In this week's Economist

A few articles from the Finance and Economics section of this week's issue of the Economist on what is otherwise a lazy Sunday afternoon (all of these are publicly accessible).

On the recent strength of the Euro - Strength on strength.

Good times in the euro area, and getting better still
VIEWED one way, these should be nervous days for the euro area. Its exporters are having to cope with a rising currency, which has been nearing a record high against the dollar (and has notched one against the yen), and a slowing American economy. On the home front, Spain's long property boom may be coming to a dusty end. The currency club's fourth-largest economy has accounted for nearly two-fifths of its net job creation since 1999, as well as a disproportionate share of its GDP growth.

However, viewing things another way makes more sense. Pleasant surprises continue to emanate from the euro area—notably from Germany, its biggest economy. This week Ifo, a Munich research institute, unveiled another strong reading for its monthly business-sentiment index. The country's five main economics institutes, including Ifo, have raised their forecast of GDP growth this year to 2.4%; last autumn they expected a percentage point less. French presidential candidates apart, the zone's politicians have been unusually accepting both of the currency's rise and of one of its causes: the European Central Bank's clear intention to raise interest rates further. The ECB is likely to take another step, from 3.75% to 4%, in June.

A faltering America and a falling dollar will, other things equal, hold euro-area exports back. But the greenback is not the only currency that counts. Though the euro has climbed by 5% against the dollar since early February, it has risen by much less against the pound and has fallen against currencies such as the Czech koruna and Hungarian forint. That has held the rise in its nominal trade-weighted rate against 24 currencies, calculated by the ECB, to 2.7%. This rate is still a bit weaker than in late 2004, when the zone's economy was in far worse shape (see chart).

On the end of the property bubble in Spain - The pain in Spain:

Signs that a 14-year boom is ending
THE only question in Spain now is which bubble is bursting. Are only overvalued property companies in trouble, or is the country's entire property market going down? For the economy as a whole, in which construction weighs in at a hefty 18%, it could mean the difference between a soft landing and a hard one, after 14 years of a construction-led boom that put Spain near the top of the euro zone's growth league.

In the past week Astroc, a property company based in Valencia, saw its shares fall by 65% in what looked like a response to tighter planning regulations in the region. The worries have spread to other property groups, where shares have tumbled by more than a fifth since April 17th. Having been floated last May, Astroc's shares had risen tenfold before the crash. Share prices of other leading property companies, such as Colonial, Metrovacesa, Fadesa, Urbis and Inmocaral, also soared last year. Worries spread wider into construction stocks such as Ferrovial, Acciona, ACS and Sacyr Vallehermoso, and banks such as Santander and BBVA, knocking the Ibex stockmarket index off by 1.7% in the week up to April 25th. On that day it was partially pepped up by reassuring noises from government officials and bankers.

Helped by low interest rates since it joined the euro in 1999, Spain has been erecting houses at an astonishing rate. Last year it built 800,000, reckoned to be more than France, Germany and Italy combined.

And Buttonwood on U.S. stocks - Sale of the century:

Companies are buying back their own shares at a record rate
BUY now while stocks last. The retailers' traditional slogan is being re-enacted in the American stockmarket. The supply of quoted shares is shrinking fast.

The biggest buyer is the corporate sector itself. According to Tim Bond, of Barclays Capital, American companies acquired (via takeovers and buy-backs) some $602 billion of shares last year. In the fourth quarter, the pace of purchases was running at an annualised rate of 6% of the entire market. April 23rd was the biggest day for takeover announcements since the AOL/Time Warner deal of January 2000 and the following day saw IBM announce a $15 billion buy-back. With that kind of support, it is hardly surprising that investors can shrug off economic and geopolitical concerns and push the Dow Jones industrials to a new record above 13,000, as they did on April 25th.

Mr Bond says this equity-buying splurge is almost exactly matched by the corporate sector's financial deficit—in other words, companies are borrowing money to buy back shares. This gearing up of the balance sheet is occurring when profit margins are at their highest level since the 1950s. It looks like hubris.

Hubris indeed.

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This week's cartoon: