Friday, 11 November 2011

PIIGS and their Bond Yields

The yield spread on 10 year Greek bonds over 10 year German bunds has attracted a lot of attention of late, and with good reason now that the yield on Greek bond yields is 32% higher than on German bunds. The spread between Portugal 10 year bonds and German 10 year bunds is also in double digits. The spreads on Italian and Spanish debt are around 5%. Not too shocking except that, in the case of Italy, Italy has $2.6 trillion dollars of debt outstanding (which is more than all of the other PIIGS combined). In order to save the euro, the European Central Bank is going to have to crank up the printing presses to print massive amounts of euros although German's and any students of the Weimar Republic would resist this.

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