The Markets Have Spoken - Spain's Bailout Is A Failure

As the above chart shows ( h/t Brad Plumer at the WAPO), the band-aid applied to th elatest case of gangrene in the eurozone hasn't fooled investors one bit. Spain's borrowing cost ( orange) shot upward to almost 6.5%.

Italy, the next domino in the ongoing crisis, (gray) saw its borrowing cost increase to nearly 6%.

Translation? Investors don't think they're going to be paid back, and will simply end up losing most of their investment in the form of a 'haircut', ala Greece.

The investors whom already own these securities are seeing their investments plummet in value, since not only are few people interested in buying Spanish or Italian government debt, they certainly aren't willing at the earlier, lower rates without a huge price discount.

I think we can call this a failure in any EU language you like.

As I said before, without major cuts in the European nanny state and major changes in demographics, there's no way shoveling more and more money down this rat hole can work. Debt at a level of 110% of Spain's Gross Domestic Product is simply unsustainable.

Spain, along with most of the EU is not reproducing at even replacement levels, and there simply aren't going to be enough young Spanish workers to pay the debt off. And for that matter, this also applies to Germany. There's no way 42 Germans in the future are going to be willing or able to carry the load for the eurozone that 100 Germans have been committed to carrying now...especially given how opposed those 100 are to it.