It is difficult to know what is going on in Euroland principally because I suspect the Eurocrats themselves have no idea what is happening. Sarky is dancing attendance on Merkel because he wants her money. The lady is not for parting with it because if she did her electorate would crucify her. The Germans are very unhappy. The gave up their excellent currency, the Deutschemark and superb Bundesbank for the dodgy Euro and politically malleable ECB.
The markets views as always are expressed in their pricing of bonds so let me try and update my little table of sovereign bond spreads that I last updated 7 weeks ago:
15th July 18th July 16th August 2nd Sept 21st Oct
Greece 17.71% (15.02) 18.23% (15.57) 15.51 (13.18) 18.28(16.18) 24.7 (22.5)
Ireland 14.27% (11.58) 14.45% (11.79) 10.18 (7.85) 8.73(6.63) 8.23(6.03)
Portugal12.93% (10.24) 12.84% (10.18) 10.90 (8.57) 10.50(8.40) 11.76(9.56)
Spain 6.07% (3.38) 6.32% (3.67) 5.02 (2.69) 5.10(3.00) 5.34(3.15)
Italy 5.77% (3.09) 5.99% (3.34) 5.04 (2.70) 5.20(3.10) 5.84(3.64)
Greece bond yields have increased and Greece is now on ECB life support. Ireland continues to make good progress. The Spanish have improved a bit and the Italians are now slightly worse than 3 months ago despite a huge amount of Euro babble. German rates have hardened but French rates have now softened to a bund spread of 0.96% compared with the UK's 0.41%. Its not just Merkel Sarky is not impressing its also the markets.
I doubt things will be any clearer after the weekend. For sure there will be a huge amount of hot air from the tower of Babel. Greece has to default soon to stop the contagion. The French banks are strapped for cash and will need a bail out. Sarky wants the EU to pay but the Dr Frau says Nien. Use your own dosh Sarky. Never mind Sarky wee George and Cameron are a softer touch!