“Spain is not Uganda.” – Spanish PM Rajoy
“Uganda does not want to be Spain.” – Uganda Foreign Minister
SPIEGEL: What would a fiscal union have to look like so that Germany could accept euro bonds?
Schäuble: In an optimal scenario, there would be a European finance minister, who would have a veto against national budgets and would have to approve levels of new borrowing. It would be up the individual countries to decide how to spend the approved funds, that is, how to answer the question: “Should we spend more money on families or on road construction?”
Bottom line is that the markets are already restoring some discipline to European sovereign debt (minus Greece). The “safe haven” United States on the other hand is running amok. The specs are loaded to bear on long term Treasuries, one of the more crowded trades ever.
The rally in the Euro and the Swiss Franc brought out heavy short covering, and rather suggests these are primarily trades at this point, as opposed to big moves.
About The Author - Russ Winter is a veteran investor, financial writer, world traveler, and he blogs at Winter Watch. (EconMatters author archive here)
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.
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