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http://krugman.blogs.nytimes.com/
Can’t Get No Satisfaction
Busy morning, so just a brief post now.
At any given time, there tends to be one number I check on waking up to see how close we are to the apocalypse. Often it has been the US 10-year — where down is bad, because it shows pessimism about the economy. Right now it’s the Spanish 10-year, where up is bad, because it shows pessimism about the future of the euro.
And guess what: after an election that supposedly was a victory for the forces of orthodoxy, the yield has spiked. 7.25 percent!
The reasons aren’t hard to see: we have a maybe coalition that received a minority of the votes, pursuing a strategy almost guaranteed to fail, with parties ranging from radical to full-on fascist waiting in the wings. But what was the market expecting?
In a way, the worst thing about the Greek election is the possibility that it will encourage the Germans and the ECB to persist a bit longer with their fantasies about how things might work.
At any given time, there tends to be one number I check on waking up to see how close we are to the apocalypse. Often it has been the US 10-year — where down is bad, because it shows pessimism about the economy. Right now it’s the Spanish 10-year, where up is bad, because it shows pessimism about the future of the euro.
And guess what: after an election that supposedly was a victory for the forces of orthodoxy, the yield has spiked. 7.25 percent!
The reasons aren’t hard to see: we have a maybe coalition that received a minority of the votes, pursuing a strategy almost guaranteed to fail, with parties ranging from radical to full-on fascist waiting in the wings. But what was the market expecting?
In a way, the worst thing about the Greek election is the possibility that it will encourage the Germans and the ECB to persist a bit longer with their fantasies about how things might work.
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