Time is running out for continent to undertake serious fiscal reform

Europe in denial

By Nita Ghei

Time is running out for Europe. As Spain’s banking crisis deepens, politicians on the continent remain in denial. The only solutions in their mind involve borrowing or subsidies from German taxpayers. With theInternational Monetary Fund (IMF) acting as their enabler, Europe’s high-debt countries may be able to put off the required reforms, but delaying the inevitable is taking a toll on their economies.

Output is shrinking, unemployment is 11 percent, and factory orders are down. IMF chief Christine Lagarde believes the European Central Bank(ECB) has room to cut rates, but monetary easing doesn’t address the fundamental problem that caused the debt crisis: countries living beyond their means. Spain is the immediate concern, but Greece is just a step behind, with elections coming up shortly.

Washington Times