Fear, that contagious emotion, spread from country to country in Europe on Thursday as panicky investors worried the euro currency union could be heading toward an ugly breakup.
Spain and even France, one of the continent's core economic engines, were forced to pay sharply higher interest rates to raise cash to fund government spending.
While the European Central Bank was suspected of intervening in bond markets to fight the rise in the borrowing rates, many analysts say it needs to act more aggressively to contain the crisis. But Germany, Europe's paymaster, once again blocked any such move on concerns it would let profligate governments off the hook.
Uncertainty is now even eroding the appeal of top AAA-rated government bonds from countries like France as investors prepare for worst-case scenarios like the deconstruction of the eurozone.... (emphasis added)
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by Alan Clendenning AP Business Writer
Market indicators are signaling risk off. Spot gold is off, too, which would seem to indicate a liquidity issue, with holders of gold cashing out.
Another Lehman moment developing due to German intransigeance preventing the ECB acting as lender of last resort?