There are reports out that bond yields in certain European nations are starting to rise well above the norms for the stronger nations, Germany in particular.
Countries at risk of becoming unable to borrow large amounts of euros include Spain, Italy and Greece, as well as some of the EU-wannabe states.
The deep global recession is putting the worst strains on Europe's monetary union that it has experienced to date.
One of the theories behind the euro was that the financial credibility of Germany would create a halo-effect that would benefit countries with much weaker fiscal histories. (Italy, I'm looking at you.)
But in this time of recession, Germany is being true to its nature and protecting its money. They can do this because they're a surplus nation. But investors, annoyingly rational creatures that they are, are bidding down debt issued by the weaker countries.
In effect, currency union is making it much harder for the deficit countries to bring in capital just when it's most needed.
And you have to start asking, when are the finance ministers of Spain, Greece and others going to start whispering that they can no longer afford the euro?
Countries at risk of becoming unable to borrow large amounts of euros include Spain, Italy and Greece, as well as some of the EU-wannabe states.
The deep global recession is putting the worst strains on Europe's monetary union that it has experienced to date.
One of the theories behind the euro was that the financial credibility of Germany would create a halo-effect that would benefit countries with much weaker fiscal histories. (Italy, I'm looking at you.)
But in this time of recession, Germany is being true to its nature and protecting its money. They can do this because they're a surplus nation. But investors, annoyingly rational creatures that they are, are bidding down debt issued by the weaker countries.
In effect, currency union is making it much harder for the deficit countries to bring in capital just when it's most needed.
And you have to start asking, when are the finance ministers of Spain, Greece and others going to start whispering that they can no longer afford the euro?
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