Why is the divergence of public debt ratios between Germany on the one hand and France, Spain and Italy on the other having such a small effect on long-term interest rates?

On average since the creation of the euro, the long-term yield spreads between the various euro-zone countries and Germany have been positively correlated with the differentials between these countries’ and Germany’s public debt ratios. Today, however, the divergence between the debt ratios of Germany on the one hand and France, Spain and Italy on the other is having only a small effect on long-term yield spreads. Why? Because the undersupply of German government bonds diverts investors in to other government bonds; similarly, because investors seek higher yields than those on German bonds; Because investors believe that the ECB insures them permanently against the risk of euro-zone countries becoming insolvent; Because the euro zone as a whole has excess savings.