An excellent article appeared at Zerohedge today that discusses the Eurozone crisis. The author provided a lengthy discussion of why Greece was let go and why the ECB (European Central Bank) has been stepping into the credit markets to buy Italian and Spanish debt. Towards the bottom of the article, he provided the following discussion with charts... a must read: View Article
The Pattern
I keep mentioning that the ECB is interfering heavily in the bond markets of various countries in their attempts to keep things going. Apparently they've tossed in the towel on Greece, as evidenced by the Greek yields above.
However, when we note the ways in which the Spanish, Irish, and Italian debts have come down off their highs, can we make sense of why the ECB focused their efforts there? Sure, that's easy, and the BBC has put together an extraordinarily helpful interactive chart to make it all crystal clear.
The interactive chart can be found here, but I've taken a number of screen shots so that you can more easily follow the story.
To begin with, what the chart is showing by the width of the arrows is how much money is owed to banks of other countries -- the wider the arrow, the greater the amount.
Here's the country that was let go:
Now let's compare that to Ireland, which was rescued (for now):
And here's Portugal, which is apparently in the process of being tossed under the bus, at least judging by how its interest rates are still punishingly (and ruinously) high:
See the pattern? Now let's look at Spain and Italy, both of which have recently enjoyed a nice decline in their yields
Now are the actions and focus of the ECB coming clear? It's not a surprising insight, but these charts help bring things into focus for me, and inform us that falling bond yields are probably more indicative of ECB actions than an improving debt crisis.
Just for kicks, and to complete the story, here are the charts for the UK and the US, which hopefully make clear why these two countries could never be allowed to fail, for surely the whole world would fail to spin on its axis
The other takeaway from these charts is that everybody owes everybody, a point I've made before, but not as nicely as these charts manage to do. Kudos to whomever thought these up.
