A danger signal or two
When fears about the future of the Greek economy were at their highest back in May the gap between the interest rate Germany paid on a 10 year bond and what the Greek Government had to fork out peaked at 9.63 percentage points (or basis points as the experts put it.)
The gap narrowed markedly after the European Union and the International Monetary Fund came to the financial rescue after insisting on a Greek fiscal austerity program.
Now, I notice, the gap is widening again:
Doubts clearly are growing that the economic problems of Europe are not over as interest rates for Ireland are also edging higher.
Meanwhile in the United States 10 year bond rates are moving in the downwards direction as doubts grow about the extent of the country’s economic recovery. And get ready for more dismal economic news from the US with some pundits predicting that Friday’s revised figures for second quarter GDP growth will be down from the advance estimate of a 2.4% annualized rate to 1.3% real annualized growth.
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