The Euromess is back! But it never really went away in the first place.

Some seemed genuinely shocked about the resurgence of Europe’s debt problems. “Wasn’t Europe Fixed?” asked CNBC. But experts say there’s nothing surprising about the recent turn of events, which has soured bond markets in Spain and Italy and set investors on edge, yet again, about the continent’s future.
European Central Bank chief Mario Draghi (EMILY WABITSCH - AFP/GETTY IMAGES)

“This was almost certainly inevitable,” says Henry Farrell, a political science professor at George Washington University. In December and again in February, the European Central Bank had propped up the euro by lending money to banks at significantly discounted rates. The banks in turn bought high-yield bonds in Spain and Italy, which prevented two of Europe’s distressed countries from going off a cliff. But that operation ended in February, as the Economist explains. And the underlying problems remain — and, in some cases, are getting worse.

Spain, for instance, recently revealed that it’s facing a bigger debt crisis than it had initially let on, and the solution that northern countries are likely to demand--more austerity--could slow down the continent’s recovery even further, as my colleague Brad explains.

Ultimately, the ECB’s previous fix was only temporary. But that was always the case: the bottom line is that now, as then, that “we don’t have any very obvious solution,” says Farrell. He expects that the ECB will try once more to calm nervous investors simply by “suggesting that it’s willing to take further action.”

But the problem is that the ECB might have trouble staging another intervention, even a temporary one. Germany has agreed to a larger bailout fund, but it recently voiced concerns that ECB’s massive lending to the euro zone’s troubled banks could have adverse consequences for Germany’s own financial system, suggesting that Germany’s patience is wearing thin. “The Germans swallowed a lot when it created the ECB, and if Germans signal profound unhappiness with the ECB could fundamentally break the political bargain that holds the ECB together,” Farrell says.

Such a breakdown isn’t likely to happen any time soon, but that tension could make it far more difficult for the ECB to act as the euro zone’s savior a third time around. Ultimately, Europe has only succeeded in buying itself some more time. “The European states trying to kick can down road again and again, and each time they’ve done so at a greater cost,” Farrell concludes.