Italy hit by market fears of contagion from Spain

Just over two years ago I warned that Spain posed a significant threat to the EU area economies. This was a very popular stance, and since I'm more of a medium to long term strategist and Spain didn't experience any immediate pain, my stance was considered even more morose. Well, luckily, I supplied ample research to paying subscribers who were well prepared for what is now evidently coming down the pike.

The ECB stepped into the fray once again today but the the results of the Spanish debt auction today speak for themselves. The rate on 10-year bonds is close to touching the 7% mark. The BBC reports on the "Dreadful Result" The Spanish government sold 3.56bn euros (£3.04bn; $4.79bn) worth of bonds out of a maximum target of 4bn euros. The auction attracted bids worth 1.5 times the securities offered. The so-called bid-to-cover ratio was down from 1.8 in October.

ROME — Italian Premier Mario Monti pledged on Monday to make €4.2 billion ($5.5 billion) in cuts in state spending over the next six months in a bid to avoid raising sales taxes and tapped a leading private-sector turnaround expert for the job of determining just what gets slashed.

Italian Premier Mario Monti pledged on Monday to make €4.2 billion ($5.5 billion) in cuts in state spending over the next six months in a bid to avoid raising sales taxes and tapped a leading private-sector turnaround expert for the job of determining just what gets slashed.