Italy Next in LIne

As Greece shambles towards some form of coalition government which might, given that it has a gun pointed towards its head, "graciously" accept the bailout terms foisted on it by the Eurozone, attention now moves to Italy.

This morning Italian bond yields are rising (6.6% at the moment), and are approaching the levels at which the country will have to ask for a bailout.

The only problem with that is that there is no money with which to bail them out, the EFSF has managed to raise zero funds (despite Eurozone flunkies passing the begging bowl around the world) and the ECB flatly refuses to purchase anymore bonds from Italy unless there is evidence from Italy that it will implement an austerity package.

During the course of this week the markets will push the intractability of the ECB and the stubbornness/shiftiness of the Italian political system to their respective extremes; it will be interesting to see which one breaks first.