Evening Update: Quakes And Economic Collapse

Deadly Northern Italy Earthquake Hits Heritage Sites

The magnitude-6.0 quake struck in the middle of the night, about 35km (22 miles) north of the city of Bologna.

The tremor caused "significant damage to the cultural heritage" of Emilia Romagna region, the government said.

Later on Sunday, a magnitude-5.1 aftershock hit the region, causing more buildings to collapse.

It was felt across a large swathe of northern Italy, including the cities of Bologna, Ferrara, Verona and Mantua and as far away as Milan and Venice.

The tremor forced many terrified residents into the streets.

More than 3,000 people were later evacuated from their homes amid fears of fresh tremors.

4 Killed After Magnitude 6.0 Earthquake Skakes Italy

A magnitude-6.0 earthquake shook several small towns in northeast Italy Sunday, killing four people, knocking down a clock tower and other centuries-old buildings and causing millions in losses to the region known for making Parmesan cheese.

Two of the dead were workers at a ceramics factory in the town of Sant'Agostino di Ferrara. Their cavernous building turned into a pile of rubble, leaving twisted metal supports jutting out at odd angles and the roof mangled.

"This is immense damage, but the worst part is we lost two people," fellow worker Stefano Zeni said. News reports said one of the dead had worked the shift of an ill colleague. Elsewhere in the town, another worker was found dead under factory rubble.

In the town of Ponte Rodoni di Bondeno, a worker also died as his factory collapsed, emergency workers told Italian news agencies

The epicenter was between the towns of Finale Emilia, San Felice sul Panaro and Sermide, but the quake was felt as far away as Tuscany and northern Alto Adige.

The initial quake was followed around an hour later by a 5.1-magnitude temblor, USGS said. It was preceded by a magnitude-4.1 temblor.

5 Videos Showing Massive Damage From Italy's Deadly Quake

An Italian official told the Associated Press it was the worst quake the area had seen since the 1300s, leaving cracked bell towers, chunks of church facades lying in the streets and caved-in roofs.

"Financial Anarchy": Run On Banks In Spain And Italy?

Jim Cramer, a former hedge fund manager and the host of CNBC’s Mad Money, was on Meet the Press with David Gregory this morning, where the two discussed Europe’s economic woes and the worldwide ramifications of the disaster.

“I’m predicting bank runs [in] Spain and Italy within the next few weeks. Without a coordinated policy, there is going to be financial anarchy in Europe and [it's] going to cause a slowdown worldwide, China and here.”

Just a few days ago, Cramer was discussing the run on Greek banks and how it would become a “slippery slope.”

“This is not Argentina and Brazil in the 80′s,” he said, “these are big countries.”

The Street TV, which conducted the interview, summarized: “Our Banks Can’t Outrun European Banks.”

The Sovereign Debt Crisis Is Never Going To End Until There Is A Major Financial Collapse

In the past, there certainly have been governments that have gotten into trouble with debt, but what we are experiencing now is the first truly global sovereign debt crisis.

There has never been a time in recorded history when virtually all of the governments of the world were drowning in debt all at the same time.

This sovereign debt crisis is never going to end until there is a major global financial collapse. There simply is no way to unwind the colossal web of debt that we have constructed in an orderly fashion.

Right now the EU and the IMF have been making "emergency loans" to nations such as Greece, Ireland and Portugal, but that is only going to buy those countries a few additional months. Giving more loans to nations that are already drowning in red ink may "kick the can down the road" for a little while but it isn't going to solve anything. Meanwhile, dozens more nations all over the globe are rapidly approaching a day of reckoning.

The financial collapse of Greece is inevitable. If they keep using the euro they will collapse. If they quit using the euro they will collapse. When the rest of Europe decides that it is tired of propping Greece up the game will be over.

As I wrote about yesterday, many of the nations around the world are only able to keep going because they are able to borrow huge amounts of money at low interest rates.

The other day, Moody's Investors Service slashed the credit rating on Portuguese government debt by four notches.

Portuguese debt is now considered to be "junk".

The downgrade of Portugal is having all kinds of consequences. The cost of insuring Portuguese government debt set a new record high on Wednesday, and yields on Portuguese bonds have gone haywire.

If you want to get an idea of just how badly Portuguese bonds have been crashing, just check out this chart.

But it is not just Portugal that is having problems.

Just recently, Moody's warned that it may downgrade Italy's Aa2 debt rating at some point within the next few months.

Spain is also on the verge of major problems and Ireland may need another bailout soon.

But Europe is not the only one facing a horrific debt crunch.

In Japan, the national debt is now up to about 226 percent of GDP. So far the Japanese government has been able to handle a debt load this massive because the citizens of Japan have been willing to lend the government gigantic mountains of money at interest rates so low that they are hard to believe.

The bottom line?

The combination of huge amounts of debt and huge amounts of leverage is incredibly toxic, and that is what we have all over the globe today. Almost every major nation is drowning in a sea of red ink and almost all of our major financial institutions are leveraged to the hilt.

There is only one way that the sovereign debt crisis can end.

Very, very badly.

I hope you are ready for what is coming.

8 More Reasons You Should Be Deeply Concerned That The U.S. Government Has Lost Its AAA Credit Rating

The United States is in such a huge amount of financial trouble that it is hard to put into words. The days of easy borrowing for the U.S government are starting to come to an end. We have been living in the greatest debt bubble in the history of the world, and it has fueled a tremendous amount of "prosperity", but now the party is ending.

A whole lot of financial pain is on the horizon. Please prepare for the hard times that are coming.