Europe stuck on bailout merry-go-round

Various Euro bills.

Various Euro bills. (Photo credit: Wikipedia)

By Shawn Pogatchnik – Throughout the deepening debt crisis, European Union leaders sought to portray Greece as a unique case in special need of aid. They were proved wrong when Ireland and Portugal required bailouts in 2011.

They’re likely to be proved wrong again. And this time, the stakes are higher for the rest of the world.

New austerity-minded governments in Rome and Madrid have helped calm fears, but of far greater significance was the European Central Bank‘s decision to provide banks more than (EURO)1 trillion ($1.3 trillion) in bargain-basement loans. This unprecedented injection spurred banks to snap up battered government debt, driving up the bonds’ value and driving Spanish and Italian borrowing costs down again.

Economists warn such relief is only temporary. more>


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