Saturday, December 18, 2010

Europe's debt crisis: An uglier 2011?

by Michael Schuman


December 17, 2010

At this point in the never-ending euro crisis, it should be clear to Europe's leaders that their piecemeal approach to the debt problems of the Eurozone's weakest members has been a failure. Rescues for Greece and Ireland have not stopped the contagion. Moody's recently threatened to downgrade its credit rating on Spain, and on Friday, lowered Ireland's rating by five notches, even after that nation's European Union/IMF bailout. Standard & Poor's warned of a downgrade for Belgium. In a bond auction this week, Portugal's borrowing costs nearly doubled in the just the past month. But that's still not enough evidence to convince Europe's leaders to change their policies.

In a summit on Thursday, European leaders agreed to form a permanent bailout framework, set to become effective in 2013. But once again, they dodged proposals for new approaches to the crisis. The continued resistance to more proactive, comprehensive solutions to Europe's debt crisis will just make it more likely the Eurozone will continue to suffer bailout after bailout.


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