The Breakdown

Explaining Southern California's economy

Visual Aid: The European debt crisis

This is a most vivid evidence I've seen of why everyone is so freaked out about Europe and its debt crisis. As you can see from the chart, 10-year bond yields for European countries marched along in neat lockstep for a decade after the introduction of the Euro. Exactly what you would want from a currency union, if your goal was to present the impression of uniform debt costs acorss member nations. But then, in 2008-2009, it all goes kerflooey. It looks like somebody spilled the colorful spaghetti. Greece isn't even on the chart, probably because you would need another whole chart on top of this one to display a yield in excess of 20 percent for September.

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