WILL IT REALLY WORK?

                         

As we keep pointing out, there are many views out there about the European Union what should be done to fix what might turn out to be the unfixable without big, big changes.

Big, big changes usually come wrapped in fancy promises. You can paint a house to make it look better, but the infrastructure can still be rotting.

Everyone wonders if this will work. Let me ask a different set of questions:

1. Why should it?
2. Does the announcement fix any structural problems with the euro?
3. Does the announcement fix any fiscal issues in any European country?
4. Does the announcement fix any competitive disadvantages of France vs. Germany?
5. Does this provide any impetus for structural reforms in France or Italy?
6. If -0.1% rates for funds parked with the ECB did not stimulate lending, why should -0.2% rates?

Yield Down

• The yield on the Spanish 10-Year bond is now 2.16%, down from 4.51% a year ago.
• The yield on the Italian 10-year bond is now 2.35%, down from 4.42% a year ago.
• The Yield on the Portuguese 10-year bond is now 3.15%, down from 6.77% a year ago.

Meanwhile, yield of the US 10-Year treasury is 2.45%. Apparently there is 0% risk of a restructuring of Spanish, Italian, or Portuguese bonds.

Greece was a one-time event, until Cyprus came along. Then it became a two-time event. But don't worry, it will never happen again. 


Anyone believe this?

The above is from http://globaleconomicanalysis.blogspot.com.