Despite all the central bank and government tinkering in Europe over the past 5 years, the growth of credit remains poor. This is hardly the sort of development one would expect from a growing or robust economy that just came out of recession.
We suspect that the deleveraging process was not allowed to fully unwind during the 2008/09 credit crunch, thanks to central banks "rescuing" the economy.
Bad decisions were made, bad decisions still need to be unwound so that good decisions can be made in their place. It appears that the world improvers are determined to keep the bad decision makers in business at taxpayer expense. That is all well and good, but the bond market will be the final arbitrator of this mess. So expect higher bond yields across the board until some reality returns to the Euro area version of Fantasy Island.