We’re in the Middle of a Run on Europe - And It’s Gonna Get Worse

Wed, Nov 16, 2011 - 8:01am

Specifically, a run on European debt

Actually, kind of scary.

Yeah, Italian bonds are back to yielding over 7%, Greek debt is ludicrous (28.85%? Really?) as it has been for the last year, Portuguese 10-years are at 11.29%, the Irish at 8.20%, Spain at 6.33%—numbers that more or less fit where we are supposed to be insofar as the PIIGS are concerned, following the whole Greek Drama and Italian Farce, right?

So what’s up with Austria’s debt? Nevermind France’s debt, which is of course higher because of the whole Italy thing—what about Holland’s debt? Finland’s debt? In short, what’s going with the debt of the non-PIIGS who are not Germany?

Take Austria: Their 10-year is yielding 3.63%—which is 186 basis points over Germany’s 10-year, which is at 1.77% as I write: In other words, Austria’s debt is yielding over twice Germany’s.

What was the German/Austrian spread on, say, September 1? A mere 67 basis points, on a German yield of 2.15%.

What the heck?

France is seeing historic spreads this morning with the 10-year yield at 3.67%, and Holland—Holland!—seeing wicked spreads as well. Holland is essentially Germany insofar as fiscal prudence is concerned—and the Dutch yield is surprisingly wide.

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Novelist, Filmmaker, Economic Commentator