The EU bailout of Spain's banks is a mere four days old and investors have now completed the raspberry they gave it on its first day. Yields on Spanish bonds shot up not just past 6 percent, which happened within hours of markets opening on Monday, but have now touched 7 percent, closing today at 6.92 percent. Clearly, the end is near. But that's not all! Despite today's news, Germany says it's had enough:
The German chancellor warned that there were no "miracle solutions" to the eurozone crisis, even as the yields on benchmark Spanish 10-year bonds climbed above 7 per cent, a level seen as unsustainable by analysts.
…Underscoring how the European crisis is causing contagion in some of the continent’s largest economies, Italy’s borrowing costs jumped sharply at an auction of €4.5bn of bonds.
…German policymakers have argued that even Europe’s leading economy is not capable of assuming responsibility for the debts of all its partners. Instead they are seeking negotiations towards a “fiscal union” that would bind the members’ budgets closer together.
Remember that 11th-hour rescue I was talking about last week? Well, Europe's come-to-Jesus moment is now looking terrifyingly imminent. Hopefully, Angela Merkel's tough talk is aimed mainly at the Greeks, who hold another round of elections this weekend, and will soften up next week. If not, who knows? The clock is very definitely ticking away.