Eurozone update

It has slipped off the front page, but the underlying problems are not solved:

The cost of borrowing for Portugal, Ireland and Greece has hit euro-era highs, amid concern in the market that European leaders will fail to take concerted action to dispel fears of sovereign defaults in the eurozone.

The long-term market interest rate for Spain has come close to setting a record and Italy’s borrowing cost rose above 5 per cent for the first time since November 2008. The moves came as Portugal was forced to pay a sharply higher premium in a debt auction on Wednesday, raising renewed fears that it will be forced to seek an international bail-out.

In Greece there is a national, and growing, anti-austerity movement.

Comments

Most of the Eurozone has a debt crisis. The US has a huge debt and growing. Japan is still stagnant. Africa and most of South America can be safely ignored. So, other than China, which are the countries really doing well and counterbalancing all this lending and bad debts? There be a conservation-of-debt-and-credit law ain't there?

The market is telling the story today. All the prognosticators have been saying to worry about oil and inflation, yet today oil and other commodities fall, the dollar rallies -- and US stocks fall hard. Deflationary fears are still the real problem. We're about to import deflation from Europe.

Dirk,

So we need QE3 right and then QEn. Because any threat of not monetizing the debt will cause a string of consecutive days where the Dow is down 200 points.

So if this is the situation we are in then I find it pretty hard to believe that conventional prescriptions for monetary and fiscal policy are effective at "fixing" the economy.

Portugal, Ireland and Greece has hit euro-era highs, amid concern in the market that European leaders will

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