World Economics - Insight , Analysis and Data

World Economics - Insight , Analysis and Data

Spotlight: European 10-year Government bond yields

The above chart is a compilation of monthly 10 year bond yields as measured by the European Central Bank. The time in the chart covers dates from the Maastricht treaty in 1993 (which set the Euro in motion) to the present.

From 1993 to the creation of the Euro in 1999, bond yields for European Union members dropped rapidly. Greek bond yields fell from over 20% to 7% over this period.

This harmonisation of interest rates at a stable 4-6% allowed for the low-cost accumulation of large state debt, sowing the seeds of the current crisis. The Lehman Brothers collapse in late 2008 was one of the triggers for the subsequent financial crisis, leading to recession and the current Euro area chaos.

In a reversion to the past, Greek & Portuguese bond yields are now at or above the high levels registered in 1993. Meanwhile, Spain and Italy stand on the brink of disaster with rates rising close to levels believed to be unsustainable in the long run.

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65 days ago

624 days ago
I don't think the Greek fully understand the unquie advantage position they have. They hold the future of the EU in their hands which leverage (to keep it in Goldman Sachs terms) they can use to stick it to the IMF and the rest of Europe.Germany hand the rest of Europe are afraid to death that the EU falls apart if Greece is not able to pay their huge debt so they will do anything to prevent that. Since they are the first in Europe to hold this position they have the higher ground in this game. Other PIIGS countries which will follow the same path of Greece later in the game getting unsustainable debts are less likely to be bailed out so Greece must profit from this unquie position to firstly get rid of the IMF. Secondly get zero interest rate loans from the EU or otherwise go back to the Drachme in which position they can devalue their currency which they can't do now and print up the same Micky Mouse money which Goldman Sachs trough Bernanke does.So it's a win win situation if they refuse the IMF firstly and secondly refuse to pay any debt in Euro's unless they get it for free. I can asure you that no one wants to blow up Europe at this point in time so GREECE PROFIT FROM THIS POSITION.If you hold a little debt your a dupe but when you hold a very large debt, positions turn as all banksters know. So, Greece has to begin to do the same as the U.S. and spend like crazies with the same argument as Bernanke does namely that it allegedly is to save the economy.

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