Death Star Economics



The Spanish explosion

Spain is exploding, and that is mainly shown in its bond yields. As high as last year in December, 6.15% on 10-year bonds gives reason to worry. Reuters, by the way, seems to think the worst is behind us, writing

Spain’s debt yields broke above 6 percent on Monday as investors worried about its budget, knowcking the euro and sending safe-haven German bonds to a record last set at the height of the euro zone crisis.

It’s fine, guys, we already hit rock bottom!

Here is the FT’s Wolfgang Muenchau on the topic, trying to figure out which scenario would really be worst. Excerpt:

The investors I know are worried that austerity may destroy the Spanish economy, and that it will drive Spain either out of the euro or into the arms of the European Stability Mechanism. The orthodox view, held in Berlin, Brussels and in most national capitals (including, unfortunately, Madrid), is that you can never have too much austerity. (…)

So Spain won’t meet its deficit targets. Big deal. [Well, yeah, it kind of is.] Here’s Alphaville’s explanation of what to do with the outlaws as set out by the new Stability and Growth Pact.

Also, the time has come to bid Merkozy farewellSarkozy, who is desperately trying to win back his country in the current presidential election, supports a stronger support role of the ECB, more or less modeled on the Federal Reserve. That, however, is quite contrary to the opinion of Angela Merkel, but in line with that of his opponent Francois Hollande. Ouch. At one of the 17 EU summits in December, Merkozy had agreed to stop commenting on the role of the ECB. I guess someone’s going to get an awkward phone call. read article

While this morning was sunny in London, we’re going to get rained on for the rest of the week. Spring has died and summer will never ever come. There you have it. But no, I will not start doing the weather forecast, this has another reason: drought. Yes. Apparently, the UK is too dry for this time of the year, which is bad for food prices, consumer spending and the inflation rateread article

Finally, Tyler Cowen’s (from Marginal Revolutiontake on food and restaurant choices and why you shouldn’t go to trendy places with beautiful women – for utility reason, of course. read article

So long.


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