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Hostage to Headlines

Friday, 25 May 2012 | 5:06 PM ET

Hostage to headlines. We can't even get a quiet, boring close going into the Memorial Day weekend.

Spain
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Spain

Headlines saying that Spain was prepared to inject $23.8 billion into Bankia shortly after 2pm ET shaved a couple dozen points off the Dow Industrialsshortly after 2pm ET.

And we have drifted lower since then, on VERY light volume. This is a buyer's strike, not a rush for the exits.

Earlier headlines that Spain's Catalonia, the largest autonomous region in Spain, was running out of money, dropped the euro to a 22-month low.

The U.S. markets move on this? Little wonder why the market is in such a funky mood. Oh sure, there is some hope that the Greeks will move to the center in the polls. And that the ECB will pull another liquidity hat trickand announce LTRO Part 3.

But there's a bigger problem. There's got to be more fiscal union. And to pull that one out, the rich countries have to be confident that the poor countries can dig out.

If they are not confident, they will eventually stop writing checks.

Italy’s Mario Monti can say that most of Europe is in favor of Eurobonds, but that doesn't mean it is going to happen.

People talk about the mood on the streets of Athens...what about the mood on the streets of Berlin? They don't want to pay for the Greeks.

Meantime, all sorts of proposals are being floated. There has been talk of a "redemption fund," which was first floated last year. Under this scheme, all debt over 60 percent of a country's GDP would be placed in a fund (a really big fund). Countries could get money from the fund (backed by eurozone gold reserves) in exchange for constitutional commitments to fiscal reforms.

Sounds like a back door way to get to eurobonds, doesn't it? It's just a variation on a simple theme: the rich guys backing the poor guys.

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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