Germany’s parliament has announced this week that they plan to endorse an enhanced bailout package aimed to finally pull the EU out of a downward spinning economic catastrophe. Sounds ideal, right? Unfortunately, the European Financial Stability Facility (EFSF) plans to achieve this by providing troubled countries with liquidity loans and the reassurance that they will buy their bonds when no one else wants to.
The question remains: where is this money coming from? Although it is nice to hope for economic renaissance for Europe, they cannot simply solve debt with more debt. This plan is no more than a band-aid aimed at covering up their underlying issues of poor governmental leadership and lack of initiative. The only thing it will buy for Europe is more time. It is up to them whether to use this time to drive forward positive change or keep waiting for a simple solution.
The Euro Zone Crisis article we discussed in class addresses these same issues, and highlights the important fact that leaders need to commit to either: ending the common currency or adopting fiscal integration. While some may view it as “too little, too late” for Europe, any action is better than apathy.
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