What Spain's woes mean for the euro

I'm starting to think there's a bit of a conspiracy going on in the global markets just now. Europe and the US are the key players. Every time investors get too worried about the problems occurring on one side of the Atlantic, the authorities on the other side stick their heads up and shout: "Hey, forget them! We're in much worse shape!" As economics professor Michael Spence puts it on Project-Syndicate.org, "capital markets have become schizophrenic, with investment rushing back and forth across the Atlantic in response to contagion risk in Europe and quantitative easing in the United States." This week, the big story has been the spike in US Treasury bond yields. There have also been rumblings of fear over how US cities are going to fund themselves in the near future. But now it looks as though the worry pendulum might be about to swing back to Europe once more...