Contagion

Today's 10-year yields for the sovereign debt of the PIIGS (Portugal, Ireland, Italy, Greece and Spain) confirm that Europe's debt crisis has spiraled out of control.

The can-kicking appears to have come to an end:

The time has come to confront an ugly truth: The possibility that the Eurozone will break up, or rather fall apart, is growing increasingly likely.

In fact, I'd say given recent developments in Italy the probability of a breakup is as high as 40%... [and] a Eurozone split would be bad news - no matter which way it happened.

Germany would survive an orderly breakup and do well in a tight-money default, but fare poorly in a period of hyperinflation. Conversely non-Eurozone Eastern Europe would do well in an orderly breakup and survive hyperinflation, but it would be battered by a tight-money default.

At the end of the day there are no easy answers on this one. The best you can do is to find markets with little economic connection to Europe - and even that's not easy.

The Eurozone is dead, whether or not the coroner has been called.