The European Union's efforts to break this "doom loop", in which frail banks and penurious states recycle the same money to prop each other up, are falling short. Banks have ramped up buying in the past two years and enjoyed high payouts on government bonds bought with cheap European Central Bank loans. On the other side of the coin, states such as Italy and Spain increasingly lean on their banks by selling them debt. Central bank strategists in Frankfurt are concerned this has laid the foundation for future shocks before the dust has settled on the worst financial storm in a generation.
WASHINGTON (AP) — After a sweeping vote by conservative Republicans controlling the House and President Barack Obama's Democratic allies, a bipartisan budget pact is in the hands of the Senate, where it will encounter stronger but probably futile resistance from Republicans.