That's the lesson of Greece and Italy knows it. If there is no way the EU would let Greece go, there is no way Italy or Spain or Portugal are going to be let go, either.
Meanwhile, enjoy these alarmist headlines from a gold fundamentalist.
In theory, German, Italian, and Greek 10-year bonds should all have the same yield. In practice, they clearly don't. The difference is perceived default risk. The odds of Italy leaving the Eurozone are rising.
[I]nterest rates are on the verge of spiraling out of control in Italy. ... In theory, German, Italian, and Greek 10-year bonds should all have the same yield. In practice, they clearly don't. The spread between German 10-year and Italian 10-year bonds is 330 basis points (3.3 percentage points). The difference is perceived default risk. The odds of Italy leaving the Eurozone are rising. On September 28, Italy's proposed budget deficit of 2.4% sent bond yields soaring. And they haven't stopped.
The yield on the 10-year has been a lot higher for a long period of time than it is right now.
Everyone should relax and enjoy the show. Who knows, maybe this will force the other rule breakers to clean up their act a little bit, at least for a little while.
