If you want to say, Italy is “Too big to fall”. I would say, Italy is “Too big to save”.

One month ago, the Italy treasury department announced that the total amount of the Italian sovereign bond is 1.5T and recently, without any valid explanation, the government suddenly announced that is Euro 1.9T instead of 1.5T. This breached the market confidence and everyone is in doubt that if there be suddenly more hidden debts jump out in the future.

Also there will be around Euro 350b Italy bond due in 2012. I really dont know what the ECB can do? Print money/Open market purchase seems to be the only way but how much can ECB afford? Can ECB print that much money without destroy the currency?

The EURO leader tried to leverage the EFSF from 0.2T to 1T and it seems that 1T is far away from 1.9T. Also, last Monday, Japan broke her promise and refused to purchase 20% of the EFSF debt and finally the bond yield rose to 4.3% which is the highest since the establishment of the fund.

According to a Dow Jones analysis. Greece’s bond yields first hit 7% 7 days after they first reached 6.5%. Irish yields jumped from 6.5% to 7% in 34 days, while Portugal’s yields took 43 days.

Why Italy’s bond yield jumped from 6.5% to 7% in 1 day only? Also, ECB automatically carried out the bailout plan for Greece/Ireland/Portugal at the day that the 10 years bond yield hit 7%. But why there is no action from the ECB yesterday/today?

The answer is very simple. There is no possible bailout plan for Italy. ECB does not know what to do as Italy is “Too big to save”.

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