Meanwhile, in Europe
The Spanish and Italian interest rate spreads — the difference between their borrowing costs and Germany’s — are widening again. So we’re drifting back toward the point at which these countries might enter vicious circles of falling confidence and rising debt burdens.
My guess is that this reflects both doubts about whether the ECB will backstop these economies in the face of growing opposition, especially in Germany, and the bad economic news for Europe generally, since paying debts will become much harder in the face of a recession. To make austerity in some European countries workable, you really needed stronger European economies not to be practicing austerity; austerity for all was and is a recipe for failure.
Truly, this is turning into a global disaster.
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