PIGS, brought down irrationally

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As the FT notes:

Investors in eurozone bond markets stand accused of letting “animal spirits” affect their judgment on the risk of a European debt default, creating a situation where financial markets could force weaker countries into excessive budget cutting, the FT reports. A senior official at the Organisation for Economic Co-operation and Development criticised the behaviour of some investors that has led to sharp swings in the yields on government bonds issued by Greece, Ireland, Portugal and Spain. Hans Blommestein, head of bond markets and public debt management at the OECD, told the Financial Times: “The psychology of the markets is very negative and not necessarily based on facts, but rather on animal instincts and spirits that trigger far greater selling in bond markets than is often justified by the data.”

So much for Osborne’s claim that we must avoid becoming like Greece. He shows himself to be no better than a market trader.

But also not the implicit support this gives for the case for a Robin Hood Tax that would calm these irrational and unnecessary trades.