Europe brightens, to investors anyway
"Persistently weak economies in Spain and Italy will push up public debts as a proportion of GDP, as well as bad loans at banks", says Simon Tilford, chief economist at the CER, a London think-tank. "Ultimately the debt problem is being made bigger" by Europe's lack of growth, he says.
Shrinking economies and worsening debt ratios might be what pushes markets to start selling Spanish or Italian debt again, Mr. Tilford says. That would test whether the ECB can make good on its promise to keep bond markets from collapsing.