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A NEW AUCTION of German 10-year bond has gone ‘disastrously’, according to European traders – showing signs that the debt crisis consuming the Eurozone may be spreading to its strongest economy.
The country’s treasury this morning auctioned off €6 billion in bonds – but only received bids for around €3.8 billion of that amount, with investors apparently baulking at the low interest rate on offer.
Germany’s central bank, the Bundesbank, had to step in to buy the remainder of the bonds in order to stop the auction from failing altogether.
The bonds sold at an average yield of 1.98 per cent.
One analyst told the Wall Street Journal that the auction reflected the “deep mistrust” of the eurozone, but others used more damning words – with analysts telling both Reuters and Bloomberg that the auction was simply a “disaster”.
The auction was also hit by some fears over the Belgian government, which was rumoured to be seeking a renegotiation of the plans for the break-up of the Dexia bank.
Last month the government agreed to pump €4bn into the troubled Franco-Belgian bank – but the WSJ report said the Belgian administration was now looking to renegotiate the terms of this deal, apparently because it couldn’t pay its agreed share.
The price of borrowing for Belgium – which is now seeing fresh political turmoil – today rose to well over 5.3 per cent, the highest it has been in the euro area.
The news also sent the major European markets downward.
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Watch how quickly the crisis is fixed now!
How the Euro is falling around them and still they don’t want to do anything. I still have some punts under my bed it won’t be to long now
….or how even quicker it spreads!
Maybe we need to start all over again!……it ain’t working!!!
I know this is really bad I have a serious case of schadenfreude right now. (:
The Euro was clinically dead a long time ago only a matter of time until the plug is pulled and its obituary wrote.
If investors don’t believe that the Euro will last ten years being the strongest economy in the Eurozone ain’t gonna matter!!
Th crisis and contagion has not spread to Germany, it is that the Germans can no longer hide the evidence that it was there all along. The biggest bank in the world Deutsch bank, has a lending to deposit ratio of 76, many times worse than most semi solvent banks.
Their second bank, Commerzbank is also in very deep hole.
The Germans were in a hole along along over the last 3 years.
The Euro experiment has bankrupted the continent, it took ten years to fail, which was a lot quicker than most people predicted but fail it has, as most economists predicted it would.
I’ve been living here in North Germany for over six years, and it’s amazed me how the German federal government has managed to hook wink both it’s own citizens and the EU as a whole into believingl that they were sitting above it all. I’m in no way surprised that Germany’s suffering; I’ve been seeing it for years now, I’m only surprised that they’ve gotten away with simply ignoring it.
Now lets see how their bust banks are bailed out? or will we bail them out on the double (remember we have bailed out the German and French banks already by bailing out our own).
The euro is only an experiment. At what point do you realise the experiment has failed?
Could we please stop kicking the can down the road. The postponed disaster is worse than anything. Let’s just call it all and start over. There in future in the Euro, or any other fiat currency. Suddenly this does not seem like science fiction anymore. http://www.thevenusproject.com/
That should have said there is no future in the euro or any other fiat currency.
You’re on the money Mark, so to speak.
http://www.buygoldordie.com/gab_gallery/the-short-unhappy-lives-of-fiat-currencies/
Was this a scheduled bond auction?
Yup.
Thanks Tim,
Guess it coincided with moves to establish a ‘eurozone’ bond – Germanys bete noire
Doh!
have your say