Europe’s Debt-Relief Calculus
The problem for Europe is not just that slow growth is driving up debt levels, but also that the debt overhang is itself becoming the cause of slow growth. Though few people want to go down that route, because it leads directly to the question of debt forgiveness, the issue can no longer be ignored.
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SANTIAGO – Europe has long been menaced by the threat of two crises. The first would erupt with a successful speculative attack on a large eurozone country’s bonds, immediately jeopardizing the single currency’s survival. European Central Bank President Mario Draghi’s vow to do “whatever it takes” to prevent a sovereign default in the eurozone seems to have diminished that danger – at least for now.