Thursday, October 6, 2011

Bond spreads and governance (ls)

Tito Boeri worte a nice piece on voxeu. He shows how the relative underperformance of Italian government bonds compared to Spanish ones during the last four months can be attributed to the different style of politicians in dealing with the debt crisis and nervous markets. It is not surprising that the obviously bad governance of the Berlusconi administration is found to be the main driver of rising spreads.