Perhaps they finally get it. That was the first reaction to the stories emerging from the emergency meeting of eurozone heads of government in Brussels. All the right buttons were hit: lower interest rates for Greece, Ireland and Portugal; an agreement by private-sector creditors to accept a writedown on their Greek debt; a "Marshall plan" for Europe to boost growth; big steps towards closer financial integration.
Bitter experience has shown, though, that it is best to wait the final details of any European deal before passing judgment. There are two reasons for caution: the problems facing European policymakers are big and complex; and their track record so far has been one of dogged prevarication, a Micawberish optimism that "something will turn up".
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So what's the bad news? Clearly, on past form there is a risk that the plan is more spin than substance. According to the rumours, Greece's private-sector creditors will voluntarily take a 10% loss on Greek debt. If true, that is not nearly enough to solve Greece's solvency problem, unless of course the European "Marshall plan" proves as generous as that announced by Harry Truman in 1948, which was worth 5% of US national output. That seems unlikely. Nor is it obvious that German taxpayers will willingly bankroll the expansion of the EFSF, which, with the crisis lapping at the shores of Spain and Italy, needs to be at least tripled in size to €1.5tn.
Most importantly of all, there's the question of whether there really will be a sea-change in policy. The hope is that the package will help Europe's policymakers get ahead of the game for the first time since the Greek crisis first erupted in May 2010, but a study of the small print means any celebrations should be put on ice. Paul Krugman noted that it was hard to see where economic recovery would come from, given the avowed determination to stick to agreed fiscal targets and to cut budget deficits in those countries not subject to bailout programmes below 3% by 2013. As such, this looks less like a game-changer and more like Austerity Lite, a rather more sophisticated version of muddling through.
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http://www.guardian.co.uk/business/2011/jul/21/eurozone-summit-deal-analysis-larry-elliott