frederik Ducrozet of Crédit Agricole explained to Business Insider the overall cause for concern:

It looks bad for Rajoy facing such a massive pressure all of a sudden, mostly because no obvious alternative is available in terms of leadership. This also give Catalunia and other regions a fresh opportunity to contest central policies. And, of course, it happened at a time when activity is still very weak and a risk to fiscal sustainability. Italian politics are getting more unstable. EU cohesion could be more broadly impacted. True, there is always the OMT backstop to cap any sell-off in Bonos but clearly we are approaching the danger zone.



Germany Warns Eurozone Crisis Isn’t Over

Europe’s efforts to solve its debt troubles won a vote of confidence Friday from the chairman of China’s sovereign wealth fund, but Germany’s finance minister told an international conference that the continent can’t afford to become complacent.

Three years since the crisis started in Greece, the 17 European Union countries that use the euro have made a hopeful start to 2013, with promising economic data and troubled countries such as Italy and Spain enjoying lower borrowing costs.

‘Last great battle’:Berlusconi: if I win, Italians get tax back… 

ROME (AP) – Media mogul Silvio Berlusconi on Sunday promised Italians that if they vote him back into office, he will abolish an unpopular tax on primary residences and refund property taxes Premier Mario Monti’s government made them pay in 2012 as a key austerity measure to rescue the country from the eurozone debt crisis.

Berlusconi abolished the tax in 2008, when he was elected for a third term as premier, to fulfill a campaign promise. But the tax was immediately revived when Monti, an economist and former European Union commissioner, replaced him in 2011 as Italy sunk deeper into the debt crisis.

‘Last great battle’

ROME (Reuters) – Italy’s former prime minister Silvio Berlusconi announced his “last great electoral and political battle” on Sunday with a sweeping promise to cut taxes and the cost of government if his center right wins elections this month.

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It would appear that either Germans have stopped using electricity (now that is some severe austerity) or the ‘real’ economy in the core powerhouse of Europe’s growth is struggling notably more than the nominal price of its stock market would imply. Applying the same ‘myth-busting’ data-series to Germany as we have in China, it is clear that expectations for greater electricity demand (and implicitly economic growth) are grossly different to the expectations priced into German stocks.

…or they just discovered cold fusion…

Zero Hedge


Dutch nationalise SNS Reaal bank group in $14 billion rescue

“The bankers get more and more money, and the people at the bottom foot the bill,” That is likely to prompt an outcry from a Dutch public which has already suffered years of austerity, including a cumulative 30 billion euros of budget cuts announced in the past year.


Spain and Italy getting slammed

The big sell-off in the euro periphery today comes amid renewed fears over political stability in Spain and Italy. Spain’s Prime Minister Mariano Rajoy has been enveloped in a corruption scandal while upcoming national elections in Italy and the resurgence of former Italian Prime Minister Silvio Berlusconi’s party have investors on edge.

ftse mib


Yields In Spain And Italy Jump

Today we’re seeing selling in the stock and bond front in both of those countries.

Italian stocks are down 1.3%.

Spain is down 0.5% (it was down 1.7% on Friday).

Two years borrowing costs in both countries is jumping a bit… not huge but notably.


Euro woes re-emerge to knock global stocks

U.S. stock-index futures slid Monday as political uncertainty about Europe rattled investors, with the euro softening and Spanish bond yields rising to a six-week high.

n Spain, Prime Minister Mariano Rajoy is facing a corruption scandal and calls for his resignation from the opposition Socialist Party. Yields on Spain’s 10-year government notes surged 19 basis points to above 5%. One basis point is 1/100th of a percentage point. See: Italy, Spain jitters spook Europe markets and See: Spanish PM says corruption claim false: reports .

And reforms implemented in Italy are seen as at risk by the increasing popularity of Silvio Berlusconi, with the former prime minister a contender in general elections slated for later in the month. See: Spain yields rise as Rajoy aims to contain scandal

Futures on the Dow industrials DJH3 -0.44% fell 76 points, or 0.6%, to 13,854, while S&P 500 Index futures SPH3 -0.38% slipped 7.9 points, or 0.5%, to 1,498.8.

The Dow Jones Industrial Average DJIA +1.08% last week topped 14,000 for the first time in more than five years.

Nasdaq 100 futures NDH3 -0.44% lost 15.25 points, or 0.6%, to 2,741.25.



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