Markets closed today. And not much from us either. We’ve got family chores to attend to.
As expected, Europe is falling apart. Yields are rising. France’s debt no longer looks safe. And Germany can’t sell its bonds.
The failure of the German bond auction earlier this week was the latest shock. It tells us that pressure on the ECB is mounting.
It’s one thing when Greece and even Italy can’t finance their debt. Who cares? But it must surely get German bankers’ attention when nobody wants to buy their bonds.
And why should they? Guess how much growth the Eurozone has had over the last 4 years? Zero. Less than zero. The euro economy has shrunk. Not as much as Japan’s 5% decline, but it’s still down.
And guess which bank is safer – a solid German bank such as Deutsche Bank…or one of Wall Street’s finest, J.P. Morgan? Grant’s Interest Rate Observer compares the two and finds the American bank ahead by almost every measure. In terms of leverage – measured by assets-to-equity – Deutsche Bank has more than 3 times as much.
And Germany has almost as much debt, compared to GDP, as the US. Practically all the rest of Europe has even more. No wonder people don’t want to buy their bonds.
So what gives? Our guess is that the ECB – Europe’s answer to the Fed – gives. Here’s the report from The Daily Crux: