NYT: Debt Problems Chip Away at Fortress Europe

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by Landon Thomas Jr.
The New York Times
February 5, 2010

Fortress Europe is now under attack by the market.

For months, the conventional wisdom in Europe was that the speculative aims of bond traders and hedge fund investors would remain largely focused on Greece, Europe’s chronic problem child.

But this week the cost of insuring the debt of not just Greece, but Portugal and Spain as well, rose to record levels — causing stock markets to tumble, the euro to fall and borrowing costs in the most vulnerable countries to soar.

As a result governments in 16 countries that use the euro must now confront a new and disturbing reality: The deal they struck more than a decade ago to create a common currency area, hoping that a single central bank could manage to paper over the divergent economic and financial conditions of its members, is finally being challenged.

Read more: http://www.nytimes.com/2010/02/06/business/global/08euro.html?partner=rss&emc=rss&pagewanted=all