Italy has called on the ECB to guarantee the bond yields warning that if they END quantitative easing the Eurozone will break apart. On this score, they are not wrong. The economic spokesman for the Italian governing party Lega has warned of a collapse of the Eurozone. The ECB should ensure that the yield spreads of government bonds of the euro countries are contained and not allowed to soar.
This is what Claudio Borghi told Reuters. “Either the ECB offers a guarantee or the euro will break apart.” Interest on Italian, Spanish and Portuguese bonds rose in response to the currency crisis in Turkey. Borghi warned that this situation cannot be solved and will explode in everyone’s face. This is the Sovereign Debt Crisis coming into play. We are no looking at the risk premium for ten-year Italian government bonds has risen to 2.7% above Germany. The promise that a single currency would produce a single interest rate has been a complete failure.
