Draghi talks tough - but Merkel wrote the script - The Globe and Mail

Draghi talks tough - but Merkel wrote the script - The Globe and Mail

Thursday, Jul. 26 2012, 10:59 AM EDT
The yields on both Italian and Spanish bonds fell after Mr. Draghi’s remarks, taking some funding pressure off the two countries. While Spain’s yields are higher than Italy’s, Italy is actually the bigger worry because, with more €1.9-trillion in national debt, it must roll over enormous amounts of bonds this year. Spain’s rollover requirements are relatively small.
The longer term problem is the slow-motion run on the banks in Greece, Spain and Italy, in which deposit accounts are being drained for fear that those countries will exit the euro and reprint their old, weak, disgraced currencies. If that were to happen, the currencies would lose half their value in an instant against the euro, leading to banking, economic, social and political chaos."