Eurodepression

This is a gloomy start of the week for the Eurozone, with spreads rising again in the usual suspects (Spain, 4.412, and Italy, 3.997) and not so usual suspect such as France (1.334). International investors are turning away from the Euro bond market, Euro is now at 1.302 dollars, and Asian stocks falling as a result of worries over the Eurozone... 

The adverse developments in the Eurozone are not the results of insufficient fiscal austerity but rather of too much austerity. As should by now be clear, and as Krugman notes in his Insane in Spain post, the crisis in Spain is not one of fiscal irresponsibility, but is better understood as resulting from a housing bubble