Sunday, November 13, 2011

Even as Governments Act, Time Runs Short for Euro

New York Times
November 12, 2011

The window of opportunity to save the euro is rapidly closing, as the sovereign debt crisis erodes the solvency of Europe’s banks and drives up borrowing rates for even once rock-solid countries like France.

A growing consensus about the urgency of Europe’s situation has brought some drastic and tangible steps toward dealing with it: first by Greece, then by Italy, where lawmakers on Saturday signed off on austerity measures and cleared the way for Prime Minister Silvio Berlusconi to step down.

Both countries are moving toward more technocratic governments that are committed to delivering the difficult reforms demanded by the European Union, the European Central Bank and the International Monetary Fund. But there are a host of problems that could quickly overwhelm that progress.

Looming over all the discussions of reform and financing mechanisms is the slowdown in the Continent’s already anemic growth rate, to 0.5 percent in 2012, and even the threat of a double-dip recession, the European Commission said in a forecast for the euro zone last week.

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