For the past year, the Europeans have been busy in an act that would be comic if it were not so genuinely tragic. They have spent a lot of time stamping out one fire only to see another one flare up behind their backs.
Italy is the latest to be singed, even as Greece and the others continue to be in trouble. Italian credit default swap rates have soared of late and government borrowing costs have climbed. The euro area is once again tottering into a crisis.
Financial markets have already seen selling of risk assets while gold has moved to record levels. Yet another bailout by the Germans and the French seems to be on the cards.
But a bailout will only buy time. The noxious combination of very low growth and rising interest rates suggests that current debt levels are not sustainable. Turning around these economies will require hard decisions. It’s going to be a long battle.