It’s easy to picture the grim surprise that Spanish officials must have when they learned on Monday that interest rates on the country’s 10-year bonds were going up again. They had an even worse shock on Thursday, when that same yield crossed the critical 7% line beyond which it is virtually impossible for a country to service its debt. After all, market pressure had just forced Spain to accept a rescue package for its troubled banks and surely, those officials must have believed, 100 billion euros would buy at least a little respite. Instead, they got one of the worst weeks in Spain’s economic history, and one that bodes poorly for the country’s—and Europe’s—future.
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