Policy Research in Macroeconomics

The Grand Bond Canyon

By Jeremy Smith

This colourful graph – from the ECB’s wonderfully named Statistical Data Warehouse – paints a pretty picture… or rather, paints a pretty terrible picture.  In today’s post Greek election on-line Financial Times we learn that, far from bond markets celebrating the Greek election results by lowering rates, Spanish and Italian yields continue to soar upwards:

“The yield on Madrid’s 10-year paper is up 28 basis points at 7.16 per cent, a euro-era record, with the mood not helped by news that Spanish banks’ bad loans are at an 18-year high.  Italian 10-years are also struggling, forcing yields up 13bp to 6.06 per cent…”

And so, the ECB’s  graph reminds us just how steeply the right hand wall is still rising.  And surely it reminds us of  something familiar, though far from European.  Ah yes.

It’s this equally colourful picture:


And hey, is that a Fund of Vultures  I see perched high on the rocky crags overlooking the Canyon?  Just waiting for some poor starving government to drop down exhausted as it tries to escape?

Or am I mistaken, is not this the true analogical valley for the Eurozone’s tragic victims?

james gillray The Valley of the Shadow of Death

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