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Europe has set the clock back to 2007

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The world's financial markets now behave like not very bright but exceptionally well-trained seals, barking and clapping their flippers whenever they hear the words "central bank." On Wednesday these circus performers talked themselves into belief in a rescue of Spain's banks, and a new round of "quantitative easing" by the Fed, and faith that these efforts would work. Dow up 280, 10-year T-note up from all-time bottom one week ago at 1.41 percent to 1.7 percent, mortgage borrowers startled by the run-up. Two days later, no mackerel from their trainers, the seals are back in the tank. The European end of this is straightforward: No one but Germany can float Europe, but it cannot unless all the rest of Europe accepts German discipline, and the ability of non-German economies and societies to adapt is more in doubt every day. Spain needs help, but wants to retain sovereignty, fearful that Europe will do for it what it has done for Greece. In terminology from another...