Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. These days I'm retired, and I can't by law give you advice. While I do make mistakes, I try hard to do my analysis thoroughly, and to make sure my data are correct (old habits die hard!) Also, don't ask me why I called it "Volewica". It's too late, now.

BTW, clicking on most charts will produce the original-sized, i.e., bigger version.

Sunday, April 15, 2012

Bit of a setback

Bond yields in Spain and Italy have risen a little over the last few days.  Now some of this is simply a result of profit taking.  But some is a reassessment of the problems facing these countries.  For the Euro countries, both these economies and their debts are "too big to fail, too big to bail".  The various financial plans imposed on Greece, Ireland and Portugal won't work here.  In the end, only ECB buying of Spanish and Italian government bonds will serve.  Remember, this isn't outlandish.  This is what central banks do in a crisis.  They stabilise bond and money and currency markets.  They act as lender of last resort.  And they have done these things for over two centuries, since the foundation of the Bank of England.  The Bundesbank doesn't want a bar of it, but to be honest, even complete cretins eventually have to face facts.  Thing is: will they come to their senses too late?

As ever, Malcolm Maiden has an insightful perspective on all this.

You can see the Bloomberg chart of Spanish bond yields here.

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