Will wealth need diversification of a tangible hedge as the sovereign crisis deepens?

”THE worst nightmares are the ones you cannot wake up from.  Just ask Spain.  A year ago the cost of Spanish government borrowing soared as euro contagion spread from – Greece, Ireland and Portugal.  Panic seemed to subside with central-bank intervention and the promise of a new reforming government in Madrid.  Since then Spain has, broadly, been as good as its word and Mariano Rajoy’s government has cut budgets, freed its labour market, played its part in countless ‘make-or-break’ summits in Brussels and secured up to 100 billion euros ($121 billion) to prop up its banks.  Yet despite all its efforts and pain, Spain cannot shake off that sense of doom.  On July 25th the yield on ten-year bonds touched a euro-era record of 7.75%.  Two-year bonds have climbed above 7%: investors fear that Spain must soon ask for a bail-out — or default.

Spain’s nightmare is a symptom of what is wrong with the entire euro zone.  As the months drag on, the crisis is deepening.  Europe’s leaders have asked the world to trust that they will do what it takes to save the euro.  They have also pleaded for more time to sort out the mess.  Their task is indeed immense, but as they disappear to their chateaux and beach villas, trust is draining away and time is not their friend.”