The day of reckoning is here. Despite the supposed resignation of Italian Prime Minister Silvio Berlusconi, the Italian bond yields have blown past the 7% level. This 7% borrowing level for Italian bonds have been the level that most experts believe the 8th largest economy in the world, Italy can no longer operate.
This is what all the worries about the Greek default were all about. The real worries were the contagion spreading from Greece to Italy but now here we are. The ECB has already stepped in and purchased well over 100 billion dollars worth of Italian bonds in an attempt to keep these yields down but none of this has helped.
All we can say is this dwarfs the 2008 financial crisis in the U.S. so let's hope the worlds politicians realize how dire this situation is for our globally connected markets. If this gets even more out of control we can expect to see some banks blow up, more countries go default and potentially the freezing up of global financial systems once again.--------------------
So be careful, what you think is a bargain may yet still have a blue light special in the coming weeks.