The markets always win

Jean-Claude Trichet's term as president of the European Central Bank will soon be coming to an end. But his final months in office may end up being his most difficult. His task is to save Europe's common currency -- and to do that, he must convince rich EU countries to cough up even more money.

The main issue has been, and still is, that Germany's economy is too strong relative to the rest of Europe. In the global market arena, the strongest economy wins. The weakest ones lose. This is also reflected by sharply higher yields in the weak countries (click on the chart to enlarge it).

They thought to borrow at Germany's low rates and get away with it, without producing the wealth to repay the debt.

The markets have been catching up and are making pay the weak governments. The markets always win.

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer by Timer Digest

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