Euroland, no Disneyland
08/30/2012 | | Bailout, Draghi, Euro, euro zone, German Constitutional court, Italian debt, Italian debt-to-GDP, italian sovereign debt, Italy, Merkel, Spain, Spanish debt
To keep Spain and Italy in the euro, the ECB must buy Italian and Spanish bonds, as nobody else will. And, it can only do so if Merkel allows it. Separately, there’s the possibility that the German Constitutional Court will prohibit Germany from contributing to the European bailout fund. Assuming Germany green-lights everything, Italy may still need a bailout, as growth is dismal and debt-to-GDP is already excessive at 120%.