Monday, December 10, 2012

Italy roiled by the resignation of Technocrat PM Monti. Greece extends deadline for bond buyback until Tuesday ( clearly this has not gone well or else they would have announced the result of the bond buyback already and the Troika would have proclaimed it a grand success. )

http://www.zerohedge.com/news/2012-12-10/tremors-are-back-japan-recession-china-trade-disappointment-european-periphery-slide


The Tremors Are Back: Japan Recession, China Trade Disappointment, European Periphery Slides

Tyler Durden's picture
Submitted by Tyler Durden on 12/10/2012 07:08 -0500



In a perfect trifecta of disappointment, overnight we had reality reassert itself with a thud as first Japan reported weaker than expected GDP which contracted for a second consecutive quarter and which technically sent the country into yet another recession, merely the latest one in its 30 year deflationary collapse. And it isn't about to get better: " Analysts expect another quarter of contraction in the final three months of this year due to sluggish exports to China, keeping the Bank of Japan under pressure to loosen monetary policy as early as this month." Of course, there is hope that the new, old PM, Abe will restore money trees and unicorns and get Japan to a 3% inflation target, without somehow destroying bank and insurance co balance sheets in the process, all of which are loaded to the gills with JGBs set to collapse should inflation truly return. Then after Japan, China reported miserable trade data, which flatly refuted all hopes of an economic pick up both in the mainland and across the world. AsBusinessWeek reports "China’s exports rose 2.9 percent in November from a year earlier while imports were unchanged, leaving a trade surplus of $19.6 billion, the customs administration said today in Beijing. The growth in overseas shipments compares with the 9 percent median estimate of analysts in a Bloomberg News survey." This was below the lowest forecast of the range ($21.9-$32.2) with an average expectation of a $26.9 billion surplus.

Perhaps the reason China can not openly fudge its trade data, unlike its GDP, inflation, retail sales, industrial production and all those other indicators that none other than the incoming head of government Li Keqiang said are for "reference only" (a fact conveniently ignored when they are all going up, and duly noted when China is self-reportedly sliding) because other countries report the counterparty data and it is very easy to catch China lying in this particular case. And finally there was Europe...

Ah Europe: the gift that keeps on giving. Just when everyone thought all was fixed, lastThursday Monti's government lost support of Berlusconi's PdL and effectively lost control. It took the market 4 days to understand, and a statement from the Goldman horse's mouth himself, what this really means. Sure enough today Italian bonds are sliding on the Monti departure, and at last check were nearly 40 bps wider to 4.9%, while latent fears over Spain following last week's weak auction and a DB note saying the hope rally may be over in Iberia, sent SPGB wider by 20 bps to 5.65% (more on DB later). We also learned that despite all attempts to disengage the banking and sovereign sectors in Europe, in Italy precisely this fusion is accelerating as sovereign debt held by Italian banks just rose to a record. To wit: Italian bank holdings of Italian sovereign debt rose to €340 billion, up €12.6 billion and the highest ever. In other words, the weakest link in the sovereign-banking symbiosis in Spain and Italy will once again be the fulcrum security when setting prices for sovereign bonds, and lead to another inevitable ECB, Troika bailout.
Finally, a look at Greece which is always full of fun lies, remember this out of Reuters on Friday:

Greece will not extend the deadline bondholders to participate in a crucial sovereign debt buyback scheme beyond Friday, a finance ministry official said.

Greek banks will hold board meetings on Friday to decide whether they will join in and must declare their interest by 1700 GMT.

"The auction will be completed today. There will be no extension," said the official, who declined to be named.
Turns out the finance ministry official source was merely pulling a Juncker-Geithner, i.e., lying. From Reuters as of moments ago:

Greece has extended its offer to buy back debt until Tuesday, seeking more bids from bondholders after falling just short of a target to retire bonds worth 30 billion euros at a cost of just 10 billion euros.

The buyback is designed to provide for about half of a 40-billion euro debt relief package for Athens agreed last month by the European Union and International Monetary Fund.

Its success is crucial to ensuring Greece's debt is put back on sustainable footing and -- more immediately -- to unlocking badly-needed aid for the country.

The offer had been due to end on Friday. The debt agency extended the offer to 1200 GMT on Tuesday.


This too will be "revised."
All one can do is laugh as the lies out of Europe, and everywhere else, in a desperate attempt to avoid facing the brutal reality, keep piling on. But the music is still playing, and those lucky enough to still manage other people's money have to keep dancing.
Finally, a less jaded take on recent events from DB's Jim Reid:
With central bankers increasingly 'all-in', political risk was one of our key themes in our 2013 Outlook. The fiscal cliff has clearly been the 'live' issue with our expectations that the Italian election would cause notable volatility towards the end of Q1. However a day is a long time in politics and after we went to press, the Italian political situation accelerated with the weekend seeing Berlusconi (remember him?) announce that he was planning to run for PM again and Monti looking like he intends to resign as soon as parliament passes the 2013 budget (ie before Xmas). Elections must be held between 45-70 days after parliament is dissolved so this raises the prospect of February elections but with a March 10th date that was a strong possibility before the weekend's events still possible.


So although the date of the election may not be too different, the campaigning looks set to be more confrontational with Berlusconi's PdL party looking likely to step up the anti-austerity and anti-German Euro leadership rhetoric thus leaving markets nervous that Italy might find it difficult to maintain their current reform program. The PdL are currently neck-and-neck with the populist Five Star Movement, led by comedian Beppe Grillo and has only around half the support of the centre-left Democratic Party (PD). So it'll be interesting to see how this changes with the weekend's news. The highest polling PM candidate, the PD’s Pier Bersani, came out over the weekend and committed himself to Monti’s reforms, stating, “we will respect the stringent commitments taken.”

If we do see a widening of Italian bond spreads as the election approaches it may serve to remind voters and Italian politicians of the still precarious economic situation that Italy is in. This could mean that Monti's reform agenda is eventually strengthened by any possible adverse market reaction. However one would now expect Italian risk to trade nervously until some clarity emerges as to the post election administration. This story and any lingering fiscal cliff issues will likely be the main events in Q1.

The weekend news followed S&P's negative comments on Italy late on Friday. It said that it was maintaining its negative outlook on the BBB+ rating partly reflecting what the agency views as “mostly downside risks” to the country's policy reform agenda. In particular they note the uncertainty around whether the next government coalition will remain committed to structural reforms and the significant risk that the economy might not recover in the 2H of 2013 which may “potentially undermine political and social support for reform”.

Turning now to China, markets are reacting positively to the weekend data dump for November. Overall the data remains consistent with a steady recovery with Industrial Production (10.1% v 9.8%) and Retail Sales (14.9% v 14.6%) printing ahead of market consensus. Fixed asset investment was unchanged from the previous month’s 20.7%. Inflation data also edged higher helped by a sharp rise in vegetable prices but still slightly below market estimates (2.0% v 2.1%).
PPI however fell -2.2% yoy v -2.0% expected and was 0.1% lower from the month before although DB’s Jun Ma is not overly concerned with this as it can be partly explained by seasonal factors. China also published its November trade numbers this morning which showed a drop in the trade balance to $19.6bn for November (vs $31bn previous month and $27bn expected) driven by exports which were materially lower than market consensus (2.9% yoy v 9.0%). Imports were also weaker than expected (0.0%yoy v 2.0%).
Overnight markets are trading stronger on the back of the weekend Chinese data, but gains have been pared following the weaker trade numbers this morning. The Hang Seng (+0.43%), ASX200 (+0.13%) and Shanghai Composite (+0.96%) are all trading higher, as are other China-related risk assets such as copper (+0.85%). In currencies, the AUDUSD (-0.1%) is trading slightly weaker this morning though, weighed by the weaker-thanexpected
Chinese import data.
Meanwhile, the Yen is steady against the greenback overnight despite headlines that Japan’s economy has sunk into recession again. The final Q3 GDP for Japan came in at - 3.5%qoq annualised (vs -3.3% expected and -0.1% in the previous quarter). Staying in the region the Philippines is said to be strongly supportive of a re-armed Japan as a counterbalancing factor to the growing military dominance of China in the region. Speaking to the FT during an interview, the Philippines foreign minister said “We are looking for balancing factors in the region and Japan could be a significant balancing
factor.” This comes days before the election in Japan and the potential re-election of former PM Shinzo Abe who is committed to revising Japan’s pacifist constitution and to beef up its military. As we highlighted in the outlook geopolitical risk is one of that is perhaps being overshadowed by the ongoing economic issues on both sides of the Atlantic. While Syria and Iran stand out on this front we are also keeping a close eye of developments elsewhere.


Looking at the week ahead, the conclusion of the FOMC’s two-day meeting and Bernanke’s press conference on Wednesday will be closely watched. Our economists expect the Fed to announce $45bn of longer-term treasury purchases per month after the year-end maturity of Operation Twist together with the continuation of $40bn in MBS purchases. In terms of guidance, our expectation is that the Fed will indicate that Treasury and MBS purchases will continue at a combined pace of $85bn per month until the labour market shows substantial improvement.
The other key macro highlight of the week is the December flash manufacturing PMIs for the Eurozone, US and China which are all scheduled for Friday. In terms of the European PMI, the market is expecting a 0.2pt, 0.5pt and 0.4pt month-on-month improvement in the French, German and Eurowide readings respectively, although all three are expected to remain well below the 50-mark. In Europe, other economic reports to watch for include today’s German trade data & French/Italian production; Tuesday’s German ZEW survey and Wednesday’s Eurozone IP and UK jobless numbers. In the US, the major economic reports of note include Tuesday's trade balance and inventories, Thursday's retail sales report and Friday’s industrial production and CPI.

We’re also expecting a busy political calendar ahead. Eurozone finance ministers will meet on Wednesday to discuss the banking union in the hopes of formalising an agreement before year-end. On Thursday, finance ministers are also expected to ratify Greece's next programme disbursement following the expected completion of the country's debt buyback. The results of Greece’s buyback are expected to be announced today. The EU leaders Summit begins on Thursday to discuss Van Rompuy's three-step plan to strengthen the economic/monetary union. Recent media reports suggest Spain will receive EUR40bn in funds for its banking recap this week. Turning to the US, fiscal cliff negotiations are expected to intensify this week in what is the second-last full week before the Xmas break. Markets will be closely watching for any concrete progress towards a compromise. Japan holds its elections on Sunday Dec 16th so we can expect further commentary from both major political parties on the role of the BoJ in the government’s fight against deflation.








and.....

http://www.zerohedge.com/news/2012-12-10/so-many-hoaxes-so-little-time


So Many Hoaxes; So Little Time

Tyler Durden's picture
Submitted by Tyler Durden on 12/10/2012 09:33 -0500




Via Mark J. Grant, author of Out of the Box,
Greece---The Hoax

“Some people can read War and Peace and come away thinking it's a simple adventure story. Others can read the ingredients on a chewing gum wrapper and unlock the secrets of the universe.”

                      -Lex Luthor

Regardless of the officially manipulated news stories; the truth of the Greek re-financing is not what we are told. Greece only managed to get about $20.7 billion in real buybacks done. They were shooting for around $41 billion and so the program was actually a failure. They have now extended the offering period which has just one goal which is to get the Greek banks to put up the rest of their holdings which will cause a further loss for the Greek banks. This is all politically mandated of course by the Troika and so the deal will get done and perhaps Greece will get its next aid tranche but it is really just Peter robbing Paul. You see, after the deal is completed then the Greek banks will issue more bonds that will be guaranteed by the nation and then pledged at the ECB. This will not be announced of course and the Troika/Greeks will “welcome, herald and praise” the success of the program and turn around and utilize the scheme that I have explained and so increase the debt of the country one more time while making a valiant effort to fool anyone who will listen.The financial reality is that a restructuring was only done on $20.7 billion and so the goals of the Troika were not met at all but the long string of hoaxes will continue unabated. The debt of Greece then will actually increase NOT decrease but the trick is accomplished under the cover of the ECB and since it is bank debt guaranteed by the Greek government it is then a contingent liability and not counted as part of the debt to GDP ratio for Greece and so the myth of the gods residing on Mt. Olympus continues.Mr. Draghi knows the truth and Ms. Lagarde knows the truth and their credibility is whacked once again but the game continues and will continue until some monkey jumps from the cart or some monkey stops feeding the horse that pulls the cart. I also note that every politician in Europe proclaimed that the Private Sector would not be hit again after the first round and yet we were because the governments of Europe cannot deal politically with writing off their holdings of Greek debt and while investors are expendable; their jobs are not. All of the King’s horses and all of the King’s men could not put Greece back together again but if the people of Germany, the Netherlands, Austria et al want to keep tossing them coins and keep up the charade; so be it.Italy---The Italian Cliff; The Bunga Jump

Jimmy Olsen: “What are you writing Miss Lane?”

Lois Lane: “An ode to spring. How do you spell massacre?”

Monti is going. He will try to pass the budget first, maybe yes/maybe no, but the technocrat is departing. Monti has been more than that however. He has been the official spokesman for the Troika in Italy and those days are coming to an end. All herald the return of Bunga/Bunga and the politics of spaghetti, parmesan cheese and the wines/whines of Super Tuscany. Senor Berlusconi is already hitting out at the German Masters and his language will get stronger I fear. If the tactic is to be to incite the Italians that they do not become “Germanized” then the European Union is about to get politicized in a very real manner. The division of the South and the North is going to take a dramatic turn in the months to come and the split between the haves and have nots of the European Union is going to be put to the test. Testy days lie ahead!America: To Jump Or Not To Jump; Now That Is The Question

Superman:  “I'm here to fight for truth, and justice, and the American way.” 

Lois Lane:  “You're gonna end up fighting every elected official in this country!”

Obama is doing the only thing he knows how to do well which is to sing the siren’s song of “tax the rich” and enchant the lower classes with the melodrama of righteous indignation.In politics it is often “them versus us” but it is quite aggravating to watch him in this performance. We cannot afford the social programs that we have now and until and unless Obama is forced to recognize this rather obvious fact then no solutions will be found. The Democrats are engaging in triviality and while it may play well in the poorer parts of the country where people do not understand that the government cannot support them forever from the backs of those that do work; the ad infinitum  lethargy of “tax the rich, tax the rich” just is not a realistic answer to the problems which have been created over the years.Maybe we will have to take the “walk of shame” before someone wakes up and realizes that we are falling into a fiscal abyss.In the meantime the Fed is printing and likely to print more. The $45 billion in mortgage purchases continues and while Operation Twist is about to end it will get extended in all probability. The Fed will create more demand than supply and you may expect lower Treasury yields, more compression in spreads and little of value will be found in Fixed Income especially after the first of the year. There has been and will be some selling now due to the probability of pending tax increases but when that is over then you may expect another massive bout of compression where both people and institutions in each and every market will overreach for yield. With equities getting some help by the printing at the margin it may be a different story as fundamentals can no longer support the price/earnings multiples. With Europe in a recession and Japan about to meet the same fate it will not be long before both America and China find themselves in the same predicament I am afraid and so a global recession is likely in the cards after the New Year.
“Faster than a speeding bullet, more powerful than a locomotive, able to leap tall buildings in a single bound. Heck, I would be happy these days if one of our political leaders could just look at a building and proclaim that it was one and not pretend that it was an Indian tepee that needed to be financially and environmentally protected!”
and today's news from Greece.....

 http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_10/12/2012_473810
Buyback deadline extension to woo more participants

 Athens hopes offers will top 30 billion euros
By Sotiris Nikas
Athens announced on Monday an extension to the deadline for bondholders to take part in the debt buyback scheme until Tuesday afternoon, while the tug of war between Germany and the International Monetary Fund over Greece’s debt continues, focusing on the amount of funds Greece should have at its disposal for the buyback scheme.
The Public Debt Management Agency (PDMA) extended the deadline for offers to enter the scheme until 2 p.m. on Tuesday.
The Eurogroup of eurozone finance ministers will hold a conference call on Tuesday to discuss the course of the debt buyback, ahead of the council’s meeting on Thursday, Guy Schuller, a spokesman for the Luxembourg government of Jean-Claude Juncker, who chairs the group’s meetings, stated on Monday.
The new PDMA head, Stelios Papadopoulos stated that “investors will have to bear in mind that even if Greece accepts all the bonds offered in response to the invitation of interest, it will continue to cooperate with its official creditors in examining further measures to set its debt on a sustainable course.” In essence, he told foreign hedge funds and banks that there will be no better offer than the current one and there may be a new intervention as regards Greece’s debt in due course.
“There is some scope for additional participation by international and domestic investors in the Greek bond buyback program,” Simon O’Connor, a European Commission spokesman, commented on Monday.
The target set for the program is for a reduction of the country’s debt by some 20 billion euros. For that to happen, the Eurogroup has approved funds of 10 billion euros, expecting the bondholder participation to add up to 30 billion euros.
Sources said that before the extension was given the offers had amounted to 26.3 billion euros and the average buyback price stood at around 33 percent. Greece would then need over 9 billion euros, lightening its debt by just over 17 billion euros.
The extension would see Greek banks raise their participation by 5 billion euros, but it appears that the 10 billion set aside will not suffice.
That is the bone of contention between Berlin and the International Monetary Fund, with Germany being against increasing funds to Athens for the scheme, as the IMF wants the eurozone’s biggest economy to do.



http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_10/12/2012_473812

TAIPED rejects lottery license bid, asks for new offer

By Vangelis Mandravelis
The TAIPED state asset management fund rejected on Monday the sole bid by the OPAP-led consortium for the concession of state lotteries for the next 12 years, and asked the suitor to come up with an improved bid by Wednesday, when the TAIPED board discusses the issue again.
Kathimerini understands that while the consortium, which also includes Lottomatica, Intralot and Scientific Games, offered a deposit of 125 million euros, TAIPED is asking for 190 million to be paid up front. The licensee will also pay 30 million euros in the first year of operation and 50 million euros minimum per year thereafter.
Should a new bid for the license come tomorrow, TAIPED will decide whether to accept it or cancel the project altogether.
Sources say Lottomatica has vetoed a deposit in excess of 150 million euros.


http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_10/12/2012_473662

Production manager at Dodoni dairy factory commits suicide

The production manage of one of Greece’s biggest dairy producers, Dodoni, has been found dead at his home in Ioannina, northwestern Greece.
Police said the 51-year-old, identified only by his initials A. S., left a note saying he was taking his life because of personal problems.
Authorities said there was no indication the incident was linked to the man’s work.
The 51-year-old killed himself by drinking pesticide, police said.





http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_10/12/2012_473656


Greece extends deadline for bond buyback until Tuesday


Greece has extended until noon on Tuesday the deadline for bondholders to take part in the buyback without revealing further details about the rate of participation so far.
The deadline had expired on Friday evening but the Public Debt Management Agency (PDMA) said in a statement on Monday morning that the new deadline would now be noon (London time) on December 11.
The PDMA added that the changing of the deadline would not allow investors who have already submitted their bonds for the buyback to withdraw from the process.
“We have decided to extend the Invitation to offer designated decurities for exchange to 11 December 2012,” said Stelios Papodopoulos, the head of PDMA.
“Holders that have not tendered so far can still take advantage of the liquidity opportunity offered by the Invitation. Investors should bear in mind that even if Greece accepts all bonds tendered in the Invitation, it will continue to engage with its official sector creditors in considering further steps to put its debt on a sustainable path. Future measures may not involve an opportunity to exit investments in Designated Securities at the levels offered for this buy back.”
The PDMA said that the settlement date for any investors taking part in the buyback would be Tuesday, December 18.
Greece has set a price range of between 30.2 and 40.1 percent of the principal amount for any bonds submitted by investors.
Despite the fact that Finance Ministry sources said on Saturday the target of collecting about 30 billion euros’ worth of offers for the buyback had been achieved, an extension to the deadline could allow more investors to come forward.
It is thought that hedge funds offered about 15 to 16 billion euros of Greek paper by the Friday deadline, while local banks will contribute up to 16 billion euros.
This would allow Greece to spend about 10 billion euros to buy back 30 billion euros’ worth of bonds, reducing its debt by 20 billion.


and Monti resignation roils Europe today......

http://uk.reuters.com/article/2012/12/10/uk-spain-de-guindos-idUKBRE8B907O20121210
(Reuters) - Spain's government continues to study a potential request for European Central Bank intervention in the debt markets, Economy Minister Luis De Guindos said on Monday.

"It is an instrument that the Spanish government is considering and we will take the decision that is best for Spain," he said in a radio interview.

De Guindos also said that he saw some signs of optimism in the Spanish economy but that uncertainties about the political situation in Italy, where Prime Minister Mario Monti has said he will resign, has a contagion effect on Spain.

And from The Telegraph live blog....


12.26 We've had the latest GDP figures from the central banks in France and the Netherlands this morning - and neither came bearing good tidings. The Dutch central bank forecast the economy will shrink over the coming year, reversing its economic forecast from 0.6pc growth to 0.6pc contraction in 2013. Meanwhile the Bank of France confirmedEurope's second biggest economy is in a shallow recession after contracting 0.1pc in the third and fourth quarters of the year.



11.52 More voices from Europe are urging Italy to press ahead with Prime Minister Mario Monti's reforms after he resigns.
Germany's foreign minister Guido Westerwelle said in a comment on the website of newspaper Spiegel:
QuoteItaly must not stand still after two-thirds of its reform process. That would bring new turmoil not only to Italy, but also to Europe.
Meanwhile, an executive board member of the European Central Bank,Joerg Asmussen, hailed Mr Monti's government for winning back investor confidence in an interview with newspaper Bild, saying:
QuoteWhoever governs Italy, a founding country of the EU, after the election must continue this course with the same level of determination.




11.25 Turning now to Greece which has announced it received €26.5bn in offers for debt buyback by the original deadline of 5pm last Friday, just short of its €30bn target. The deadline has been extended to midday Tuesday in an effort to raise the shortfall. Athens plans to buy the bonds back at a third of their value, with the overall aim of buying €30bn debt for €10bn.



.


....




10.44 Think tank Open Europe has predicted Italian elections will be called on February 17 or 24 - two months ahead of when they would have been had Mario Monti completed his term. It forecasts an election campaign dominated by clashing economic policies, with two parties calling for a referendum on Italy's membership of the single currency. Read the full piece here.
10.20 Spain's economy minister has spoken out about fears of contagion from Italy on the already-brittle Spanish economy, saying he is considering asking the European Central Bank for help tackling the country's debts, a move the prime minister Mariano Rajoy has so far avoided. Luis de Guindos was speaking in response to a front-page demand in Spain's biggest selling newspaper El Pais that thegovernment request a bail out urgently, or risk prolonging the recession beyond 2014. Mr de Guindos said:
QuoteEvery time there are doubts ... for example today in the case of Italy, when there are uncertainties about the political stability of a neighbouring country such as Italy, that immediately affects us.
10.06 Spain is already feeling the pain from Italian political turmoil, seeing its bond yield (cost of borrowing) rise rapidly in early trading. Both Italy and Spain's cost of borrowing rose this morning. The Italy-Germany bond yield spread widened 31.7 basis points to 353.6bp, while the Spain-Germany spread grew 18.4bp to 431.1bp.
Spanish 10-year bond yields over last five days. Source: Bloomberg
09.35 In more bad news for Italy, lastest figures show its industrial output fell more than feared, with a drop of 1.1pc compared with economists' forecasts of 0.3pc.

09.19 Turning away from Italy, Greece has announced it will extend the deadline for banks, funds and investors to agree to the debt buyback programme. The country's biggest banks confirmed their participation in the plan just hours before the original deadline of 5pm on Friday, but now the public debt agency has given further bondholders until midday on Tuesday to come forward.
09.11 Italy's listed banks have plunged in early trading, underperforming an already weak Italian stock market. Shares in Banca Monti dei Paschi de Siena dived nearly 6pc, while UniCredit andIntesaSanpaolo both lost more than 5pc.
08.50 Italian bond yields have spiked on news the technocratic prime minister Mario Monti plans to resign after his budget is passed, as fresh uncertainty looms over Italy's fragile economy.
Italian 10-year bond yields over the last five days. Source: Bloomberg
08.28 Breaking: Germany's trade surplus shrank in October, after imports grew faster than exports. While imports grew 2.5pc to €77.6bnfrom September, exports edged up 0.2pc to €92.8bn, creating a surplus of €15.2bn, from €16.9bn in September. The figures are a mixed bag for Germans who will be glad that exports rose after they fell in September - but as an export-driven economy the narrowing surplus will be unwelcome news.

06.15 Ambrose Evans-Pritchard has pulled no punches in his comment in the Daily Telegraph this morning. He writes that Europe is clinging to a "scorched-earth ideology" as its depression deepens:
Like the generals of the First World War, Europe’s leaders seem determined to send wave after wave of their youth into the barbed wire of tight money, bank deleveraging, and fiscal austerity a l’outrance.
The strategy of triple-barrelled contraction across a string of inter-linked countries has been the greatest policy debacle since the early 1930s. The outcome over the last three years has been worse than forecast at every stage, and in every key respect.

















http://www.guardian.co.uk/business/2012/dec/10/eurozone-crisis-monti-resignation-markets-italy
Another sign of jitters over Italy -- the cost of insuring its debt against default has risen this morning. Italian credit default swaps are up 15 basis points at 268bp.


Trading in three Italian banks has just been temporarily halted after their shares dropped by around 5%, triggering automatic suspensions.
From Milan, @lemasabachthani reports:



                                                  

Italian stock market slides

The Italian stock market is a sea of red this morning.
The main index, the FTSE MIB, has tumbled by 2.3% at the start of trading, shedding 356 points to 15343.
With Italian sovereign debt also being pummeled (see 7.56am), it's an alarming start to the day.


Monti: I'm very concerned

Mario Monti has told Italian newspaper La Repubblica that he is very worried about the situation in Italy.
In an interview published this morning, Monti said:
If I had to ...describe my feelings today, I would say that I am very concerned.
Asked about his own plans for the future, Monti replied "I don't know".
Speculation has been swirling that Monti – who was parachuted in as technocratic (unelected) PM just over a year ago – could play a part in the looming general election.
Until now the former EU commissioner has said he would not run for office.


                                   Good morning, and welcome to our rolling coverage of the eurozone financial crisis.

Mario Monti's pledge to resign as Italy's prime minister is sending shivers through the financial markets already today.

Italian sovereign debt is being sold off in early trading, pushing up the yield (the measure of borrowing costs) sharply. The yield on Italian 10-year bonds has jumped to 4.79% already, from 4.54% on Friday night.

That's a significant move (although still a long way from the ' 7% danger zone' where a country's borrowing costs become unaffordable).

Spanish bonds are also falling in value as the political uncertainty in Italy reverberates across the Eurozone periphery.

The trigger for the sell-off is Monti's decision to resign following the loss of support from SIlvio Berlusconi's Freedom People party.
Monti declared over the weekend that he will tender his resignation as soon as the 2013 Italian budget has been approved by parliament.
As my colleague Tom Kington wrote from Rome:
In a pointed reference to Berlusconi's previous government, Monti warned on Saturday that Italy needed to avoid becoming, once again, "the detonator that could blow up the eurozone".When the Freedom People party withdrew parliamentary support from Monti on Thursday, the difference between German and Italian benchmark bonds rose by 30 points.

Berlusconi will now launch an aggressive election campaign as he seeks to build his party's popularity back up from 15 per cent, which sees it far behind the centre-left Democratic party and in third place behind the Five Star movement led by comic Beppe Grillo.
I'll be tracking reaction and latest developments in Italy through the day, along with other key events across the eurozone and the wider economy.


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