HONOLULU – The eurozone crisis is over, or so we are being told. But can a couple of quarters of economic growth support claims of recovery?
There is no doubt that the outlook for Europe has brightened since early 2012. Ten eurozone countries had just been downgraded by the ratings agency Standard & Poor’s. Economic activity was spiraling downward, while nervous investors were fleeing southern European banks. The Spanish government was about to nationalize Bankia, the country’s fourth-largest bank, but could not say where it would obtain the funds to recapitalize it. Interest rates on government bonds were racing upward.
In Greece, meanwhile, an election was approaching, amid fears that the new government would reject the country’s financing agreement with the European Union and the International Monetary Fund. At that point, the country might be forced out of the eurozone.
And what happened in Greece would not stay in Greece. Once the process of euro exit had started, there was no telling where it would stop. The general feeling was that the common currency was doomed.