New York Times
October 27, 2011
Europe’s leaders did better than expected, but expectations were low to start. After Wednesday’s all-night summit meeting, they announced a greatly strengthened financial rescue plan that includes bigger write-downs of Greek debt and new injections of capital into weakened European banks. Still, far too many of the crucial details have been left to work out over the days, weeks and months ahead.
Until those are known, it will not be clear if Europe has finally mobilized enough cash and political will to stop the unraveling that now also threatens Italy, Spain and even France. And Europe is still only grappling with the financial symptoms of the crisis, not the underlying causes.
One of the biggest of those is that while Europe has a unified currency, and independent central bank, it has no lender of last resort — like the Federal Reserve — that can supply unlimited emergency funds to governments and banks that need them. And Europe’s continued insistence on imposing punitive austerity in exchange for bailouts, which will make it impossible for weaker economies to generate enough growth to pay down debts.