Mark Weisbrot, one bonehead economist

He says, concerning rates and the euro bank delusionals.

US New: Rather, it is the European authorities – led by the European Central Bank (ECB).  Mario Draghi, the president of the ECB, proved this beyond a shadow of a doubt on July 26, 2012, when he put an end to the financial crisis in Europe with just a few words, announcing that the ECB was “ready to do whatever it takes to preserve the euro.”

Trading economics tells us the Italian inflation rate:

See how it dropped from the time of Mario's 'words beyond a shadow of a doubt', by 2 points.  Looks like it dropped right on time, the day of the delusional announcement. And rates did indeed drop by 1.5 points, exactly in line. Since inflation dropped, and subsequently went to zero, the Italian government paid an additional 1/2 point for two years, and now pay an additional; 1 1/2 rate for the next eight on any ten year bond.

Anybody hear think the bonehead Italian government was stupid enough to believe the BS?  You bet, they bought up an additional 5.6% of GDP in debt, paying the net additional one point. 

Now the same thing happed today, the five year forward inflation expectation is right back where is was two days ago when the court ruled ECB QE was legal, Then bonehead central banker in Europe announced a QE, in six weeks.  Zero Hedge has that story. So, the net change, when all is said and done will likely be higher real rates paid by Euro governments.

What is going on in Euro bond markets? Segmented price control.  Euro governments want to reduce debt sales today in anticipation of lower rates in five weeks. So Krugman, who should know all about this, said inflation expectations are up, then has to reverse himself six hours later, blaming the Euro governments.  But Krugman himself learned about market segmentation and price controls when he looked at the California electricity price controls in 2000.  He learned, at that time, that price controls created two sequential markets causing abrupt shifts and arbitrage opportunities! And at the time, Gray Davis paid the high rates, charged the taxpayer and lost the election to Gubinator.

OK, governments around the world, here is a clue. The bond market is smarter than the average economist.  There is never an arbitrage moment available to governments, governments are not fast enough.