German Finance Minister Wolfgang Schaeuble declared bond traders all wrong in driving up Spanish borrowing costs to unsustainable levels.
After issuing the statement late yesterday, Schaeuble, 69, went off duty for a three-week vacation.
It’s summertime in Europe, and like last year, borrowing costs are rising as investors fret over the fate of the 17- nation euro area. Most government leaders are heading to their favorite beaches, mountains and lakes to take a break from a crisis that U.S. Treasury Secretary Timothy Geithner said July 23 requires “immediate, short-term” measures to help Spain and Italy.
“The markets are clearly very unsettled,” said Sarah Hewin, London-based head of research in Europe for Standard Chartered Plc. “We’re in a position now where we’re in the middle of summer” with no summits and meetings of policy makers to focus on.
The summer-holiday season in 2011 saw a spasm of turmoil that forced the European Central Bank to step in and buy Spanish and Italian debt for the first time and required emergency meetings among policy makers.
Now, Schaeuble and German Chancellor Angela Merkel, who has left Berlin for her usual two- to three-week break, are fortified by gains in bunds, Europe’s haven security.