Italy is Doomed and Euro Will Break

NYU's economist Roubini is coming out with some pretty strong words on the fate of Italy and the European Union.

With the European sovereign debt crisis escalating dramatically, after Italian bond yields hit record highs on Wednesday and France’s bond spread over German bunds continues to widen, the possibility that the EU will fail to find a solution and will be forced to break up is now very real.

Nouriel Roubini, the famed NYU economist dubbed Dr. Doom for his ultra-bearish predictions, argues that without the ECB engaging in QE (drop rates down to zero and massively purchase bonds) and a strong stimulus program from Germany, the European Union will not survive.

The only way to stop the upcoming disaster, according to Roubini, is quantitative easing. The ECB would have to drop interest rates to zero, effectively helping to depreciate the currency, and begin massively buying up Italian and peripheral debt. The euro would fall to parity with the dollar, Roubini says, and Germany and other “core” countries would have to implement fiscal stimulus plans to compensate for the fall in aggregate demand caused by austerity in peripheral nations.

It’s clear why they call him Dr. Doom.

Here;  http://www.forbes.com/sites/afontevecchia/2011/11/10/roubini-italian-debt-restructuring-and-eu-exit-coming-unless-ecb-qes/

See...the big problem when a country has paper money is CONFIDENCE!  Who is going to buy Italy's IOU's when there is a good chance you won't get your money back?  If you are going to be enticed to buy their paper you are going to demand a large interest rate...and Italy can't afford to pay higher rates.

So what happens to America when the spotlight inevitably focus on us and our $15 trillion of debt?  When our rates on this money goes to 7% and you do the math....we simply won't have the tax revenues to pay the interest.  Then what?

Hold on to The Rock of Jesus Christ....because this ride could get really bumpy.