Yields on benchmark 10-year Spanish and Italian bonds peaked at 6.45 per cent and 6.25 per cent, respectively. The premiums Madrid and Rome pay to borrow over Germany also reached new euro-era highs of 404 and 384 basis points. Both the yields and premiums are close to levels that pushed Greece, Ireland and Portugal into bail-outs.
The continent-wide Euro may die at the end of this road. And if Libya's economic problems are too much to afford a war of choice based from Italian soil, the Libya War could take a crippling hit that will allow Khaddafi to survive.
UPDATE: While geographically essential for waging an air war (air bases just north of Libya), Italy has always been shaky on participating in the Libya War. I have to believe that a financial crisis could shake them right out of the coalition.
