by Calculated Risk on 2/06/2010 09:18:00 AM

“We have control of the ship, we have a plan.”
María Teresa Fernández de la Vega, Spain’s deputy premier
From the Financial Times: Spain and Portugal fight to calm investors

Spanish and Portuguese debt and equity markets were hard hit by Greece-related doubts among investors, partly because Madrid and Lisbon ran up budget deficits to dampen the effects of the economic crisis and partly because of fears for eurozone cohesion.
...
“In a country with such high unemployment, how will it be possible to reduce the public deficit?” asked Prof [Juan José Toribio, economics professor at Iese Business School]
excerpted with permission

Reuters is quoting European Central Bank Governing Council member Ewald Nowotny as saying talk of a Eurozone breakup is "absurd". And Bloomberg is quoting Nowotny on the exchange rate:

“There’s no worrying development. Foreign exchange rates naturally fluctuate.”

And more from the NY Times: Debt Problems Chip Away at Fortress Europe

And from the WaPo: Debt crisis unsettles European economy

Senior officials at the major rating agencies on Friday played down the risk of an immediate debt crisis, saying even nations such as Greece have enough reserves to put off for months a day of financial reckoning. ... is especially hitting banks and other institutions with broad exposure to the sovereign debt of the "PIGS" of Europe -- Portugal, Ireland, Greece and Spain.

And more from Paul Krugman on the problems of a single currency: The Spanish Tragedy

We might get further updates on Sunday ...