Spain can borrow for next-to-nothing and austerity is still at the top of the agenda

Spanish 10-year yields at all-time low

The turnaround in the Spanish bond market in the past 4 years has been remarkable. In 2012, they were paying nearly 8% to borrow of 10 years and now that's fallen to a record 1.04%.

What's absurd is that the EU is considering deficit sanctions against Spain and Portugal for missing the 3% limit.

Ultimately, it's the market decides what's sustainable and with the ECB still buying and the economy still struggling; it's mind-blowing that the government can't pull on the stimulus lever.

But that's the way it goes in Merkel's Europe.