New York Times
July 19, 2011
An emergency meeting of European leaders in Brussels on Thursday to discuss another Greek bailout will decide the future of the euro. If they do what they have done so often since the crisis first began in Greece some 18 months ago, they will simply have kicked the can down the road. Contagion is almost inevitable. A problem that began in the periphery has now moved to the center, and while Spain and Italy have been the most shaken, other nations will almost surely be affected in coming months.
What needs to be done is by now well-known: Issue European bonds, using the collective borrowing power of the European Union, and pass the low interest rates onto the countries in need, combined with a growth strategy that will engender needed revenues.
As in the United States, much of the revenue shortfall arises simply from the weak economy. Putting Greece, Spain and the other countries that are languishing back to work would do more to restore fiscal order than all the speeches and austerity measures combined.
Reforms are needed, and are being undertaken. But it is foolish to think that the full fruits of these reforms will be seen any time soon, and certainly not within the short time horizon of myopic bond markets.
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