Will Europe’s Economies Regain Their Footing?

STOCKHOLM – What will Europe’s growth trajectory look like after the financial crisis? For some Europeans, still nervous that their economies and banking systems might collapse, this is a little like asking a passenger on the Titanic what they plan to do when they arrive in New York. But it is a crucial question to ask, especially when Europe has been facing so much outside pressure from the likes of the United States and the International Monetary Fund to focus on short-term Keynesian stimulus policies.

True, things are pretty ugly right now. Europe’s income is projected to fall a staggering 4% this year. Unemployment will soon be in double digits throughout most of the Continent, with Spanish and Latvian unemployment on track to exceed 20%. Europe’s banking system remains sickly, even though many national governments have gone to great lengths to hide their banks’ woes.