November 30, 2011
Only a few months ago, many assumed the biggest challenge facing the euro zone was how to manage the debts and dysfunctional economy of a single country, Greece. Now, policymakers and investors wish it were that simple.
Amid worries over Italy's mountainous debt, France's shaky AAA credit rating and the sustainability of Europe's banking system, Greece is barely mentioned.
The crisis in the currency bloc has become existential.
But investors ignore events in the cradle of democracy at their peril. Greece remains the country considered most likely to leave the euro. Such a move would trigger another round of market panic that could drag Europe deeper into crisis and potentially upend the global economy.
In their handling of Greece, the most egregious example of the euro zone's wider problems, Europe's leaders had an opportunity to demonstrate the will and capability to address the currency union's inbuilt flaws. A monetary union without a fiscal union could not succeed in the long term, economists say.
In the eyes of markets, the politicians have so far failed.