Who is still holding toxic Italian debt ?

The Italian yields have cooled-off a bit, revolving around the 6.50%-7.00% area, partially due to the ECB rather frequent interventions and on the news that Mario Monti, a former European Commisioner, will lead the Italian government.  Spanish yields on the 10y benchmark are still high up there at 6.31% after recent weak macroeconomic news and French 10 year bonds rose today to 3.72%. The most solid European country, Germany, which reported today a 0.5% quarterly increase in GDP and its 10 year yields stand at 1.81%. Who is taking this loss ?

Berlusconi is out. European markets applaud.

The Prime Minister of Italy Silvio Berlusconi has resigned today after more than 17 years dominating the political scene. The move comes after losing parliamentary majority and after pushing a new austerity plan designed to shrink the budget deficit from 120% of GDP (only seconded by Greece's budget deficit). Most likely, Mario Monti, a technocrat, will be appointed by President Giorgio Napolitano to lead the new government. Mario Monti, a former European Union Commissioner and pro-euro advocate will start negotiating with the major political parties later this evening. The pattern is becoming more and more obvious: EU is pushing for less national political control in exchange for financial protection. Will this ultimately end up creating the United States or Europe or break it apart ?