The money men who lend to governments had their first real opportunity on Friday to pass judgment on the latest extend and pretend European sovereign debt solution. Italy, in selling €8bn of 10-year bonds, had to agree to pay an interest rate of 6.06pc – higher not lower than the pre-solution rate.

Comments this morning on the subject:

Paul Krugman – Italy is having to roll over its debt at levels that are unsustainable, and the unraveling of the euro is definitely still on. It’s still looking impossible to save this system without a drastic change in both the ECB’s actions and its philosophy. If that’s impossible, as so many people claim, the euro will be a failed experiment.

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George Soros attacks Brussels rescue deal – Veteran investor George Soros has attacked the lack of leadership at the top of the eurozone and said that the new Brussels “deal” to solve the debt crisis will only last between “one day and three months”. [London Sunday Telegraph]

Why the latest eurozone bail-out is destined to fail within weeks – What is needed, urgently, is a clean, transparent Greek default – allowing this flailing semi-developed economy to leave the eurozone, re-establish a weaker drachma and regain its self-respect. Portugal should leave too, its membership of the same currency bloc as Germany is as absurd, and self-defeating, as that of Greece. There would be further market turmoil, yes, but a few more months of volatility, leading to an ultimately more stable outcome, is surely better than the current situation where the entire world is living in fear of a massive “euroquake”. [Liam Halligan in the Sunday Telegraph]

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Peter Fray
Peter Fray
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