Wednesday, 23 November 2011

German bond auction disaster

The German 10 bond auction today with half the offering unsold and German rates going higher than US rates for the first time in recent years, 2.04% compared with 1.96% for the US. This was a real confidence breaker for the Eurozone with Italian 10 year bonds ending at 7.01% and Spanish bonds ending at 6.66%. UK gilts ended at 2.14% a record low spread to bunds.

The EU response was as always to call for more fiscal control from Brussels and demanding that national budgets should be submitted to Brussels for approval before they are seen by national parliaments! THe main blame for this of course must lie with these parliaments who like our own have handed over power wholsale to Brussels. Its going to be a hard sell to their electors so I anticipate more techno/euro crat governments soon.

Eventually they will learn as have many US presidents that the bond market is the most powerful force on God's earth! The lesson will be a hard one with much pain but not of course for the Eurocrats who will go on demanding inflation busting pay rises.

Treaty changes will soon be demanded by the EU. Boy Dave will have to put up and call a referendum or kow tow to the LibDems and shut up. Either way he is toast but what and who comes next? Comments please.

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