Europe Just Can't Seem to Unscrew Itself

While it has only been a week since the latest "bailout" announcement, it actually feels much longer.  In fact, the way bond markets have been acting, it might as well have been announced in 1941.  Yields on the Spanish 10 year went up 0.37% today to 6.78% (7% is considered to be the level at which people start to panic, and we are within a day of that), Spanish 2 year bonds went up a whopping 0.52% to 4.61% and even the Italian 10 year started knocking on the 6% level again.  Just to be clear, this is not the sort of volatility that sovereign investors like to see.  They are not biotech investors, they are investors who want to lend the government $100 with the absolute certainty that they will receive back $102 in 2 years.  No wonder, Europe just can't seem to fix their bond markets, run of the mill sovereign bond investors have mostly run away (especially after being fleeced in the Greek "bailout"). 

Of course, it doesn't help that Greece, which supposedly was fixed already, is now openly reneging on its austerity commitments (they don't seem to want to let go of almost any public sector employees).  If the Germans are given so much heart burn by miniscule Greece, imagine what trouble Italy and Spain could cause them?  This recalcitrant Greek attitude only makes it more likely that the Germans just get out of the bailout business, which is not much a business regardless.

It seems only a matter of time before Europe completely implodes.