JUST over a week after Europe's leaders unveiled their latest "solution" to the eurozone debt crisis, the deal is already unravelling.
Last Friday's warning from credit rating agency Moody's that it was considering downgrading Spain's credit rating pushed the yield on 10-year Spanish government bonds back over 6 per cent, while on the very same day prime minister Jose Zapatero announced that he was calling a general election four months early.
And it isn't just Spain that is spooking the bond markets. During the week, another eurozone member country, Cyprus, had its credit rating cut, being downgraded two notches by Moody's. Cyprus now joins Spain and Italy as a possible bailout candidate. Even France, often thought to be part of the eurozone core, has not been immune from the spreading panic.
With Greece, Portugal and Ireland having already had to be bailed out, twice in the case of Greece, why has the value of the euro held up so well on the foreign exchange markets? Despite some wobbles late in the week the single currency finished on Friday at almost $1.44 and stg87.4p, well above the levels to which it fell at the time of the first Greek bailout in 2010.
So why is the euro, despite its many problems, apparently defying gravity? Look across the Atlantic. Even if the stand-off between President Barack Obama and Congressional Republicans over plans to increase the US debt ceiling is resolved by the time this newspaper is published, the whole affair has revealed a truly shocking level of political immaturity on the part of the world's largest economy.
The House Republicans blocking an increase in the US debt ceiling make the Greek parliamentarians who voted for that country's latest austerity package earlier this month look like paragons of fiscal virtue. That the House Republicans could even contemplate a US default with possibly catastrophic consequences for the global economy beggars belief.
By doing so they threaten to unleash the world's worst financial crisis since the autumn 1931 panic turned the post-1929 economic downturn into a the global Great Depression that lasted for over decade.
As if that wasn't enough to be worrying about there are also disturbing signs that the overheating Chinese economy may be about to hit the wall. If Chinese growth were to slow appreciably, the likely result would be the mother of all banking crises in China and a collapse in commodity prices worldwide.
With the Great Recession about to enter its fifth year, things may be about to get even more interesting than any of us had imagined was possible.
Sunday Indo Business