Within the eurozone countries it is relatively easy to assess risk and gauge it against return. Yields and spreads are constantly available, a real time ready reckoner. It may be uncomfortable but it's certainly transparent, and effective in causing policy adjustment.
However, rating agencies are always behind the curve (as was noted in the FT yesterday) and 'vanno prese cum grano salis' (as the Prime Minister remarked on the telly last night); a sentiment echoed with considerably more vehemence in the Telegraph today by Jeremy Warner.
Interestingly, Warner went on to make a a point made by the Governor of the Austrian Central Bank ("Mervyn King buys 80% of new government issues") last year:
"Bond yields are close to historic lows almost anywhere with its own currency and central bank; while in the UK, benign gilt markets are as much the result of the Bank of England’s printing presses as the Government’s fiscal strategy."
So what is a Girl to do when our Italian bond holdings have come bleating home like little lambs and fresh investment decisions must be made? If Eurozone sovereign bonds are bought at least I know where they stand, all the time, and have been standing, and why they moved, and can take a view rather than rely on undergraduate economics essays by ratings agency staff.
What of the safe havens? German bonds are safe alright - but paying to hold them? And as for the United Kingdom sovereign debt, how do I rate Osborne and King in comparison with, say, Monti and Draghi? Mervyn King is a fine economist but is subservient to George Osborne (oh yes he is, there is no independent Bank of England, remember who set it up) who is not. Nope. Not England. I can't 'see' England.
What's needed is a sovereign with a growing economy, high employment levels, highly educated population, entrepreneurial, technologically sophisticated, stable and competent political leadership: resilient, multi-lingual, god-fearing Europeans.
Poland rides to the rescue. Again. [Nice wings.]
Interests to Declare
1 hour ago