But it was unclear Monday whether anything would be enough to stave off a broader crisis. Among investors, a bitter truth appeared to be sinking in: The problems in Europe are so widespread and so deep that a real solution is sure to be complex, hard-fought and anything but quick.
With the region’s 21
2-year-old debt crisis in danger of upending the global economic recovery, President Obama on Monday held talks with German Chancellor Angela Merkel, the euro zone’s most influential leader and toughest fiscal disciplinarian.
In comments that seemed to suggest Merkel should agree to an easing of the tough conditions attached to Greece’s bailout, Obama said that he hoped Athens and its “international partners” could reform Greece “in a way that also offers the prospects for the Greek people to succeed and prosper.”
Merkel is facing heightened calls from her peers in Europe and in other G-20 nations to do more to aid her country’s ailing neighbors. European officials want the might of German wallets to stand behind a range of financial activity, from bank deposits to collective debt, across the 17-nation euro zone in a bid to shore up the currency’s foundations, with leaders racing to reach a compromise ahead of a pivotal European Union summit in Brussels next week.
French President Francois Hollande in particular is pressing for measured injections of fiscal stimulus, an effort largely aimed at economies, such as those of Greece and Spain, that are buckling under the deep austerity measures and budget cuts that Germany sees as the only cure for the region’s debt crisis.
Markets initially rallied Monday after Sunday’s elections in Greece, in which New Democracy, a mainstream party, beat a radical left-wing movement that wanted to throw out the nation’s bailout deal with the European Union and the International Monetary Fund. Such a move would be widely seen as a step toward a messy exit from the euro for Greece.
But even a best-case scenario in the elections involved complications, and the positive market sentiment quickly fizzled. Investors began to realize that New Democracy would, at best, probably head a weak coalition government that would seek to renegotiate at least some of the tough conditions of Greece’s financial rescue. On Monday, party chief Antonis Samaras was struggling to woo longtime political foes into a new government “of national salvation.”
Even assuming that one is formed Tuesday, as many expect, Greece appeared set for at least several more weeks of uncertainty as politicians in Athens attempt to hash out a new deal with creditors — led by Germany — that appear willing to make only minor concessions.