Blight of the living dead
Europe’s financial system is in a terrible state, and nothing much is being done about it
“PROBABLY the most successful monetary-policy measure undertaken in recent times.” That is Mario Draghi’s self-effacing judgment on the outright monetary transactions (OMT) programme, the promise made by the European Central Bank (ECB) last summer to buy the bonds of struggling euro-area governments. The ECB’s president deserves credit for bringing calm to bond markets. But in reality the situation is still awful, and Europe’s banks are at the heart of the problem.
The euro-zone economy has contracted for six consecutive quarters. The IMF this week revised its 2013 forecast down again: it expects the euro zone to shrink by 0.6% this year. (Just to rub things in, the fund adjusted its forecasts for Britain upwards.) The outlook in the core euro-zone economies has worsened, thanks in part to a slowdown in China: in May German exports suffered their sharpest fall for two years. But the brunt of the pain is being borne by the peripheral economies.
This article appeared in the Leaders section of the print edition under the headline "Blight of the living dead"
From the July 13th 2013 edition
Discover stories from this section and more in the list of contents
Explore the editionMore from Leaders
Why South Africans are fed up after 30 years of democracy
After a bright start the ANC has proved incapable of governing for the whole country
How disinformation works—and how to counter it
More co-ordination is needed, and better access to data
America’s reckless borrowing is a danger to its economy—and the world’s
Without good luck or a painful adjustment, the only way out will be to let inflation rip