Punishing austerity or votes? Why the euro zone bond rally cannot last - The Globe and Mail: "Bond yields are still falling, as if the euro crisis has been magically cured. The euro is soaring against the dollar, and an upbeat Mr. Draghi this week talked about the coming “normalization” of financial markets, even if he predicted only a weak economic recovery in the second half of this year. But guess what? The recession isn’t over and the euro is on a tear, reaching almost $1.33 (U.S.) on Friday. A high euro will make European exports more expensive, damaging the touted economic recovery. Euro zone unemployment is at a record high and climbing. Youth unemployment ranges from 30 per cent to more than 50 per cent on the euro zone’s Mediterranean frontier. Budget deficits will remain intact as a strong recovery proves elusive; a triple dip recession is not out of the question. All of this means that austerity will not go away, in spite of the lower sovereign borrowing costs. Remember that the ECB’s bond-buying guarantee is conditional on austerity. The problem is that the spending cutbacks and tax hikes are making already weak economies even weaker."
more news below