High Tensions

摘要

For all the faults they have displayed in recent years, financial markets still provide useful signals. Right now, they are indicating danger for Europe's single currency, the euro. The signalling is coming not from the foreign-exchange mar-ket (the euro has climbed back from its October low against the dollar) but from the bond markets. Spreads on the ten-year government debt of Greece, Ireland, Italy, Portugal and Spain over that of Germany have widened sharply. Rating agencies are paying particularly close attention to the fiscal positions of the profligate five: Standard & Poor's has downgraded three of them and put another on credit watch.