Risk-free rates….really?

In Getting Back to Business, I call into question the notion of a “risk free” rate, to which one adds a certain incremental amount to determine the appropriate overall risk (and expected return) of an investment. According to today’s FT, consumers in Italy are asking (sort of) the same question, as they become unusually aware of and focused on the spread between Italian government bonds and those of the “risk-free” investment source, German bunds.