Is Europe back? Maybe, with China's help.

[pampango]

http://www.globalpost.com/dispatch/europe/110107/eurozone-debt-crisis-china-bonds

After months of doom, gloom and predictions of the euro’s impending demise, you might think the prospect of good economic news from Europe was as likely as pigs taking flight. There were reports that China had pledged to spend billions buying up the bonds of Spain and other debt-ridden eurozone nations — a clear sign of Beijing's confidence in the Europeans' ability to pay back the loans.

Beijing has around 2 trillion euros in foreign reserves, so undoubtedly has the monetary muscle to help Europe out. It’s also keen to avoid economic uncertainty in its biggest export market; wants to diversify its bond investments away from the $907 billion it holds in U.S. government paper; and is keen to reverse the euro’s slide on currency markets, which have made European exports more competitive with Chinese goods.

Despite last years’ spate of lurid headlines about the euro’s looming collapse, German officials recognize that the country has more to lose from a breakup of the eurozone than from bailing out its partners, at least for as long as they stay on the path of fiscal responsibility.

Estonia may be small, but it’s arguably the EU’s best-run economy. Growth is expected to hit 4.4 percent this year, the budget is close to balance and public debt is just 8 percent. “What the euro means to us is security,” Prime Minister Andrus Ansip told the nation after withdrawing his first euro bills from an ATM in Tallinn.


An Estonian cashier gives change in euro bills
to a young Estonian customerin a supermarket
in Tallinn on Jan. 1, 2011. Estonia adopted the
European single currency at midnight, ringing
in 2011 as the 17th member of the eurozone.