All eyes on Italy

The million lira question is: can Italy survive in the euro?  The portents are not good as the nation slips into recession, sovereign debt costs rise to unsustainable levels and austerity is imposed in an attempt to reduce government spending. 

The 'rescue' measures put, or rather, not put in place would, even if complete, be insufficient.  Italy is a major European economy and should the country default the eurozone is doomed.  The problem is not helped by the fact that much of Italy's sovereign debt is held by Italian banks.  Are they capitalised to meet the losses on a default?

The elephant in the room in Germany.  How long will Germany refuse to entertain the idea that the European Central Bank should act as a central bank?

http://blogs.telegraph.co.uk/finance/jeremywarner/100013088/italy-on-the-brink-as-yields-soar-past-point-of-no-return/

http://www.telegraph.co.uk/news/worldnews/europe/greece/8873689/Greek-leaders-meet-to-agree-replacement-for-George-Papandreou.html

http://www.bbc.co.uk/news/world-europe-15617940

http://www.bbc.co.uk/news/business-15617132

http://www.bbc.co.uk/news/business-15618597   Italy on the brink!

http://www.spiegel.de/international/europe/0,1518,796280,00.html  Excellent articles

http://www.spiegel.de/international/europe/0,1518,796233,00.html

http://www.spiegel.de/international/europe/0,1518,796251,00.html

http://blogs.telegraph.co.uk/news/danielhannan/100115775/greek-elites-are-set-against-their-own-people-by-the-eu/