from Zero Hedge:
Everyone knows Europe is insolvent; the only question is “when” will Europe be forced to finally admit this truism. The long overdue house of cards may start toppling in as little as 6 months, as The Telegraph reports, Mediobanca’s ‘index of solvency risk’ suggests “time is running out fast” for Italy. With the breakdown in Eurozone talks on a banking union and the Fed’s shift in policy, Europe “has become a dangerous place,” warns RBS. Unless Italy can count on low borrowing costs and a broad recovery, it will “inevitably end up in an EU bailout.” The current situation is as bad as when the country was blown out of the ERM in 1992 as “the Italian macro situation has not improved…rather the contrary; with 160 large corporates in Italy now in special crisis administration.” If the ECB doesn’t act, one analyst warns (pleads) it could see all the gains of the past nine months vanish in two weeks. Mediobanca said the trigger for a blow-up in Italy could be a bail-out crisis for Slovenia or an ugly turn of events in Argentina, which has close links to Italian business. “Argentina in particular worries us, as a new default seems likely.”
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