Raise a glass to the dozens of mutual funds that doubled or even tripled in value since the stock market hit bottom on March 9, 2009. But choose your words carefully when you offer a toast.

In many instances investors in those funds haven’t come close to realizing such massive gains. That’s because they timed their moves in and out of funds poorly.

In volatile markets, there’s a greater tendency to latch onto a rising fund too late and miss most or all the upside. Then there are investors who bail too early from a falling fund and miss the rebound.

"Big gains and losses trigger emotional responses of fear and greed, and that’s when an ordinarily bright person invests like a dolt," says Russel Kinnel, director of fund research at Morningstar Inc. "They start thinking, ‘I’ve got to get into this fund, this manager is going to make me rich.’"

A couple of examples from the current bull market, which has sent the Standard & Poor’s 500 up 60 percent:

— Fidelity Select Automotive (FSAVX) gained 215 percent for the 12 months ended Feb. 28, thanks to the come-back-from-the-dead performance of auto industry stocks that the fund specializes in. But the $122 million fund’s investors averaged gains of only 73 percent, according to Morningstar. Poor timing meant that the typical investor shared only about one-third of the fund’s return.

— ProFunds UltraLatin America (UBPIX), which isn’t meant for buy-and-hold investors because it uses leverage. It spiked 221 percent by investing borrowed funds to magnify the returns of a Latin stocks index. The return for its investors? An average 129 percent. Although such a return is stellar, it was preceded by an 87 percent loss in 2008. And performance so far this year has been in the bottom 5 percent of its peer group.

Morningstar’s measure of investor returns quantifies the gap between a fund’s official return or loss, and the gains or pains investors actually experienced. It’s a sort of reality check that accounts for money investors have put in or taken out during a given period.

If a fund receives more investor cash right after posting strong returns and right before a period of poor performance, investor returns will be lower than the total return for the fund. That’s because more investors participated in the losses than the gains.

Investors aren’t necessarily dumb. Kinnel’s research shows the average investor often enjoys better returns than the average fund. That’s because most investors have a stake in large funds that tend to have lower costs per investor than smaller funds, which tends to improve results.

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German Chancellor Angela Merkel said a meeting tomorrow with Greek Prime Minister George Papandreou won’t be “about aid commitments.” Her finance minister, Wolfgang Schaeuble, said the third round of deficit-reduction measures this year were probably enough to convince investors to buy Greek debt.

While Papandreou is risking a backlash at home to meet European Union demands for more deficit cuts before allies even consider providing aid, Merkel is facing domestic opposition to tapping taxpayers to extend a financial lifeline to Greece.

“There would be no understanding in Germany for bailing out Greece,” Henrik Enderlein, a political economist at the Hertie School of Governance in Berlin, said by phone. “It’s a bit of catch-22 situation: if you give in to Greece and you put 5 billion or perhaps even 10 billion into some kind of rescue package or into some guarantees, then the German government would look irresponsible. However, if it doesn’t, then European Union leaders might put a lot of pressure on Merkel and say, look, we have to bail out Greece.”

In Athens, about 200 members of the PAME union, aligned with the Communist Party, were reported at the finance ministry and protesters also took over the nearby General Accounting Office, according to a police spokeswoman. Another group blocked a central road, snarling traffic.

Deficit Cuts

The demonstrations followed the Cabinet’s backing yesterday of 4.8 billion euros ($6.6 billion) of cuts, Papandreou’s statement that said Greece was prepared to turn to the International Monetary Fund as a last resort.

“We have fulfilled to the utmost all that we must from our side; now it’s Europe’s turn,” Papandreou told his ministers yesterday, according to an e-mailed transcript. “It is a historic moment for the European Union.”

Greek bonds rose to their highest in three weeks after the Cabinet endorsed a package of revenue-raising and budget-cutting steps, including higher fuel, tobacco and sales taxes and a cut of 30 percent in three bonus payments to civil servants on top of a wage and benefits freeze.

The measures are “convincing,” the European Central Bank said in a statement. The ECB appreciates the Greek government’s recognition of the need to “rapidly adopt and implement decisive structural reforms.”

Euro Weakens

The euro dropped to $1.3662 as of 8:22 a.m. in Berlin from $1.3697 in New York yesterday, when it climbed to $1.3736, the strongest since Feb. 17. The premium investors demand to buy Greek government debt over comparable German bonds, the European benchmark, slid 2 basis points to 2 free credit reports.84 percentage points, extending yesterday 19 basis point drop.

The Greek announcement “is as much about giving other EU governments more political capital in the event that they do eventually need to provide liquidity to Greece,” said Gary Jenkins, head of credit research at Evolution Securities Ltd. in London. “They can make the claim to their own taxpayers that Greece has taken further measures as suggested by the EU.”

For now, none of the potential lenders has stepped up since a statement at a Feb. 11 EU summit promised “determined and coordinated action” to support Greece.

‘No Need’

“There’s no need for such a thing at this point in time,” French Finance Minister Christine Lagarde said late yesterday on Sky television. “If it was required, the partners in the club would be available to restore stability.”

After meeting Merkel in Berlin, the Greek leader is due in Paris two days later for talks with French President Nicolas Sarkozy.

While Greece is pressing EU leaders to help cover the bloc’s largest budget deficit, Merkel’s comments were the clearest signal yet that Germany isn’t convinced.

“I expressly want to say that Friday isn’t about aid commitments, but about good relations between Germany and Greece,” Merkel said yesterday in an interview with N-TV, according to a transcript provided by her office. Greece’s steps are “an important signal” toward restoring confidence in the euro.

Greece faces more than 20 billion euros in debt redemptions in April and May. The EU is devising a plan to grant Greece about 25 billion euros in emergency aid should the need arise, German lawmakers have said, enough to cover the maturing debt. One option could involve using state-owned lenders such as Germany’s KfW Group to buy its bonds.

Papandreou Package

Greece has pledged to trim a deficit of 12.7 percent of gross domestic product to 8.7 percent this year. Concern that Greece won’t be able to tame the shortfall saw the euro lose almost 5 percent against the dollar this year.

Greece has blamed market speculators for fueling the decline in its securities. European officials have warned hedge funds that they shouldn’t try to profit from the woes of the region’s nations. U.S. authorities have told some hedge funds not to destroy trading records on euro bets, according to a person with knowledge of the requests.

Banks and regulators across Europe were summoned by the European Commission to discuss regulation of the market for sovereign credit-default swaps in the wake of the Greek debt crisis.

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“Within a year or so, residential housing problems should largely be behind us,” Buffett wrote yesterday in his annual letter to the shareholders of his Berkshire Hathaway Inc. “Prices will remain far below ‘bubble’ levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits.”

The worst housing decline since the Great Depression has left one in five U.S. mortgage holders owing more than their houses are worth. Record foreclosures last year flooded a real estate market already glutted with unsold property, causing new construction to fall to the lowest in at least 50 years. The fall in homebuilding is the only fix unless the U.S. decides to “blow up a lot of houses,” Buffett joked.

“People thought it was good news a few years back when housing starts — the supply side of the picture — were running about two million annually,” said Buffett, the chairman and chief executive officer of Omaha, Nebraska-based Berkshire. “But household formations — the demand side — only amounted to about 1.2 million.”

Berkshire, which owns a real-estate brokerage, a business that constructs pre-fabricated houses and units that make products used in homebuilding, has suffered amid the slump. Profit at Clayton Homes, the pre-fab housing business, fell about 9 percent to $187 million before taxes, while earnings at carpet manufacturer Shaw Industries fell 30 percent.

“High-value houses and those in certain localities where overbuilding was particularly egregious” will take longer to recover, he wrote.

‘Deeply Invested’

“He’s very deeply invested in this,” said Tom Russo, partner at Gardner Russo & Gardner, which holds Berkshire stock. “Across his industrial companies, he’s massively poised to gain” from a housing recovery, Russo said.

Buffett joked that curbing home construction was the best of three ways to reduce supply. The other two, he said, would be to explode homes in a “tactic similar to the destruction of autos that occurred with the ‘cash-for-clunkers’ program” or “speed up householder formations by, say, encouraging teenagers to cohabitate, a program not likely to suffer from a lack of volunteers.”

Buffett’s annual communications with shareholders have won him a following of professional money managers and the moniker “the Oracle of Omaha.” He’s written passages in past years that compare investing to baseball, derivatives to venereal disease, and Wall Street bankers to Pied Pipers. The letters have been compiled into a book for those who want to study his pronouncements.

Transformative

Buffett, 79, built Berkshire into a $198 billion company through investments in firms he believes have superior management and lasting competitive advantages. His deals transformed Berkshire from a failing textile mill into an enterprise that makes candy, produces power and sells flight time on private jets. The shares traded at about $15 when he took control in 1965; the Class A stock last closed at $119,800.

Still, he and Vice Chairman Charlie Munger passed up opportunities when they weren’t able to evaluate the future of a business, even in a compelling industry, he said. That strategy has allowed the stock to perform better than the benchmark Standard & Poor’s 500 in every year when both Berkshire and the index have fallen.

Playing Defense

“In other words, our defense has been better than our offense,” Buffett wrote. Last year, he said, Berkshire should have made more purchases of corporate and municipal bonds because they were “ridiculously cheap” when compared with U paydayloans.S. Treasuries.

“When it’s raining gold, reach for a bucket, not a thimble,” he said. Corporate bonds returned 26 percent in 2009, compared with negative 11 percent in 2008, according to data compiled by Bank of America Corp. Merrill Lynch. State and local government bonds yielded 14 percent last year, compared with negative 4 percent in 2008.

Berkshire did extend financing to companies including Goldman Sachs Group Inc., General Electric Co. and Dow Chemical Co. during the credit crisis as other investors were withholding funds. The private deals pay dividends and interest of $2.1 billion annually, Berkshire said in a filing disclosing 2009 results. Berkshire’s net income of $8.06 billion rose 61 percent from 2008.

‘Climate of Fear’

“We’ve put a lot of money to work during the chaos of the last two years,” Buffett wrote. “It’s been an ideal period for investors: A climate of fear is their best friend. Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance.”

Buffett has used past letters to discuss plans for his successor, praise Berkshire managers and confess his failings. He admitted this year to a “very expensive business fiasco” with his move to issue credit cards to policyholders at his company’s Geico Corp. auto-insurance subsidiary. Last year, he said the U.S. economy was “in shambles” after reckless lending caused the worst financial “freefall” he ever saw.

He chastised the media in the new letter for “terrible journalism” in seizing on that comment from the prior year without also reporting that he made no predictions about the direction of the stock market.

CEO Responsibility

Buffett said this year that the CEOs and boards of companies that failed during the credit crisis shouldn’t be allowed to pass blame to underlings. Boards should insist on CEOs taking full responsibility for the risk of collapse, he said. “If he’s incapable of handling that job, he should look for other employment,” Buffett wrote.

Shareholders weren’t responsible for the botched operations at some of the country’s largest financial institutions, Buffett said, “yet they have borne the burden with 90 percent or more” of their holdings wiped out in cases of failure.

Still, he said, using year-to-year stock prices to evaluate a company’s progress can be an “extraordinarily erratic” measure. Even a decade can fail to give the proper picture, as Microsoft Corp. CEO Steve Ballmer and GE’s Jeffrey Immelt found when they took over with their shares at “nosebleed” prices.

GE shares have dropped about 60 percent since Immelt took over in September 2001; Microsoft has fallen about 47 percent under Ballmer’s tenure.

Berkshire shares have risen more than 160 percent in the past decade, compared to the 17 percent decline in the S&P 500. Buffett’s company joined that index this month when it completed the largest deal of his 40-year tenure, the $27 billion takeover of railroad Burlington Northern Santa Fe Corp.

‘We Sleep Well’

Berkshire had $30.6 billion in cash and so-called near cash like U.S. Treasuries as of Dec. 31, compared with $26.9 billion three months earlier, after Buffett sold stock to add to the company’s cash cushion in advance of the rail deal. Buffett used about $8 billion of that cash to help fund the acquisition.

“We pay a steep price to maintain our premier financial strength,” Buffett wrote. “The $20 billion-plus of cash- equivalent assets that we customarily hold is earning a pittance at present. But we sleep well.”

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Freddie Mac’s weekly rate report says a 30-year, fixed-rate mortgage averaged 5.05 percent in the week ended Feb. 25, up from 4.93 percent last week. A one-year, adjustable-rate mortgage averaged 4.15 percent, down from 4.23 percent last week.

"Interest rates for 30-year fixed mortgages followed long-term bond yields higher amid a mixed set of economic data reports," Freddie Mac (NYSE: FRE) chief economist Frank Nothaft said. "For instance, the January producer price index jumped well above market consensus, but the consumer price index remained subdued and consumer confidence declined to the lowest level since April 2009, according to The Conference Board flexcheck cash advance."

On Tuesday, Case-Shiller reported that home prices in Miami fell 9.9 percent between December 2008 and December 2009, but slipped just 0.3 percent between November and December.

And on Wednesday, First American CoreLogic reported that Florida has the third-highest percentage of homes under water.

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Investors bought and sold more than $24 billion worth of Berkshire (BRKA, Fortune 500) shares last Friday, the day the stock joined the S&P 500 index of big companies. That is the second-largest single-day volume for a U.S. stock in the past decade, according to a survey of currently listed companies by Capital IQ, a unit of S&P.

The record, in a testament to the insanity of the Internet boom of the late 1990s, belongs to JDSU (JDSU) — a now-obscure broadband gear company that generated $27 billion of trading on the day it joined the S&P in July 2000.

The company, which used to be called JDS Uniphase, has since replaced its top management. Still, it can hardly escape the shadow of those tech bubble days.

Just over a year after the trading frenzy that accompanied the company’s accession to the S&P 500, JDSU posted a $51 billion loss for fiscal 2001. Investors who bought the stock on the day it was added to the S&P have been all but wiped out.

That’s not likely to happen to Berkshire Hathaway shareholders. Buffett, of course, has managed to increase the company’s per-share net worth at a 20% compound annual rate since taking over the firm in 1965.

Some Buffett fans say that even now, the stock is substantially undervalued, given the earnings growth in its operating businesses such as MidAmerican Energy and the recently acquired Burlington Northern Santa Fe railroad.

Others, however, predict the stock will decline as investors take a second look at the pricey Burlington buy. Skeptics deride that deal as evidence of "style drift" — a case of Buffett making a pricey purchase at the expense of some long-held ideals, including a long-stated aversion to stock splits.

For now, joining the S&P 500 has been good for the stock. Berkshire shares have risen 12% since Jan. 26, the day S&P said it would add the company to the index, thanks to the stock split Berkshire did that month to facilitate the cash-and-stock Burlington deal.

As for the other stocks on the trading frenzy list, neither JDS nor Yahoo (YHOO, Fortune 500) trades anywhere near their value on their big day. But other members of the top 10, including Apple (AAPL, Fortune 500), Google (GOOG, Fortune 500) and Goldman Sachs (GS, Fortune 500) — which Berkshire owns a stake in — have all risen substantially since then. 

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The service will run from June 9 through Aug. 30.

The announcement by United, a wholly owned subsidiary of UAL Corporation (Nasdaq: UAUA), also identified more than a dozen additional seasonal and year-round flights to North American cities from its hubs in Chicago, Denver, Los Angeles, San Francisco and Washington.

United, the top carrier serving Hawaii in 2008, offers more than 615 daily departures to more than 145 cities worldwide.

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“We need to confirm the will of the people before making any significant changes to the tax system,” Kan told lawmakers in parliament in Tokyo today. He said discussions won’t be limited to “whether to raise or lower” certain levies.

Kan said yesterday the government will start debate on taxes next month, in contrast with remarks made last month, when he said the system will be overhauled only after exhausting cost-cutting measures. Moody’s Investors Service said raising the sales tax won’t be enough to repair the country’s finances without a strategy to spur growth and corporate earnings.

“Japan still hasn’t solved this problem where there’s a negative feedback loop,” Thomas Byrne, senior vice president at Moody’s in Singapore, said today on Bloomberg Television. “The big surge in tax collection that occurred before this global crisis came through corporate taxes, so it’s very important for corporates to remain profitable.”

Kan said on Fuji Television yesterday discussions will include income, corporate and environment taxes in addition to the sales levy. Prime Minister Yukio Hatoyama, whose Democratic Party of Japan took office in September, has pledged not to raise the sales tax for four years.

July Election

With an upper house election scheduled in July, Hatoyama may have difficulty introducing policies that could weigh on an economy that’s recovering from its worst postwar recession free business cards. A report today showed growth accelerated last quarter even as deflation intensified.

Hatoyama’s support fell to 35.7 percent this month from 47.1 percent in January, a Jiji Press survey showed Feb. 12.

Standard & Poor’s last month cut the outlook for Japan’s AA sovereign credit rating, citing the government’s failure to come up with a plan to contain the deficit. Japan’s debt burden is approaching 200 percent of gross domestic product, making it the largest in the industrialized world.

The Finance Ministry forecasts public debt will swell to 973 trillion yen ($10.8 trillion) by March 2011. Tax collections are set to fall below the amount of bonds sold this fiscal year for the first time in 63 years.

Kan also said yesterday the government will “make efforts” to meet the DPJ’s election pledge to double child- care allowances for households in the year starting April 2011. Monthly handouts of 13,000 yen have been budgeted for the year starting April.

Japan’s economy expanded at a 4.6 percent annual rate in the three months ended Dec. 31, the Cabinet Office said today, a figure that policy makers including Kan said reduced the risk the nation will fall back into a recession.

“Risks for a double-dip recession are receding,” Kan told reporters in Tokyo. “We’re starting to see some bright signs emerge from the clouds, but we can’t be complacent.”

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Obama, in a Feb. 9 Oval Office interview, said that a presidential commission on the budget needs to consider all options for reducing the deficit, including tax increases and cuts in spending on entitlement programs such as Social Security and Medicare.

“The whole point of it is to make sure that all ideas are on the table,” the president said in the interview with Bloomberg BusinessWeek, which will appear on newsstands Friday. “So what I want to do is to be completely agnostic, in terms of solutions.”

Obama repeatedly vowed during the 2008 presidential election campaign that he would not raise taxes on individuals making less than $200,000 and households earning less than $250,000 a year. When senior White House economic adviser Lawrence H. Summers and Treasury Secretary Timothy F. Geithner suggested in August that the administration might be open to going back on that pledge, White House press secretary Robert Gibbs quickly reiterated the president’s promise.

In the interview, Obama said that putting preconditions on the agenda of a bipartisan advisory commission, which he said he would soon establish, would just undermine its purpose.

“What I can’t do is to set the thing up where a whole bunch of things are off the table,” Obama said. “Some would say we can’t look at entitlements. There are going to be some that say we can’t look at taxes, and pretty soon, you just can’t solve the problem.”

Politically Risky

It would be politically risky for Obama to abandon his promise not to increase taxes on the middle class. Only 26 percent of Americans surveyed in a December poll by Bloomberg News said they favored such a step as a way to reduce the budget shortfall.

Many economists, including conservatives such as former Federal Reserve Chairman Alan Greenspan, argue that tax increases will be necessary as part of a broad package to control the deficit, which the White House projects will hit a record $1.6 trillion in the fiscal year ending on Sept. 30.

Obama said the U.S. was faced with a “structural deficit” that was in place before the recession began and that was only made worse by the deepest drop in the economy since the 1930s.

Revenue ‘Mismatch’

“Our real problem is not the spike in spending last year, or the lost, even the lost revenues last year, as significant as those are,” he said. “The real problem has to do with the fact that there is a just a mismatch between the amount of money coming in and the amount of money going out. And that is going to require some big, tough choices that, so far, the political system has been unable to deal with payday loan lenders.”

The administration hopes the bipartisan commission will make it easier to produce a comprehensive plan to reduce the budget gap to a sustainable level, often described as 3 percent of the overall economy, by 2015.

The White House decided to set up the group on its own after the Senate blocked a measure to establish a congressional panel whose recommendations would have been guaranteed a vote by lawmakers. Opponents, including a majority of Senate Republicans, complained that the plan would result in tax increases and that Congress wouldn’t have a chance to amend the panel’s recommendations. Under a presidentially appointed commission, Congress could ignore any panel recommendations.

Republican Skepticism

House Republican leader John Boehner has expressed skepticism about the Obama commission and has sought assurances from the White House that its makeup would be bipartisan and not predisposed to tax increases. The Ohio Republican said he is still considering whether to appoint members from his party to the panel after a Feb. 9 meeting with the president.

Americans’ favorite way of cutting the budget deficit is by raising taxes on the wealthy, according to the Bloomberg News poll conducted by Des Moines, Iowa-based Selzer & Co. Two-thirds of the 1,000 adults surveyed Dec. 3-7 backed that approach.

The Obama administration’s budget already takes that route with its proposed $970 billion tax increase over the next decade on Americans earning more than $200,000 a year, largely by not extending former President George W. Bush’s tax cuts for the wealthy beyond 2010.

Even with those revenues — and a proposed three-year freeze on some discretionary spending by the government — the administration still projects a deficit of $752 billion in 2015, equivalent to 3.9 percent of gross domestic product.

That’s above the 3 percent mark that White House budget director Peter Orszag has said is necessary to stop the rise in government debt as a proportion of the economy.

Budget Gap

Analysts say that middle-class taxes will need to be increased because the government can’t raise enough money from the wealthy alone to close the budget gap. “It’s just not possible to get the revenue you need only from this group,” said Joel Slemrod, director of the Office of Tax Policy Research at the University of Michigan.

Going back on his campaign pledge would be fraught with risks for Obama. Former President George H.W. Bush paid a steep political price when he abandoned his 1988 campaign promise not to raise taxes, losing out in his bid for a second term to Bill Clinton.

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An average of 800 applicants have shown up at each of the past three job fairs. More than 1,000 applied for jobs in 2009.

Team officials say the following openings will be available:

• Bat boys
• Cooks
• Ticket sellers and takers
• Concession stand leaders
• Warehouse workers
• Parking attendants
• Picnic staff
• Guards
• Prep cooks
• Game-day grounds crew
• Money room attendants
• Ushers
• Beer vendors
• Program sellers
• Pro shop attendants
• Souvenir vendors

All interested applicants should enter the stadium at the third base gate on the west side of Isotopes Park, located at 1601 Avenida de Cesar Chavez SE. Applications are available online. Applicants are being encouraged to print and fill out an online application before arriving at the job fair.

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As Greece tries to control a record deficit and stem a slide in its bonds, Trichet said the economy of the 16-nation euro area is solid and its budget shortfall will probably be smaller than those of the U.S. and Japan this year. The comments yesterday didn’t stop Spanish and Portuguese stocks from dropping on concern they are in a similar predicament to Greece or the euro from tumbling to a nine-month low against the dollar.

Trichet “did not convince me,” said Stuart Thomson, who helps manage $100 billion at Ignis Asset Management in Glasgow, Scotland. “Where does he think the Greek, Spanish and Portuguese economies will be three years from now? Their austerity measures will weigh on the euro area as a whole.”

Trichet has been forced to fend off questions about the survival of the euro as investors doubt Greece’s ability to cut its deficit from 12.7 percent of gross domestic product to below the European Union’s 3 percent limit. As concern spreads to Spain and Portugal’s rising debt burdens, Trichet will try to stress the need for fiscal prudence without inflaming skepticism that it can be achieved.

“Something has to happen to turn credibility around,” said Paul Mortimer-Lee, head of Market Economics at BNP Paribas in London. “The market’s just saying it’s not believable. It might have to get worse before it gets better.”

Markets Shudder

Spanish stocks dropped the most in 15 months yesterday and Portugal led declines in government bonds. Increasing concern about sovereign creditworthiness contributed to a rout in shares that spread across the globe, with the Standard & Poor’s 500 Stock Index closing down 3.1 percent and the MSCI Asia Pacific Index losing 2.5 percent as of 1:53 p.m. Hong Kong time.

The euro fell as low as $1.3669 today and traded at $1.3706 at 2:54 p.m. in Tokyo. It has declined about 9 percent since Nov. 25.

Greek bonds have tumbled in the past two months, pushing the yield on the country’s 10-year debt above 7 percent, the highest since 1999, the year the euro was introduced. The premium investors charge to hold Greek 10-year bonds over the benchmark German bund has widened to 356 basis points, about 10 times what it was two years ago.

No Rush at ECB

The ECB yesterday left its benchmark rate at a record low of 1 percent and Trichet signaled the bank is in no rush to raise borrowing costs as the economy recovers gradually from its worst recession since World War II.

Still, Trichet said the “solidity” of the euro area “is not necessarily very well known” and its situation compares “very flatteringly with a number of other industrialized countries.”

The euro-area economy will grow 0.8 percent this year and 1.2 percent in 2011, according to the ECB’s December forecasts. It contracted 4 percent last year, the European Commission estimates.

“Trichet is still trying to persuade markets that they should be looking at the euro area as a whole, which does not look that bad, rather than at individual countries, some of which look extremely fragile,” said Marco Annunziata, chief economist at UniCredit SpA in London.

Ballooning Debt

Spain’s public debt will rise to 74 percent of GDP by 2011 from 54 percent last year, according to European Commission forecasts. Greece’s debt will increase to 135 percent of GDP from 113 percent, and Portugal’s will increase to 91 percent from 77 percent, the EU estimates.

Greece’s consolidation plans, which call for about 10 billion euros ($13.7 billion) of spending cuts and revenue increases this year, are more ambitious than any budget reduction achieved by euro-region countries since the 1970s, according to ING Group.

Papandreou told reporters today in New Delhi that Greece has no plans to put in place new measures to cut its budget deficit. He said the steps already announced are “credible,” adding that the nation has substantial funds available from the European Union.

Greece’s biggest union yesterday approved a second mass strike this month to protest the spending cuts and tax collectors began a 48-hour walkout, illustrating the difficulty Prime Minister George Papandreou faces in implementing his plan.

“We expect and we are confident that the Greek government will take all the decisions that will permit them to reach that goal,” Trichet said. Additional proposals announced by Greece this week to freeze public-sector wages and revamp the pension system “are steps in the right direction,” he said.

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