The following is an excerpt from Michael Schuman | November 28, 2011 | Time.com
Reading about developments in the euro zone these days makes me recall the old American TV sci-fi show Lost in Space. Every time the Robinson family got itself into trouble, their robot would swing its arms and flash its lights and yell “Danger! Danger!” Perhaps we need to send this robot through the streets of Berlin, Paris, and other major euro zone capitals, since the leaders of Europe apparently aren’t getting the message on their own. More and more countries are getting dragged down into the euro zone debt crisis as its leadership continues to dither. Much like the Robinson family, they just seem lost, wandering from place to place, with no clear progress on getting where they need to go.
Let’s get to the facts. Belgium saw its credit rating downgraded on Friday and its bond yields have been rising steadily. (That pressure, though, seems to have finally convinced the country’s squabbling political parties to strike a compromise and form a government, which will give Belgium its first permanent administration in over 18 months.) The situation in Italy continues to deteriorate. In auctions on Friday, Italy was forced to pay sharply higher interest rates on short-term financing. In fact, the yield on three-year bonds spiked above the yield on 10-year bonds, at one point topping 8%. It’s a really bad sign when countries have to pay more for short-term money than long-term money. That’s an indication of increased concern in markets that Italy might default in the near term. Both Italy and Spain are paying more for short-term funding than Greece. Whatever little faith investors may have had that newly appointed Prime Minister Mario Monti can turn the Italian ship around appears to have quickly evaporated.
Yet amid all of these dramatic events, the most stress-inducing actually came from
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