June 19, 2012 (Chinavestor) Many may wonder what's happening with borrowing costs in Europe? How come this issue was non existent before 2008? Why is Spain paying over 7% right now and how much did it pay before?
The following graph tells it all. It shows how investors are demanding 7% from Spain and Italy, countries whose debt ratio is the highest within the European Union (omit Greece for now). High debt to GDP with high interest rates may push these countries into a death spiral. The EU has to come up with a plan to stop this else the euro may cease to exists as we know it.
Source: Thaler's Corner
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