Goldman's Francesco Garzarelli weighs in on Italy.
As for what will end this: "What will get Italian and Spanish spreads back in check at this juncture can only be a convincing solution for Greece, which if successfully crafted and communicated could form the paradigm for the other ‘program’ countries. As said before, we are of the view that a full extension of additional funding to Greece (dropping PSI), or market-based solutions to buy legacy assets through the common funding vehicles, would be the best near-term solution. Beyond the near-term snap-back, a protracted compression in intra-EMU sovereign spreads awaits a greater involvement in the individual sovereign markets by non-EMU investors, particularly those in Asia. And that awaits greater clarity on the Eurozone’s governance fiscal structure."
This story originally appeared on Business Insider
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