http://www.alternet.org/story/153002/is_the_eurozone_about_to_collapse--and_how_will_it_impact_the_us/After days of drama-filled meetings, in late October eurozone leaders announced the latest “comprehensive” rescue plan. Although it was an improvement over earlier efforts, this package, too, came up short in that it failed to calm the markets and offer the eurozone a path back to economic growth. And without growth, there will be many more months of crisis.
The stakes are very high. The fate of the US economic recovery rests in part on whether Europe can keep its intertwined banking and debt crises from spiraling into full-fledged financial contagion, which would deal a damaging blow to an already fragile US economy. Yet the United States has little influence over European policy. Not only is Washington’s advice viewed with suspicion in Berlin and Paris (Europeans still rightly complain about the economic shock visited upon their economies by the collapse of Lehman Brothers); with austerity-drunk Republicans in charge of Congress, the United States can’t do much to help rescue Europe.
After days of drama-filled meetings, in late October eurozone leaders announced the latest “comprehensive” rescue plan. Although it was an improvement over earlier efforts, this package, too, came up short in that it failed to calm the markets and offer the eurozone a path back to economic growth. And without growth, there will be many more months of crisis.
The most we can do at this point is draw the right lessons from the crisis for our economy and try to nudge policy in the right direction (while encouraging the Federal Reserve to support Europe’s efforts at stabilization). Indeed, there is a danger that we will only compound the problem with bad advice and inappropriate policy. So what are the most essential lessons to draw from the crisis?
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