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Europe sounds the "All Clear"

Boy, that’s a relief! Just a few days ago the eurozone was about to blow up, and now they’re sounding the All-Clear. I feel so much better now. Mario Draghi has a bank rescue plan, and Greece will accept the bailout and stay in the zone.

Tomorrow the stock market will rise, yet again. Watching the stock market during this crisis has been fascinating: stocks are so screamingly cheap that the market will grasp at any straw to rally. Any news is good news, even bad news.

Now let’s go back to reality. Actually, Europe hasn’t won the war.

First of all, the “Draghi Plan” as described in today’s NYTimes is a long-term solution to an immediate problem. Yes, of course it would be nice if the eurozone had a single bank regulator, and yes it would be nice if the eurozone were able to create a credible deposit insurance scheme. Someday, who knows, all of that may come to pass. But right now, there is no reason why a rational bank depositor in any PIIGS bank would not be in the process of moving his money not only out of the country, but out of the eurozone.