May 5 (Bloomberg) -- Investors are already testing the euro region’s efforts to contain the Greek crisis.
Greek bond yields yesterday rose above their level before the government agreed on a European Union-led bailout on May 2 as escalating protests cast doubt on its ability to drive through austerity measures. Spanish and Portuguese bonds also renewed last week’s slide as investors question their ability to cut budget deficits that are among the highest in the euro area...
Investors are speculating that Spain and Portugal may also eventually need assistance, prompting Spanish Prime Minister Jose Luis Rodriguez Zapatero to dismiss such talk as “complete madness.” --
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Comment: What we observe is a game that has gone out of control because of mutual misunderstandings. The authorities have not correctly understood the financial markets while the financial markets have thoroughly misunderstood the authorities. It is quite a task now for both of these two group to disentangle. Along the way we may expect more absurdities.
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