While we slept, it happened: bond yields for Italy crossed the critical 7 percent mark, making a bailout of the nation unavoidable (here’s why 7 pct is the bright red line). But Italy is far too big to bail out. Janet Daley:

We have reached the end of the line in terms of feasible solutions.

However many democratically elected governments are dissolved and replaced by “technocrats” (EU receivers), there can be no way out of this that does not involve the bankruptcy of nation states, and ultimately (maybe sooner rather than later) the implosion of the single currency. The priority must be to salvage the integrity of democratic principle: the right of free peoples to choose who governs them and to what end. Before we find ourselves allowing the entire edifice of government by the consent to be dismantled, we must consider what is worth saving from this horror.

Hold on tight, this ride is about to get real rough for all of us. The German taxpayers are about to get bigtime bunga-bunga’d.

UPDATE: Walter Russell Mead on why culture always beats abstract universalism:

While Italy may not be too big to fail, it is too big to bail out; the IMF and the EFSF can’t handle the consequences of an Italian collapse.  An Italian failure would force both Germany and France into massive bailouts of their domestic banking systems, destroy France’s credit rating and generally wreak unspeakable havoc on the increasingly fragile underpinnings of both the single currency and the European economy.

Unfortunately, Club Med’s biggest problems can’t be solved by a change of prime ministers or even government coalitions.  There are deep cultural and historical reasons why these countries’ economies and political systems work the way they do.  Italy can’t become Denmark by an act of will or by passing a new legal code; Greece cannot become Germany and Spain can’t become Sweden.

And Iraq cannot become Minnesota.