"When will the euro zone debt crisis end and how will we know it?" A reader's emailed question cuts through the daily dramas of the financial soap opera that has kept European investors glued to their screens for the last 19 months, threatening to wreak wider global turmoil.
Yet European Union policymakers are so busy building firewalls within the 17-nation single currency area and devising temporary fixes to avert immediate disaster that scant thought is being given to how the story ends.
Next week, EU leaders are likely to buy a little more time by approving a second bailout for Greece, barely a year after Athens was granted a first 110 billion euro assistance programme from the EU and the International Monetary Fund.
In Harold Wilson's 1970s Britain, this approach became known pejoratively as "muddling through".
The European Union prefers to dress it up in grand phrases such as "comprehensive package" and "permanent crisis-resolution mechanism", but a solution it isn't.
Funding fatigue is growing in the north European creditor countries, especially Germany, the Netherlands, Finland and Austria, just as austerity fatigue is mounting in Greece.
Yet all the indications are that EU policymakers have as little clue about the endgame as does my questioner.
No one in Brussels, Berlin or Frankfurt even pretends to believe the new package will solve the problem of Greece's debt mountain, already at 150 percent of annual output and rising.
Since Athens is unable to return to the capital markets for the foreseeable future -- contrary to its initial rescue plan -- lending more taxpayers' money on draconian austerity conditions is seen in Europe and Washington as the least worst alternative.
"We must win time with a new package," Finance Minister Wolfgang Schaeuble told sceptics in the German parliament last week, admitting doubts about Greece's ability to repay its debt.
At German insistence, private bondholders seem likely to be arm-twisted into "voluntarily" extending their exposure to Greek government debt for up to seven years. Two-thirds of that money is likely to come from Greek banks, which are totally dependent on European official support and have no real choice.
By Paul Taylor
Reuters
