Bonds always fox me. The more people want them the lower they pay; the more worry about their provenance the better their yield.
100 points spread sounds like a lot to the uninformed, but that's only one per cent interest rate differential in the cost of new borrowing. This is neither going to push Italy and Greece into bankruptcy, nor discourage existing lenders from holding old debt; they can avoid the capital loss on falling bond prices by just waiting for them to mature.
The rising spread is a problem that belongs to debtor countries - such as Greece, Italy and Spain - anyway; and it's a problem too for creditors, should these countries default, which they won’t, they're nowhere near default.
What it is not, is a problem for the Euro; nor for any other Euro-zone country that is not suffering from internal or external imbalances. The state of New York could go bust without affecting the value of the US dollar.
So why such euro-centred economic catastrophism? The Dollar and the Pound are looking much iffier even if their bonds are yielding less than Italy's.
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