While many of us may been indulging in tasty Thanksgiving trimmings, Europe’s been starving for financial help. As Italy’s bond yields surpassed above 8% while Spain looks to follow the same fate, it is clear that the contagion is spreading faster than anticipated, moving from the periphery into the core of Europe. Germany’s lackluster bond auction earlier this week and Belgium’s downgrade are clear evidence of this development.
With unsustainable debt levels, Italy and Spain at the very least will have to restructure their obligations. Austerity simply isn’t enough and will only lead to a greater economic contraction that will have a ripple effect across global markets. In other words, there is nothing positive coming out of Europe.
For now, below is a Bloomberg interview on how Europe can try to get out of this mess. Let’s brace for what might be an upcoming tumultuous week.