Bailouts appear to be the medicine du jour prescribed across Europe for debt-stricken nations. Large-scale purchases of government bonds by the ECB also seem to be the only focus of creditors and political leaders. But the true key to resolving the eurozone crisis actually lies in properly structured reforms in the ailing countries.
WARSAW – The seemingly never-ending debate over the eurozone’s fiscal problems has focused excessively on official bailouts, in particular the proposed purchase of government bonds on a massive scale by the European Central Bank. Indeed, we are warned almost daily – by the International Monetary Fund and others – that if bailout efforts are not greatly expanded, the euro will perish.