Spanish-Italian success deceptive

The low interest rates at which Spain and Italy were able to borrow money on the bond market on Thursday have nothing to do with the recently introduced reforms but are the result of the shorter repayment periods on the bonds, warns the left-liberal Frankfurter Rundschau: "Italy took out three-month and one-year loans, while Spain's were for up to five years. These are shorter repayment periods. And the shorter the maturity, the more impressive the reduction in interest rates compared to December rates. Did something happen at the end of December? It certainly did! Shortly before Christmas the European Central Bank made money available to banks at the base interest rate and with an unusually long maturity of three years. The banks proceeded to secure themselves the record sum of 500 billion euros. What is the base interest rate? One percent. It is this liquidity that explains the success, because the interest rates on bonds with longer repayment periods have barely gone down. They are still at levels that won't be tenable for long. At levels that neither fit in with a recession nor with the goal of reducing the amount of debt in the long term."

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