DESPITE MONTI'S AUSTERITY BUDGET AND THE ECB BAILOUT, ITALY AND THE EURO STILL LIKELY TO FAIL

Prime Minister Mario Monti’s market honeymoon is ending as Italian bond yields approaching 7 percent signal mounting concern his government may struggle to sell 440 billion euros ($574 billion) of debt next year. 

Monti took just five weeks in office to push through a 30 billion-euro emergency budget package aimed at taming surging borrowing costs. Investors reacted to the plan’s final approval by the Senate Thursday by driving up the yield on Italy’s 10-year benchmark bond by 12 basis points to 6.91 percent, close to the 7 percent level that prompted Greece, Ireland and Portugal to seek bailouts. It was at 6.94 percent at 10:13 a.m. in Rome. 

“The Monti effect has now also been priced in and I think there is a lot of room for disappointment next year,” said Lex Van Dam, who manages $500 million in assets at Hampstead Capital LLC in London.

THE EURO IS FAR FROM SAVED AND THE EU IS FAR FROM SECURE.

2012 WILL BE THE YEAR BOTH FADE AWAY.