by Michael Schuman
Time
July 22, 2011
After 18 months of dithering, bickering and delusion, the leaders the euro zone have finally conceded to the inevitable and cobbled together a second bailout of Greece. The total package agreed to on Thursday – with fresh loans of $157 billion – includes some startling breakthroughs in Europe's approach to solving the destabilizing euro debt crisis. For the first time, private creditors are expected to pitch in, by absorbing losses estimated at $53 billion. In the process, the euro zone is allowing what is effectively a sovereign default, a drastic step that many of its top officials had been desperate to avoid. And the zone also agreed to expand the activities of the $1 trillion rescue fund formed last year so that it can use its cash more proactively to help other struggling countries -- an attempt to squelch the contagion threatening the entire euro experiment.
I have to say that the Thursday agreement is a big step forward for Europe, the most dramatic show of commitment to the euro during the crisis since that bailout fund was first founded more than a year ago. They agreed to take steps that they have long tried to avoid. It's heartening to see that Europe's leaders are finally putting their money and their political careers where their lip service has been, and taking real steps towards shoring up their embattled monetary union.
But will it work? Has this second bailout of Greece finally put an end to Europe's debt crisis? I have my doubts.
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