With the world (or mostly the Japanese) front-running Draghi’s ever-increasing threat of QE in Europe, Spanish and Italian government bond yields have reached levels commensurate with insanity compared to their risk (event and macro). Lower rates are great news right? They encourage growth… as the cost of borrowing drops across the nation’s capital assets and the phoenix rises from the flames. Well – as the following 2 charts show – no! The lower rates are not ‘trickling down’ to real loans and loan creation continues to contract.