Economic Outlook: Is Spain next?

The shadow that Spain cast across the European economic landscape for the past three years is turning itself into a three-dimensional problem.

Yields on 10-year benchmark government bonds in Madrid have lately jumped to more than 6 percent, which sent investors scurrying to safer places to invest, causing yield gaps with Germany and France to grow wider. The same misguided solution, in effect, is presenting itself in Europe as it did on a global scale in the United States.

When Standard & Poor's, with some audacity, lowered the credit rating for the United States, a year ago, yields fell for U.S. treasuries, given there was no place else to run and hide.

It makes an awkward bet at best. Lower borrowing costs for the United States amount to cheap, if not free money, but investments need to have more than math behind them. Even solid math doesn't do the trick. One still has to have products and customers. That bottom line does not go away.

In Europe, Spain is providing fear, not opportunity.

Unemployment has been near 20 percent throughout much of the past two years and is far from any sort of turnaround. It is now struggling with a stick-out-foot and blast away strategy of austerity budgeting -- a strategy that would be effective if Spain could adjust its market value through currency devaluation.

In truth, if enough countries in the eurozone go into a tailspin, the euro should provide in part for Greece, Portugal and Spain, except that it will also jump start flagging industries in Germany and France.

Despite all that, the euro has held on. It's mule-headed -- protected by diversity.

There are familiar refrains being bantered about in Europe. "I don't foresee the need for Spain to come, but there is a lot of money available," The New York Times quoted Klaus Regling, chief executive officer of the bailout fund assembled by eurozone countries, as saying.

Is that true or is that, once again, the pat and disjointed theme-song called, "Don't scare the customers?" We'll all know soon enough.

In international markets Thursday, the Nikkei 225 index in Japan fell 0.82 percent while the Shanghai composite index in China was flat, falling 0.09 percent. The Hang Seng index in Hong Kong rose 1.03 percent while the Sensex in India gained 0.64 percent.

The S&P/ASX 200 in Australia rose 0.32 percent.

In midday trading in Europe, the FTSE 100 index in Britain gained 0.34 percent while the DAX 30 in Germany fell 0.24 percent. The CAC 40 in France gave up 0.95 percent while the Stoxx Europe 600 declined slightly, off 0.02 percent.