Checkmate: Eurozone stumbles through final market moves to prevent collapse

November 28, 2011 – ROME – That thought is difficult for me to fathom. How could we be so close to the brink? At this point there is zero possibility that Italy can refinance any portion of its $300b of 2012 maturing debt. If there is anyone at the table who still thinks that Italy can pull off a miracle, they are wrong. I’m certain that the finance guys at the ECB and Italian CB understand this. I repeat, there is a zero chance for a market solution for Italy. Either the ECB (aka Germany) steps in and underwrites the debt with some form of Euro bonds or the IMF (aka the USA) steps in with some very serious money. If Italy can’t make it, then there will be a very big crashing sound. It would end up taking out most of the global-lenders, a fair number of countries would follow into Italy’s vortex. In my opinion a default by Italy is certain to bring a global depression; one that would take many years to crawl out of. The policy makers are aware of this too. So I say something is brewing. And yes, if there is a plan in the works it must involve the IMF. And yes, it’s going to be big. Please do not read this and conclude that some headline is coming that will make us all feel happy again. I think headlines are coming. But those headlines are likely to scare the crap out of the markets once the implications are understood. –Business Insider 

10 days before day of reckoning: Financial Times’ Wolfgang Münchau says: I am hearing that there are exploratory talks about a compromise package comprising those three elements. If the European summit could reach a deal on December 9, its next scheduled meeting, the Eurozone will survive. If not, it risks a violent collapse. Even then, there is still a risk of a long recession, possibly a depression. So even if the European Council was able to agree on such an improbably ambitious agenda, its leaders would have to continue to outdo themselves for months and years to come. Ultimately, Münchau reckons that Italy’s disastrous bond auction on Friday tells us time is running out. The Eurozone has 10 days at most. –Business Insider

Last minute IMF rescue package? The International Monetary Fund is being lined up potentially to help Italy and Spain amid growing fears that a European rescue scheme will not be able to prop up the countries, it emerged last night. Reports in Italy suggested that the IMF is drawing up plans for a €600 billion (£517 billion) assistance package for the country. Spain may be offered access to IMF credit, rather than a rescue package, to avoid it being “picked off” by the markets in the coming weeks. Any IMF involvement in European rescue packages would be partly underwritten by British taxpayers, which could leave this country liable if Italy and Spain did not repay any international loan. –Telegraph

contribution by Luisport