EVER since the sovereign-debt crisis erupted a year ago bond markets have repeatedly tested the resolve of European leaders to avoid government defaults. On each occasion euro-zone members have done something—but not quite enough to quell the crisis. This year looks like following the same pattern.
In early January investors sold off bonds issued by vulnerable euro-zone countries like Portugal, on the region’s periphery, and Belgium, closer to the core. In response Germany, the euro area’s reluctant paymaster, put its weight behind another initiative. A “grand bargain”, which is due to be struck at a summit in March, is supposed to bolster the support available for rescues. In return the euro zone will embrace more Germanic discipline.