Europe's debt crisis deepened as Greece struggled to complete a fifth austerity plan to keep pace with its mounting deficit, Italy faced a possible credit-rating cut and Spain's ruling party was routed in local voting.

The cost to insure Greek debt against default rose to a record and the yield on its 10-year bonds increased to a euro- era high as Prime Minister George Papandreou's government met today in Athens to endorse a new package of spending cuts and state-asset sales needed to assure the flow of bailout funds.

"The bond market is the only language policy makers will listen to," Axel Merk, chief investment officer for Merk Investments Llc said in an interview with Bloomberg Television's Betty Liu. "Once the bond markets impose austerity on the country that's when they follow through, when there is a backing off, when things are going better, that's when they lapse."