Ker-clunk, ker clunk, ker-clunk…

That sound you hear is Europe kicking an ever rustier, more dented can a bit further down the road.

Germany has agreed to lend money to Spain’s bank insurance program, in order to sustain the solvency of Spain’s banks.

Good though this is for Spain and its banking system, and the Euro, it does nothing to solve several fundamental problems:  (1) There is no mechanism forcing Germany to be responsible for the sovereign or bank losses of other Eurozone countries;  (2) The banks and governments in several Eurozone countries are effectively broke;  (3) Populations in weaker Eurozone states seem strongly disinclined to elect leaders who will gain German funds by bowing to German demands for more austerity.

So we have a few more stiches on a new wound while the patient still struggles with a major illness.

About jackgoldstone

Hazel Professor of Public Policy at George Mason University
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