First it was Greece. Bonds started increasing to uncomfortable levels triggering increasing concern about the state of its finances. Panic started setting in, and EU leaders scrambled to "reassure" the markets that there was nothing to be seen here, that everything was fine, and it was all down to evil speculators. In early 2010 Greece managed to sell some bonds at a yield of just over 6%. Shortly after the whole house of cards came tumbling down, showing that speculators were 100% correct, ultimately leading to the bailout.
Next in line was Ireland. Again bonds started increasing to uncomfortable levels triggering increasing concern about the ability of the state to borrow in the future because of a combination of a massive deficit and bank bailout costs. Just like Greece, Ireland managed to sell some more bonds on the open market, and just like with Greece it was claimed a success and that there was no need for all the panic. Again evil speculators got blamed by EU leaders, but again they were 100% correct. Irish leaders came out in droves to claim there would be no bailout, and we all know how right they were. Very shortly after the "successful" bond auction with a yield of over 6%, Ireland too was bailed out.
Third in line was Portugal. The very same thing happened again, i.e. total denial and that there was nothing worth seeing, evil speculators were singling out Portugal. Their problems were completely different, we were told, and again commentators pointed at a bond auction they managed to pull off, as a sign of success. Yet again another country was bailed out shortly after that auction.
On Monday news came out that Italy's bonds were under attack on the markets, and that bond yields were uncomfortably high. Again EU leaders scrambled to cover up the whole mess, and again there was a "successful" bond auction of 12 month bonds. Media and politicians came out in droves to reassure the public that the bond sale showed that there was no problem with Italy. And again, politicians tried to blame speculators, in this case Italy scrambled to ban short selling.
Anybody else get a sense of déjà vu? The next few weeks/months will tell whether the Italian story pans out the same as the other 3, but I'm betting it will.
Next in line was Ireland. Again bonds started increasing to uncomfortable levels triggering increasing concern about the ability of the state to borrow in the future because of a combination of a massive deficit and bank bailout costs. Just like Greece, Ireland managed to sell some more bonds on the open market, and just like with Greece it was claimed a success and that there was no need for all the panic. Again evil speculators got blamed by EU leaders, but again they were 100% correct. Irish leaders came out in droves to claim there would be no bailout, and we all know how right they were. Very shortly after the "successful" bond auction with a yield of over 6%, Ireland too was bailed out.
Third in line was Portugal. The very same thing happened again, i.e. total denial and that there was nothing worth seeing, evil speculators were singling out Portugal. Their problems were completely different, we were told, and again commentators pointed at a bond auction they managed to pull off, as a sign of success. Yet again another country was bailed out shortly after that auction.
On Monday news came out that Italy's bonds were under attack on the markets, and that bond yields were uncomfortably high. Again EU leaders scrambled to cover up the whole mess, and again there was a "successful" bond auction of 12 month bonds. Media and politicians came out in droves to reassure the public that the bond sale showed that there was no problem with Italy. And again, politicians tried to blame speculators, in this case Italy scrambled to ban short selling.
Anybody else get a sense of déjà vu? The next few weeks/months will tell whether the Italian story pans out the same as the other 3, but I'm betting it will.