RENEE MONTAGNE, HOST:
NPR's business news starts with Spanish bonds.
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MONTAGNE: More worries about the stability of Europe's economy, yesterday, after Spain ran into trouble trying to sell government bonds. The sale was weaker than expected and sparked a sell off on global stock markets, as fears of a eurozone contagion spread.
NPR's Chris Arnold reports.
CHRIS ARNOLD, BYLINE: This bond offering was a kind of litmus test, and it did not go very well.
DAVID KOTOK: I'm concerned about Spain.
ARNOLD: David Kotok is the chief investment officer at Cumberland Advisors. He says some analysts had grown hopeful that the troubles in Europe were mostly behind us.
This Spanish bond auction tested that hope - because it was the first such auction where the free market was buying Spanish debt without a lot of help from the European Central Bank. And basically many investors said, thumbs down.
KOTOK: This has been building for the last few weeks. Those who held out hope are disappointed. Those who were detractors say see, I told you so. There was a triumph of reality over hope.
ARNOLD: Kotok says the reality is that countries like Spain are still in big economic trouble. Spain's in recession, its housing market is tanking, and unlike the U.S., Spain has very little power to stimulate growth and turn things around.
Now if it was just Spain, then that's not such a big deal for the U.S. economy. But there's again talk about contagion in Europe. Nariman Behravesh is chief economist at IHS Global Insight.
NARIMAN BEHRAVESH: If it spreads, let's say, to Italy or France - and a lot of people are starting to worry about France now - then I think the effect on the U.S. could be quite a bit bigger.
ARNOLD: Still, Behravesh thinks that the stronger countries in Europe won't let a catastrophic meltdown get going.
Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.