Friday, January 13, 2012

A good-news bad-news day for the eurobaloney crisis

Funny thing was, it was all the same news.

Both Spain and Italy had government bond auctions this morning, and according to all reports in both cases the results were substantiallly better than expected.

Italy sold over 12 billion in treasury bills at an interest rate almost 300 basis points lower than the last auction, an unheard of drop. If rates are going lower, that can mean only one thing; bond buyers are growing more confident.

In Spain, the auction of three-year bonds was over-subscribed by a factor of almost two  while the interest rate came down almost two hundred basis points. Again, that's a vote of confidence by the markets for the Spanish economy and the Spanish government.

So far it's all good news. Break out the bubbly! Europe has turned the corner! We can bury this never-ending euro crisis once and for all...

Not so fast my little pointy-headed friend.

True, the first headlines on the business news wires were all about the Spanish Bonanza boosting  the markets and that kind of stuff. But that barely lasted an hour.

The first sign of negativity was a claim that the Italian sale had not "gone as well" as the Spanish. That's true, but it went exceptionally well in any case. How is it bad news that the Spanish sale went even better?

By the end of the day the editors at the business news outlets were comfortably back in crisis territory. Those un-credible purveyors of credit worthiness Standard and Poors were giving their official certificate of downgrade to virtually anyone and anything. It was the joy of uncertainty and doom and yes, the sky really is falling.

Whew!.... That was close!

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