Europe is on the brink again. The region’s debt crisis flared on Monday as fears intensified that Spain would be next in line for a government bailout.
A recession is deepening in Spain, the fourth-largest economy that uses the euro currency, and a growing number of its regional governments are seeking financial lifelines to make ends meet. The interest rate on Spanish government bonds soared in a sign of waning market confidence in the country’s ability to pay off its debts.
The prospect of bailing out Spain is worrisome for Europe because the potential cost far exceeds what’s available in existing emergency funds. Financial markets are also growing uneasy about Italy, another major European economy with large debts and a feeble economy.
Stocks fell sharply across Europe and around the world. Germany’s DAX plunged 3.18 percent. Britain’s FTSE dropped 2 percent and France’s CAC 40 fell 2.89 percent. In midday trading on Wall Street, the Dow Jones industrial average was down 1.35 percent. The euro slipped just below $1.21 against the dollar, its lowest reading since June 2010.
The collapse of the Eurozone continues…