European Leaders Keep Telling Themselves Same Huge Lie And It's Ruining The Economy
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Europe is a wreck, but for the most part, people these days are talking about crises of democracy and growth, rather than sovereign debt.
Borrowing costs for several nations (ones that have been bailed out and ones that haven't) have come in sharply.
Italy, despite its government turmoil, is seeing yields near its lows of the year.
France, which is a total wreck, and which sometimes gets lumped in with peripheral Europe is borrowing at prices pretty close to the US! (The French 10-year yields is 1.81%, the US's is 1.54%)
Why are yields so low? Well lately people are citing Japan, and the BOJ's efforts to depress rates. But the bigger picture is that ever since last summer, yields have been falling thanks to the ECB's "OMT" announcement, whereby it said that it would backstop government bond markets (provided they agreed to austerity). Essentially, the ECB said it would kind of act like a real central bank, the likes of which backstop the US, the UK, and Japan.
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