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9/8/10

European debt crisis reignites; Ireland's borrowing costs soar - by David A.Lynch

Renewed fears about European banks and borrowing rattled markets Tuesday as investors rediscovered Old World financial problems they thought had been quelled in mid-summer.
Spreads between the yield on rock-solid German bonds and those of Europe's heavily indebted smaller countries rose to historic highs. Ireland's 10-year borrowing costs peaked above 6% in midday trading, higher than the level reached in early May during the worst of the Greek debt crisis. The 10-year Irish bond closed at 5.98%, 3.73 percentage points higher than the comparable German bond yield.

"This is the new normal for the eurozone. This is what you're going to see as the markets start acting as more of a policeman enforcing more sustainable fiscal policies," says economist Jacob Kirkegaard of the Peterson Institute for International Economics.

For more: European debt crisis reignites; Ireland's borrowing costs soar - USATODAY.com

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