HEARD ON THE STREET: Euro Zone Is Short of Survival Options - WSJ.com: "German Chancellor Angela Merkel has acknowledged this is no longer an academic question, describing the current situation as 'extraordinarily worrying.' While markets steadied Wednesday, there still were signs of stress: Senior bank debt spreads in Portugal and Spain continued widening, and the cost of insuring Belgian government bonds against default reached a record.
European leaders are responding to each crisis country by country, providing individual bailout packages designed to prevent contagion. But the Irish bailout has failed to settle market nerves, with Portugal now under pressure and Spain also in the market's sights. If putting together an Irish bailout is proving hard, given rows over the conditions to any aid plus a domestic political crisis, Portugal will present an even greater challenge, given Lisbon's lack of progress in tackling its deficit and its chronic lack of competitiveness. Meanwhile, Spain's economy may be too big to save.
But even if the strategy does halt contagion, it most likely only buys time. The euro zone's bailout arrangements are due to expire in 2013"
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