Italians dunnit

There has been a 15 basis point drop in ten year treasury, in one day.  This is like a swing in interest charges of 3% in one day, relative to guv budget.  Treasury needs huger cash pile to avoid short term charges.

The Europeans are marking Italy to market and German banks grab the US bond for safety and yield during the repricing phase.   Merkel can do a 250 billion dollar bail out, still keep the Euro, but they have to institute congestion priced entry and exit. 

You cannot have Euro currency banking backed by the German banks, they miss local pricing processes. You can do Euro central banking as long as the 'central' is a fair market creation.  Then, on the margin, the peripheral economies notice, early, the ebb and flow of local banking conditions. They act earlier, the are less inclined to pressure the local bankers. Smaller defaults, more adiabatic change.

I see adiabatic as an isonormal sequence of node transforms which reach a stable change  in quantization; a renormalization of distribution and defaults within bit error. .  We always have the pit boss and it should have excess index space due to N-color binding, it always gets the latest look at the tradebook before matching market queues.

The Euro does not abandon guv since guvs still have monopoly tax power, but guv taxes in become priced against spending out by market. The market prices the monopoly fee effectively.