The Greek bailout and cheap loans may have pulled Europe back from the edge, but economists warn that without real change, the eurozone will continue to teeter.
Berlin and Frankfurt
Europe is heaving a sigh of relief. A messy Greek default has been averted, a permanent rescue fund is about to be installed to prevent future “credit events” with EU governments, Europe’s banks have received massive cash injections from the European Central Bank (ECB), and there is relative calm in the financial markets.
Is this the beginning of the end of Europe’s debt crisis?
No, it is not, warns Jens Weidmann, president of the German central bank, the Bundesbank, and former economic adviser to Chancellor Angela Merkel.
“At its roots, the debt crisis is a crisis of confidence in public finances, and one of competitiveness of certain European economies,” Mr. Weidmann told reporters in Frankfurt earlier this week. “These issues have to be addressed by national policymakers. If our liquidity provision results in these politicians not addressing the problems, we have gained nothing.”