Germany: is it as "the only first class passenger of Titanic" yet?
Yesterday there was an event that did not happen by March 2009: the rates of 10-years Gilts (the British government bonds) were lower than the corresponding German Bund, that is a benchmark for European money markets. While the UK government bonds were traded at 2.18%, those Germans have reached a peak of 2.26% (even if at the end of the day the rates were rebalanced, with the Bund at 2,14%and Gilt at 2.16%). While in 2009 the fall in British interest rates was encouraged by the announcement of the Bank of England to start the monetary policy called "quantitative easing" (ie print money to buy government bonds and supporting quotes), it now seems that this reversal is due the perception of English as a safe-haven bonds in this period of turbulence. The historic result of the auction of Bund, where they were placed only about two thirds (3.4 billion to be exact) of the 6 billion euros offer, has certainly contributed to this result, because it foreshadows even possible contagion of the crisis of Euro on the prospects of the country that has been defined, with a sentence really effective, "the only first class passenger of the Titanic." It's an hard blow for the german proud such raising borrowing costs.
But as always is going on now in these days of confusion in the financial markets, what seemed like a good news has been found on the flip side, with the warning of a member of the FSA (the authority of British control in the financial markets) that such low rates are detrimental to the accounts of banks due to the reduction of interest margins.
But, I mean, not now that, in addition to reaching agreement on the monetary fiscal and economic aspects, would it be desiderable to make a nice agreement between the different actors (politicians, journalists, economists) to curb the catastrophic news (now we know the situation ) and try to inject a minimum of optimism among consumers? The economic recovery, or at least the possibility of avoiding a recession, are heavily dependent on buying behavior of people; but if you present the news as "This is the worst crisis since the Great Depression of '29" who benefits? Do we get if we carry on to terrify the consumers in this way? Certainly not to encourage the recovery in consumption.
But as always is going on now in these days of confusion in the financial markets, what seemed like a good news has been found on the flip side, with the warning of a member of the FSA (the authority of British control in the financial markets) that such low rates are detrimental to the accounts of banks due to the reduction of interest margins.
But, I mean, not now that, in addition to reaching agreement on the monetary fiscal and economic aspects, would it be desiderable to make a nice agreement between the different actors (politicians, journalists, economists) to curb the catastrophic news (now we know the situation ) and try to inject a minimum of optimism among consumers? The economic recovery, or at least the possibility of avoiding a recession, are heavily dependent on buying behavior of people; but if you present the news as "This is the worst crisis since the Great Depression of '29" who benefits? Do we get if we carry on to terrify the consumers in this way? Certainly not to encourage the recovery in consumption.
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