Douglas Carswell's Blog

Euroland - something has got to give

These three graphs - which show the amount of interest private investors have required in order to lend money to the governments of Germany (left), Italy (middle) and Spain (right) over the past year - suggest to me that the Euro is doomed.  

What do you notice?  Even the stupidest politicians ought to be able to spot it. 

The graph for Germany has gone down, and for Italy and Spain up.  Before exchanging money for a paper IOU from the German government, private investors have been prepared to accept less interest.  But before buying bonds off the governments of Italy and Spain, private investors are demanding almost three times the interest.

Five years ago in early August 2006, there was hardly a whiskers difference between the amount Germany, Italy and Spain had to pay to borrow money (3.9, 4.1 and 3.9 respectively).  Today, if lenders treat Euro denominated debt as having such widely differing value, for how much longer will there be a common currency?  

My guess is that something pretty collosal will have to give - and I'm absolutely certain it must not be my constituents ....

Back to all posts