Tags: Southern | Europe | Bonds | Germany

Investors Flee Southern Europe's Bonds After German Threat

By    |   Friday, 29 Jan 2010 04:06 PM

Investors are running away from bond markets in southern Europe after Germany warned there will be no bailouts for struggling debtors.

Greece, which sports a budget deficit equal to 12.7 percent of its GDP, was particularly hard hit, with its 10-year government bond yields soaring more than 40 basis points to 7.15 percent.

That sent the premium of Greek bond yields over German bond yields to the highest level since Greece joined the euro in 2002, according to the London Telegraph.

Markets in Portugal, Spain, Italy and Ireland also suffered big-time.

Comments from German economy minister Rainer Brüderle sparked the move.

He said there will be "no bailouts" for struggling debtors, the Telegraph reports.

“A few European nations are exhibiting dangerous weaknesses,” Brüderle explained.

“That could have fatal consequences for all countries in the euro zone."

Still, he emphasized that each country has to solve its own problems.

"Germany is not in a mood to be the deep pocket for what they consider profligate, southern neighbors," hedge fund mogul George Soros said at the World Economic Conference, according to the Telegraph.

Many experts have warned that the euro may ultimately collapse.

But Axel Weber, a member of the European Central Bank’s governing council, is adamant that it won’t.

"At the core, this is a healthy economy, and there is no problem with the currency whatsoever. I expect the euro to be there forever," he told CNBC.

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Investors are running away from bond markets in southern Europe after Germany warned there will be no bailouts for struggling debtors. Greece, which sports a budget deficit equal to 12.7 percent of its GDP, was particularly hard hit, with its 10-year government bond yields...
Southern,Europe,Bonds,Germany
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2010-06-29
Friday, 29 Jan 2010 04:06 PM
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