Italy is Next!

Greek PM Papandreou’s call for a referendum to approve additional financing has heightened fears that Greece will default. In response 10-yr Italian debt yields hit 6.33% a euro-era high and as much as 4.55% above super safe German bonds. Once the spread exceeds 4.5%, clearing houses can force investors who use Italian debt as collateral to make margin payments. In the recent past, all such requests have resulted in bail-outs. Italy, look out, Berlusconi, bye bye!

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