ML-Implode News - Efforts to Halt the Euro Crisis Ineffective in Southern Europe

The sovereign debt crisis has been eating its way through the Continent for the last four years, despite the various remedies prescribed by crisis managers in Brussels and Berlin, and at the European Central Bank (ECB) in Frankfurt. The situation in the euro zone eased somewhat after ECB President Mario Draghi's announcement last summer that he intended to do everything possible to preserve the euro. But it is now becoming clear how deceptive this period of calm was. Since US Federal Reserve Chairman Ben Bernanke announced his aim to gradually pump less money into the financial markets, interest rates have gone up considerably in both the United States and Europe.
With the sedative effect of cheap money now diminishing, it is becoming clear what risks still lurk in Europe's debt-ridden economies, and that many problems remain unsolved. Sovereign debt is rising rapidly, not just in Spain, but also in Greece, Italy and Portugal, despite austerity policies and impressive reform efforts. The countries have significantly reduced spending in response to pressure from the so-called troika, consisting of the European Commission, the ECB and the International Monetary Fund (IMF). But the recession has led to a concurrent decline in revenues. In addition, devastatingly high unemployment has led to higher government spending.

It has created a vicious downward spiral. And economists have been left to argue over whether and how the countries in question might be able to emerge from it... many politicians and economists in the troubled countries believe that this is the result of strict austerity policies, for which they hold German Chancellor Angela Merkel largely responsible.

Relevant:

Efforts to Halt the Euro Crisis Ineffective in Southern Europe