Michael Taft: Remember all those comments in the days following the latest bank-bailout? How the markets had sent positive signals? That confidence was slowly rebuilding. 2-year yields fell from their high of 10.25 percent on March 3rd to 8.65 percent on April 13th. 10-year yields fell from 10.22 percent to 9.09 percent. Okay, far away from being able to re-enter the market – but evidence that the Government’s banking policy was gaining something approximating market credibility.
Well, say good-bye (for now) to all that.
In just a week all those gains have been wiped away and the slide continues. As of lunchtime today, 2-year yields have set a new high – at 10.35, while 10-year yields rose to 10.31 percent.
Where are the analysts now? Where are the kudos? What has gone wrong – apart from the fact that drawing even tentative conclusions from such a short time-frame is bound to disappoint?
This is all part of a continuing crisis in the Eurozone periphery. Even the assertions that Spain had effectively ‘de-coupled’ from the periphery with strengthening bond yields are being tested by the markets. Rising yields and falling investor demand is re-starting the worries. Greece and Portugal continue to slide as well.
It is long past time that policy-makes – here in Ireland or especially in the Eurozone – stop seeing this as a sovereign debt crisis and admit that this is a bank crisis, spreading contagion wherever it goes.
As Yanis Varoufakis puts it: ‘It’s the (German) banks, stupid’.
Michael Taft is an economic analyst and trade unionist. He is author of the Notes of the Front blog and a member of the TASC Economists’ Network.