Everybody likes to pretend that the euro crisis is over.

There are the politicians who never want to hear the word "bailout" again. The central bankers who never want to hear the word "deflation" again. And the people who never want to hear the words "bond spreads" again. But this suspension of belief, of course, hasn't done anything to end Europe's depression. Unemployment is still over 25 percent in Greece and Spain, 15 percent in Portugal and 10 percent in Ireland.

So why hasn't Europe gotten a real — or any — recovery? Well, it's the debt, stupid.

Now, it hasn't been the same kind of debt. Greece, as Germany will sternly remind you, has gotten into trouble from too much government debt. So has Italy, though it's actually been pretty fiscally responsible -- hurt more by bad growth than bad budgeting. But every other country that's run into problems has done so because of too much private, not public, debt. You can see that in the chart below from Standard & Poor's, which shows total private liabilities — household and corporate — as a percentage of GDP.

There's a reason debt is a four-letter word. Every euro that the private sector spends on paying back what it owes is a euro that gets sucked out of the economy. That's because overindebted households and companies don't want to take on much more debt, and banks don't want to make as many loans now that they have to comply with tougher capital requirements.

In other words, deleveraging is creating economic headwinds that Europe hasn't been able to overcome. Actually, it hasn't even really tried.

Now, there are two ways it could make up for a private sector that's more focused on cutting debts than on expanding: Governments could spend more, or countries could sell more overseas. But Europe's austerity rules make the first impossible, and the European Central Bank's tight money make the second all but pointless. See, without a cheaper currency, the surest way to boost exports is cheaper labor costs — that is, pay cuts. But, as even economists can tell you, people don't like taking pay cuts, so unemployment goes up instead.

And that's why Europe's strategy has been so self-defeating. It's made countries try to cut their public debt and private debt and wages all at the same time. That's impossible. Just look at the chart again. Private-debt ratios have barely fallen despite households and corporations trying to pay back what they owe, because GDP has fallen as much as outstanding liabilities. In other words, lower growth has canceled out any savings.

Europe has turned its difficult, but doable, deleveraging task into a Sisyphean one. And it's going to be awhile before Ireland, Portugal and Spain finish it — if they even do before the next recession (or is it the same one?) pushes them back down the mountain.