To demonstrate the point that its the ECB's actions that are responsible for the punative interest rates being faced by the European periphery, let us examine some statistics (puts on cherry-picking gloves). In 2010, the sovereign debt of the United Kingdom was 77% of GDP and the annual deficit was 11% of GDP. For Spain, debt was 61% of GDP and the deficit was 9% of GDP. By any sane evaluation, the fiscal posistion of the United Kingdom is far worse than that of Spain; any rational bond investor would certainly price British bonds lower than Spanish. Yet as of Dec 11 British 10 year bonds are selling at a 3.75% coupon rate; the Spanish 10 year rate was 5.75%. The Spanish government must pay an interest rate that is 53% higher than the British government faces even though it is running far smaller budget deficits and has a much smaller national debt. Why? Because the bond market knows that the Bank of England will set interest rate policy in a way conducive to future British growth, so investors are more confident about future British tax revenues being available to pay them back. Meanwhile, Spanish monetary policy is set by an oblivious central bank in Frankfurt who's only concern seems to be German unemployment and German inflation, a monetary policy that Nobel laureate Paul Krugman has dubbed the "one size fits one" approach to monetary policy.