Continuing to Monitor Euro Mess
November 30th, 2010Gold and the dollar are up sharply together this morning on the expanding freak out in Europe.
Via: Reuters:
The euro zone’s debt crisis deepened on Tuesday as investors pushed the spreads on Spanish, Italian and Belgian bonds to euro lifetime highs and Portugal warned of “intolerable risks” facing its banks.
The euro dipped below $1.30 for the first time since mid-September, immune to new attempts by European policymakers to calm markets hell-bent on testing the EU’s determination to shield its financially weak members and increasingly nervous about the possibility of future euro zone defaults.
Two days after the bloc approved an 85 billion euro ($111.7 billion) emergency aid package for Ireland, worries about contagion to Portugal and Spain persisted and the borrowing costs of large countries like Italy and France shot higher.
…
Markets are already discounting an eventual rescue of Portugal although the government in Lisbon denies, as Irish leaders initially did, that the country needs outside aid.
While a Portuguese rescue would be manageable, assistance for its larger neighbour Spain would sorely test EU resources, raise deeper questions about the integrity of the 12-year old currency area, and possibly spread contagion beyond Europe.
Italy, the euro zone’s third largest economy, is now being referred to as “too big to fail” and “too big to bail”.
