Guess Who's Tanking?

Guess Who's Tanking?: "Not us, today." By Paul Krugman

Many people feared a calamitous morning in the markets, as investors reacted to the continuing stalemate over the debt ceiling. Well, it has been fairly calamitous — but not for the United States. The big news, instead, is that Italian and Spanish spreads — the difference between interest rates on their bonds and interest rates on (presumably safe) German bonds — have widened drastically again. Last week’s big rescue plan apparently didn’t restore confidence.

Sometimes it looks as if the Europeans and the Americans are in a contest to see who can do the most to mess up an economy that should be very strong. Today, surprisingly, the Europeans seem to have won a round.