No  matter whether in the Far East, down in Rio or on Wall Street all eyes  continue to watch the unfolding day-by-day ups and downs in the Euro  Zone. The US markets continue to react to every sneeze European banks or  financial ministers make.

In  early trading yesterday morning markets rose in optimism over Spain.  But before the end of the day, remarks from US Federal Reserve Chairman  Ben Bernancke put a damper on the world's economy.

Germany Tries to Power Through:

German  Chancellor Angela Merkel has called for Europe to take a gradual path  towards political union, frustrating the appeals of many of her  colleagues for quick, bold moves to fight the continent's raging  financial crisis.

After a meeting with British Prime Minister  David Cameron, who called for "urgent action," Merkel noted Thursday  that the debt crisis has built over the 10 years of the currency's  existence and cannot be fixed overnight.

"Now it will also take a few years to get things right again," she said.

http://azstarnet.com/news/world/merkel-urges-gradual-political-union-in-europe/article_6aa98b40-950e-5b07-a231-2e8387c95455.html

What’s  to become of Europe? As Spain’s straits become newly dire and the whole  euro zone convulses over its debt crisis, the common prayer is that  Germany will rise up, reject outside help and protect the European  household.

But Germany’s looking not so mighty itself: Industrial  production in the once-indomitable economy is down. In April alone, it  dropped by a stomach-churning 2.2 percent. "The German economy's  immunity against the euro zone sovereign debt crisis is clearly fading  away," Carsten Brzeski, an economist at ING in Brussels, warned  recently.

Germany seems to have missed the memo that kicked off the digital economy decades ago.

http://news.yahoo.com/can-german-engineering-go-digital--the-arri-alexa-camera--a-hollywood-test-case.html

The Rain in Spain:

Spain,  a eurozone behemoth, is in the crosshairs of Europe's financial crisis.  The country is suffering from soaring borrowing costs, a banking system  leaking cash and unemployment rates at devastating levels.

Greece  might be teetering toward expulsion from the eurozone but Spain's  situation is now the focus of concern. If such a major economy were to  fail, the repercussions could cause unprecedented havoc across Europe --  and the globe.

http://cnn.com/2012/06/07/business/spain-euro-crisis/index.html?eref=rss_world&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fedition_world+(RSS%3A+World)

The  bargaining has begun over a deal to rescue Spain’s ailing banks,  confronting Europe with urgent choices about whether to try to enforce  onerous bailout terms on Madrid as the crisis spreads to the region’s  largest economies.

The question has seemingly become one of  when, and not if, Spain’s banks will receive assistance from European  countries, with investors on Wednesday predicting an imminent rescue and  pushing up stocks and bonds on both sides of the Atlantic.

Spain,  the euro zone’s fourth-largest economy, is too big to fail and possibly  too big to steamroll, changing the balance of power in negotiations  over a bailout.

http://nytimes.com/2012/06/07/world/europe/spain-holds-a-trump-card-in-bank-bailout-talks.html?_r=1&hp

Ode to a Grecian Urn:

Greece's  unemployment shot up to 21.9 percent in March, rising sharply from the  15.7 percent rate in the same month last year and up from 21.4 percent  in February, the country's statistics agency said Thursday.

Greece  has been struggling through a financial crisis for the past two years,  and has been relying on billions of euros in international rescue loans  from other eurozone countries and the International Monetary Fund since  May 2010. In return, it has made deep spending cuts and imposed major  tax hikes, leaving the country mired in a deep recession.

The  statistics agency said Thursday that unemployment was up 37.8 percent in  March compared with the same month last year. Compared with February  2012, there were 21,625 more people unemployed this March, a 2.1 percent  increase.

Young people have been the most affected by the job  losses, with more than half _ 52.8 percent _ of those in the 15-24 age  group out of work in March, compared to 42 percent in the same month  last year.

Greece's financial crisis has also triggered political turmoil.

http://azstarnet.com/news/world/greek-unemployment-hits-pct-in-march/article_6fd8ffb9-c2b7-5940-b3c7-12dd894df24d.html

Asia Reacts Too:

Asian  stock markets fell Friday, deflated after U.S. Federal Reserve Chairman  Ben Bernanke gave no hint of immediate action to jump-start growth in  the world's No. 1 economy.

Bernanke avoided sending any signals  Thursday in an appearance before members of the U.S. Congress about what  the Fed might do in response to a slowdown in hiring.

Francis  Lun, managing director of Lyncean Holdings in Hong Kong said markets  were "slightly disappointed" that Bernanke had not said the Fed would  extend its Treasury bond-buying program, known as quantitative easing.  The program injects money into the financial system, lowering interest  rates to spur lending and growth.

Japan's Nikkei 225 index fell 2  percent to 8,471.04. South Korea's Kospi dropped 0.6 percent to  1,837.19. Australia's S&P/ASX 200 lost 1.1 percent to 4,062.90. Hong  Kong's Hang Seng Index fell 0.4 percent to 18,604.18.

Benchmarks  in Singapore, Taiwan, Indonesia, the Philippines and New Zealand also  fell. Mainland Chinese shares moved higher by midday.

An effort  by China on Thursday to reverse a sharp economic downturn by a surprise  cut to the benchmark lending rates failed to rejuvenate markets because  it may have been too little, Lun said.

"The economy is slowing much faster than people expected," he said.

http://azstarnet.com/news/world/markets-rise-on-hopes-for-spain-aid-us-stimulus/article_1b541804-7d77-5d12-aeb0-2eb3364d0283.html

From the Cornfield, like it or not, the US economy is tied in a knot from which it cannot easily loosen to the global economy.