Speculators hell bent on bringing the world down..

1. First they attacked Italian and Spanish sovereign debt and the banks that are holding them
2. The ECB has stopped the rot, buying up both sovereign paper, interest rates have come down hugely (see graph below)
3. Speculators are now taking on French banks and French sovereign paper

Italian-German 10 year bond yield spread

Neither Italy nor France is insolvent (France triple A has been confirmed as recently as this morning by S&P), but if speculative attacks against their sovereigns increases their interest rates to such extent their debt trajectory might become unsustainable.

So these speculative attacks might very well be self-fulfilling. This is exactly why the ECB intervened in the Italian and Spanish debt markets.

And all the time, these speculative attacks could have been prevented of only the European Commission, or more especially Eurocrat Michel Barnier would just implement a change in accounting rule (a softening of mark-to-market) for which the International Accounting Standards Board (IASB) itself is clamoring!

We are inclined to say that the situation is already serious enough for policy makers and bureaucrats not to shoot ourselves in the foot, and to be frank, we’re quite curious about his motives.

Meanwhile, Mr. Barnier’s own (French) banks are burning.