Perhaps for now, yes. But the debt problems are not going to go away…
Slowly, authorities seem to be wakening up to the challenges. There are signs emerging of a multi-year program of assistance to Greece. And in the first bit of actual positive news, an Italian debt auction went actually rather well.
This might stop the rot. For now. Important questions remain:
- With 90% of the German electorate against Germany even having to fund the 8.6B euros of the smaller (30B + 15B from the IMF) aid package on the table, can they (and their politicians) stomach far larger contributions?
- Will Greece manage to embark on much tougher austerity measures than the ones proposed already?
- And even if the previous question has to be answered with a yes, will the Greek economy and the population take this kind of medicine? The signs for both are rather bleak. Ireland is the only country which already implemented deep public sector cuts, and the results are bleak. Despite cuts to the tune of 5% of GDP, the deficit/GDP ratio has only be stabilized (at 11% of GDP). The Greek population is already on the streets, wait until the austerity starts to bite in earnest..
- When will the Greeks think the alternative (restructuring its debt and/or leaving the euro) might actually be less harmful?
- When will the rest of Europe get tired of assuming misbehaving countries debt, thereby worsening their balance sheets and possibly increasing their interest rates?
- What will happen to the European economies when all the countries with dire fiscal situations embark on the necessary (and unprecedented) austerity? Ask the Irish..
These are just a few awkward questions. This sovereign debt crisis won’t go away anytime soon, even if Greece is helped with a large dollop of cash now