And Now On To The Main Event., Italy.

Greece is saved! Or maybe not. At least the banks that hold worthless Greek debt are saved. That's what matters there. At least for 2011. For 2012 and beyond, Greece and the rest are doomed, but Eurosocialism was never about the future, only about the present.

Greece was a sideshow and everyone knew that. The chain of frantic bailout efforts and "austerity" budgets was not about Greece, it was about Spain and Italy. The typically short-sighted theory was that if the Eurosocialists could convince bondholders that Greece was going to be OK, they wouldn't panic about Italian and Spanish debts blasting out of orbit and heading for Neptune. That was never going to work for reasons that are becoming all to obvious.

Almost exactly a year ago, I wrote this:

You can't have the kind of debts (Greece, Portugal, Spain, Italy) has with (olive oil, sardine, tourism, lousy Italian cars) income. This is like a runaway freight train and the bondholders and European Central Bankers keep getting surprised every time the thing smashes through another flimsy barricade.

The last barricades are coming up very soon as Italian bonds are getting killed. Whether Greece was "solved" or not means nothing to bondholders who are deciding that the market for their allegedly convertible Italian securities is rapidly drying up and it's time to unload the things. It's not the number of Italian bonds the Italian government is trying to sell, it's the total number of Italian bonds up for sale and with an overall debt of $2.6T, there's a lot of Italian bonds out there waiting to be be thrown onto the market. More and more people aren't waiting.

With Italian bond yields surging higher, analysts said Italy is at the brink of being unable to afford to borrow in the public markets.

Less than two weeks after European leaders unveiled an agreement that was designed to bolster confidence in the region, the yield on Italy's 10-year debt drew close to the 7% mark, a line in the sand of both practical and psychological importance to the market...

"I don't know if 7% is the upper limit, or if it's 6.9% or 7.25%, but I do know [Italy] can't go on for very long having these kinds of bond yields," said Gabriel Stein, director at Lombard Street Research in London.

The MSM is watching the fate of Italian Prime Minister Silvio Berlusconi. Will he resign? Will his allies stick by him? Will he grow a beard? It doesn't matter. Socialized medicine, free college education, massive pensions, a huge government workforce, it's all gone. We're watching the final days of Eurosocialism no matter what. Even if they fix things in 2011, they'll return to the same problems in 2012, 2013 and on until it breaks down for good.


Silvio Berlusconi now has a beard. We're saved!