Sunday, May 27, 2012

Two graphics on European bond markets

Two excellent graphics highlight the extent of fear that has gripped the European and global financial markets as a denoument to the Eurozone crisis gets closer. Martin Wolf has a graphic that highlights the widening sovereign bond spreads and the forecasts of output loss following the Eurozone break-up.















The biggest beneficiaries of the crisis have been the safe haven economies. As capital has taken flight from the vulnerable economies, Germany, US and UK have benefited from being able to access capital at ultra-cheap rates. In the case of Germany, it has helped the economy weather the worst of the European crisis and motor along at an impressive pace. For US and UK, it has helped mitigate the impact of weak economic conditions and high public debt and fiscal deficits.

 

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