Greece and the myth of the easy economic fix

Washington Post
May 5, 2010

For the past year, I've been warning that the imbalances underlying the financial crisis -- the explosive growth of credit, the mispricing of risk, the mispricing of real estate and other assets, the overcapacity in the global economy -- were so huge that a quick and easy economic recovery was highly unlikely.

And for much of that time, it has looked as though I was dead wrong. Stocks rebounded, credit markets revived, corporate profits returned and bank balance sheets have been repaired. But the nagging suspicion is that too much of this rebound is the result of the massive fiscal and monetary stimulus that not only did its job of reversing what was a dangerous downward spiral, but also made it possible for many countries to delay dealing with those fundamental economic imbalances.

More