Wall Street Journal
July 10, 2012
Once again, a summit of European leaders raised hopes that the euro zone's debt and banking crisis could be about to turn the corner. And once again, those hopes were soon dashed.
The leaders' late-June summit followed the usual template. Since the start of the crisis in early 2010, summits have been greeted by bond-market rallies lasting anywhere from a few hours to a few days—followed by abrupt reversals.
Political fixes are proving unconvincing to financial markets, says Paul De Grauwe, an economics professor at the London School of Economics. Leaders "have stopped thinking about economic implications: They look at this process from a political point of view," he says.
Time and again, leaders claim they have reached agreement on issues that are then revealed not to be settled at all.