Room for Debate
October 10, 2011
As European leaders urge banks to shore up their finances, what signs are most worrying? Are there any indicators that are reassuring?
Facing a slow-motion financial crisis in the last few years, European leaders have done a lot of talking, about the woes of Iceland, Ireland, Greece, Spain and Portugal and the burdens on Britain, France, Germany and Scandinavia. What has come of all the talk? A few proposals, and a little reassurance for investors -- but no "Lehman Brothers moment" that could mark the nadir for Europe's downturn. (Even if there had been, Americans can attest that the end of a recession does not always feel like the beginning of a recovery.)
The latest proposal comes from Germany and France, whose leaders -- perhaps disturbed by how swiftly Greece tipped from "business as usual" to "bailout or bust" -- agreed Monday that European banks should shore up their finances with a broad recapitalization program. This could reduce the risk of bank failures throughout the euro zone.
If leaders are taking steps like this to brace for the worst, and the markets can so easily swing from the pessimism of last week to this week's guarded optimism, it's hard to say: is Europe recovering, or on the second downhill slide of a double-dip recession? What signs are worrying, and are there any indicators that are reassuring?
Vanessa Rossi (Oxford Analytica), "The Two Europes Diverge"
Edward Harrison (Credit Writedowns.com), "It Boils Down to Banks"
Klaus Abberger (Ifo Institute for Economic Research), "All Eyes on Germany"
Shahin Vallée (visiting fellow, Bruegel), "Focus on the Long Term"
Aristides Hatzis (University of Athens), "The Inevitable Second Slump"
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