It has happened time and again in recent months as Europe's debt crisis has played out. Stocks stage a remarkably strong comeback on expectations that a solution has been found. Then they quickly resume their decline as hopes dissipate, leaving investors puzzled and frazzled.
What is going on?
The problem, say close watchers of both the subprime financial crisis in 2008 and the European government debt crisis today, is that many investors think there is a quick and easy fix, if only government officials can come to an agreement and act decisively.
In reality, one might not exist. A best case in Europe is a bailout of troubled governments and their banks that keeps the financial system from experiencing a major shock and sending economies worldwide into recession.
The latest rescue package for Europe gained approval from Germany on Thursday, after Chancellor Angela Merkel won a vote in Parliament, throwing the financial weight of the Continent's biggest economy behind a new deal.
But a bailout doesn't wipe out the huge debts that have taken years to accumulate - just as bailing out U.S. banks in 2008 didn't wipe out the huge amount of subprime debt that homeowners had borrowed but couldn't repay.
The problem - too much debt and not enough growth to ease the burden - could take many years to resolve.
"Everybody has been living beyond their means for nearly the last decade, so it is an adjustment that will be painful and long, and it will test the resilience of societies socially and politically," said Nicolas Veron, a fellow at Bruegel, a research organization in Brussels.
This is not to say that the discussions in Europe are moot. If governments can't agree on how to rescue Greece from its debilitating government debt, some fear the worst could happen - a collapse of the financial system akin to 2008 that would ricochet around the world, dooming Europe but also the U.S. and emerging countries to a prolonged downturn, or worse.
Just like the U.S., Europe built up trillions in debts in past decades. What is different is that more of the U.S. borrowing was done by consumers and businesses, while in Europe it was mainly governments that piled on the debt, facilitated by banks that lent them money by buying up sovereign bonds.
Now, just as the U.S. economy is held back by households whose mortgages are still underwater and who won't begin to spend again until they have run down their debts, Europe can't begin to grow again until its countries learn to live within their means.
In short, it means years of painful adjustment.
"We have to adjust to lower growth," said Thomas Mirow, president of the European Bank for Reconstruction and Development, referring to both Europe and the U.S. "It is of course going to be very painful. But leaders have to speak frankly to their populations."
The uncertainty about Europe's future has been driving the gyrations of financial markets since the summer. Earlier this week, stocks rallied on euphoria that a new and more powerful bailout was near, but the rally fizzled Wednesday when cracks began to appear among European nations over the terms of money being given to Greece.
