Europe on the Eve of Destruction. One of 2 things are set to happen in Europe, the EU will cease to exist in their current form or the Euro will collapse to around 86c US according to Economist Shayne Heffernan.

Greece

While Greece, facing fresh elections which could hasten its exit from the euro zone, has dominated headlines, uncertainty over the final cost of Spain's banking reform has stoked investor fears it could require an expensive international bailout, a bill the euro zone would be stretched to cover.

Greek banking officials said the pace of withdrawals slowed Wednesday, a day after President Karolos Papoulias - the ceremonial head of state - conceded that almost $1 billion worth of deposits had been withdrawn or converted into safe-haven German bonds in recent days.

While Merkel and the architects of the EuroCrisis try to talk up Greece, behind close doors they have cut off some Greek banks from its main lending programs because they are so weak, forcing them to rely on other forms of emergency help. A recapitalization of Greece's banking system is part of the international bailout program, but officials have been slow to agree to the details.

The jobless rate hit 21.7 per cent in February, and rose to 54 per cent in the 15-24 age group.

The statistics documented the hardship that led voters last Sunday to reject the austerity that has come as a condition for an international bailout.

On average, more than 900 Greeks have lost their jobs every day over the year ending in February, for a total of 1.1 million, a 42 per cent increase over 12 months.

And the country remains mired in a recession, now in its fifth year.

Spain

Official data confirmed the Spanish economy shrunk by 0.3 percent in the first quarter, putting it back into recession and facing a prolonged downturn as the government cuts spending in an attempt to wrestle down its budget deficit.

Unemployment is already running close to 25 percent with half of the young without a job.

Expansion of the export sector, the only area of Spain's economy to have grown in the last two quarters, slowed in the first quarter as the country's main trading partners in Europe saw their own economies contract.

Spanish Prime Minister Mariano Rajoy warned on Wednesday that his government, struggling to reduce its budget deficit, could soon find it difficult to fund itself on the bond market unless the pressure eases.

Spain's 10-year yields have spiked back above 6 percent, which investors view as a pivot point that could accelerate a climb to 7 percent, a cost of borrowing widely seen as unsustainable even though Madrid has sold well over half its debt needs for the year.

The premium investors pay for Spanish over German debt rose to its highest level since the euro's introduction this week, at over 500 basis points.

Italy

The Italian economy, already forecast to grow negatively this year, performed even weaker than expected in the first quarter by contracting 0.8 percent.

The shrink represented the third consecutive quarter in which the Italian economy, the world's eighth largest according to figures from the International Monetary Fund, actually shrunk in size.

According to economists, it is likely to force a recalibration of official full-year prognostications.

Economists predicted a shrink in the first quarter, but the Italian press said the rate was expected to be smaller at around 0.4 percent to 0.6 percent.

The latest growth figures, released Tuesday by the Italian National Statistics Institute (ISTAT), showed a contraction of 0.7 percent in the fourth quarter of 2011, following a 0.2-percent contraction in the third quarter.http://www.ibtimes.com/biz/admin/publish/published/index.php?a=insert&typology=1

Analysts said that the weight of the austerity measures put in place by the technocratic government led by former European Commissioner Mario Monti was the main culprit behind three consecutive quarters of economic growth.

The Monti government has pushed through several waves of reduced government spending, higher taxes, and increased focus on reducing tax evasion and corruption.

Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reached a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.Read the Terms of Service