New Italian and Greek shoulders can't shrug off heavy burdens

In this macro view video Steen Jakobsen, Chief Economist, Saxo Bank, analyses the situation for the Eurozone in light of heads rolling in the hot political seats of troubled nations, namely Greece and Italy. It goes without saying that despite the appointment soon of new heads of state the burdens in these nations are so heavy now that they can hardly be shrugged off.Clean-up in both countries is a major task. While Greece is in the bailout phase and is undergoing a leadership change, the main focus is on Italy now which still has a chance to save itself. And it must as there is hardly a hand large enough to help the Eurozone's third-largest economy. With the situation worsening by the hour though and the markets having clearly demonstrated a looming doomsday with perilously high bond yield spreads prompt action must be taken.The problem in Italy is one of liquidity not solvency, unlike Greece, though it seems the difference hardly matters now in the eyes of investors. It is interesting to note that it only took Portugal, Greece and Ireland 14 days to ask the International Monetary Fund for help after their 10-year bond yield spread to German bunds passed 6.5 percent, says Steen. Italy's has been above 7 percent for a few days now. So the pressure is definitely on Italy's politicians in charge - whoever they might be - to activate reforms, move through austerity and create a credible plan. Until then EURUSD is expected to remain under considerable pressure.For more comments by Steen Jakobsen see his blog Steen's Chronicle on TradingFloor.com

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