German yields are suddenly backing up in line with everyone else's.
The question is is this a long overdue correction to an overbought market, or a sign that suddenly the market have realised Germany simply doesn't have the firepower to save the Eurozone. German government debt is already over 80% of GDP. To think they have the monetary capacity to take on Spain and Italy is simply deranged.
Europe needs the ECB to step in. It is the only solution that is remotely likely to work. It is unpalatable to Germany at the moment, but maybe a sharp deterioration in their own bonds will make them rethink.
Don't hold your breath.
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