The market seems to be pricing in a significant risk of the Euro not surviving as bond yields diverge:
http://www.aei.org/publications/pubI...pub_detail.asp
http://1.bp.blogspot.com/_Z04FnvYygy...0-h/bonds2.jpg
"The current differences in the interest rates of euro-zone government bonds show that the financial markets regard a break-up as a real possibility. Ten-year government bonds in Greece and Ireland, for example, now pay nearly a full percentage point above the rate on comparable German bonds, and Italy's rate is almost as high."
My own thought is that Spain is the weakest economy in Europe by a long way and it may decide that they cannot let the ECB dictate economic terms. Germany would probably welcome this (and Greece, Portugal and Italy leaving too) leaving the "Euro" as the default Franco-German currency.
http://www.aei.org/publications/pubI...pub_detail.asp
http://1.bp.blogspot.com/_Z04FnvYygy...0-h/bonds2.jpg
"The current differences in the interest rates of euro-zone government bonds show that the financial markets regard a break-up as a real possibility. Ten-year government bonds in Greece and Ireland, for example, now pay nearly a full percentage point above the rate on comparable German bonds, and Italy's rate is almost as high."
My own thought is that Spain is the weakest economy in Europe by a long way and it may decide that they cannot let the ECB dictate economic terms. Germany would probably welcome this (and Greece, Portugal and Italy leaving too) leaving the "Euro" as the default Franco-German currency.
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