Greece may have earned the euro some respite on the markets, but any gains and celebrations were short-lived.
Simply changing the government does nothing to resolve any economic problems, but merely gives politicians a chance to delay making a decision that may end the crisis for a little longer.
Sooner or later, Germany and the other euro economies will run out of time and money and have a resolution forced on them.
Until then, savvy investors will flee for a haven for their cash – looking towards the US Dollar and Pound for relief.
As political leaders and finance ministers readied for the G20 meeting in Mexico, Spain’s 10-year bond yields headed in to the red zone at an interest rate of 7.18%.
Rates this high signal that credit on the international markets has run out for Spain and that the economy will need another massive bail-out to keep going.
Yields for Italian government bonds also headed up – hitting 6.18% on an ever upward path to the 7% barrier.
Meanwhile, Cyprus is about to sign a loan deal with Russia to keep the economy afloat.
Outside Europe, China is rallying support from emerging and third world economies not to make the euro the centre of the world’s economic focus.
Many are hinting that they have no sympathy for exploitive old world economies and that the European Union market may be large, but is insignificant compared with China, India, Russia and many other new economies.
“If we consider the wider issues facing the EU away from Greece itself, we are immediately reminded in particular of the extreme woes faced by the much bigger and far more significant economies of Spain and Italy,” said Jason Gaywood, director at currrency firm HiFX.
“€100 billion of aid has failed to improve things with bond yields topping 7%, unemployment above 8% and a Moody’s downgrade to one notch above ‘junk’ status. The situation in Greece maybe fixed for now, but there are evidently still much bigger problems the eurozone still has to tackle.”
