The Italian media are calling it “Black Friday.” On July 8, Italian stocks sunk and interest rates soared. The yield on Italian 10-year bonds rose to 5.28 percent. The ftse mib—Italy’s main stock index—plunged 7 percent over the five sessions last week, its biggest fall in 14 months. “We can’t go on for many more days like Friday,” Reuters quoted a senior European Central Bank official as saying. “We’re very worried about Italy.”
On Monday it got worse. Yields on 10-year bonds hit 5.6 percent. Spain suffered too, as its 10-year bonds rose from 5.7 percent to 5.9 percent. Many experts believe that when it gets this expensive for countries to borrow, their economies are close to collapse. “The bond markets of both countries are replicating the pattern seen in Greece, Portugal and Ireland before each spiraled into insolvency,” wrote Ambrose Evans-Pritchard on Tuesday.
“We believe the European sovereign crisis might be entering a new phase with contagion reaching the larger economies,” warned the chief Europe economist at the Royal Bank of Scotland, Jacques Cailloux.
European Council President Herman Van Rompuy called an emergency meeting for Monday morning, though his spokesman claimed Italy was not on the agenda. Reuters, however, says that two official sources told it that Italy would be discussed.
One of the main causes for Italy’s troubles has been Italian Prime Minister Silvio Berlusconi’s attack on the man who is seen as the only person who can save Italy’s economy—Finance Minister Giulio Tremonti. “If I fall, then Italy falls. If Italy falls, then so falls the euro. It is a chain,” Tremonti said, according to Italian newspapers. Nonetheless, Berlusconi is opposing Tremonti’s spending cuts, and investors are worried that Tremonti could lose his job. Tremonti is “not a team player, and thinks he’s genius and that everybody else is a cretin,” said Berlusconi.
The high price Italy must pay to borrow money could hurt it soon. Italy has to roll over €69 billion in August and September, and must raise €500 billion by the end of 2013. The interest rate the government has to pay on its debt could become unsustainable.
Europe’s short-term fixes and billion-dollar bailouts won’t solve this problem. European officials admit their bailout fund isn’t big enough to cover Italy. They must come up with a new fix. “Germany must now be willing either to buy or guarantee Spanish and Italian debt, and in doing so to cross the Rubicon to fiscal and political union, or accept that emu [Economic and Monetary Union] must break up with calamitous consequences for German foreign policy,” wrote Pritchard.
Will the eurozone collapse? We have pointed out in the past that, as a German idea, the euro was designed to permit the German economy to become strong at the expense of other eurozone member nations which, having lost their sovereign means of exchange, have no means of adjusting their exchange rate to offset changing economic conditions.
Both the EU and the euro are umbrella mechanisms under which cover German elites have been able to pursue their own imperialist goals to the ignorance of the masses. Germany may choose to leave, to change or to retain either institution of its own making once these imperialist goals have been largely met. Due to the power it has accumulated under each of these institutions, the decision either way will be Germany’s to make.
What we are now seeing, via the dislocation of EU unity as a result of the euro crisis, is the beginning of the fracturing of the EU into a combine of 10 regional groupings under the overarching dominance of Europe’s strongest economy and its historically most aggressive politico/military power—Germany. This, all in exact fulfillment of the prophecy of the final resurrection of the Holy Roman Empire as recorded in Revelation 17:12-13. ▪