Spanish Bond Yields Back on the Rise

A church in Madrid
A church in Madrid

Photograph by Kay Steiger.

Another day of falling stocks in Spain and Italy as bond yields rise, and it gets tiring to say the same thing over and over again. So I’ll steal a point I saw someone make on Twitter. Several months ago, the European Central Bank cobbled together a can-kicking scheme that sort of patched the Eurozone debt crisis together. The return of the acute phase of the crisis has corresponded almost precisely with increased chatter out of Frankfurt about the need to start devising an exit strategy. 

That’s all because the can-kicking scheme didn’t really solve anything. Which is fine as far as it goes. But the moral of the story is that when all you do is kick the can down the road you have to remember that that’s all you did and not start prematurely patting yourself on the back and talking about exit strategies. There’s nothing wrong with “desperate play to buy more time” as a crisis-management strategy, but once you’ve bought more time you need to go back to working on the fundamentals and until you’re done there is no exit strategy. The fundamental problems with the European economic structure are incredibly profound and difficult to overcome. Making any progress at all is hard, but absent some random good luck from elsewhere in the world there can be no exit until substantial progress is made.