The revolution in Libya and other events have focused attention away from the sovereign debt situation in Europe, but it's still dire.
Gillian Tett, managing editor of the Financial Times, confirms that European politicians don't have the guts to make the tough choices necessary to resolve the problems and are instead just kicking the can down the road.
There are only two ways the situation can be permanently fixed, Tett says:
Either European countries come even closer together and operate as a fiscal unit in which rich countries like Germany pay the bills of poorer countries like Greece, or the Euro-zone just splits apart.
The former solution--fiscal unity--is preferable, Tett says, but it's also politically challenging. German citizens are understandably outraged at the idea that their taxes would have to pay for other country's spending, and Germany's borrowing costs would almost certainly rise.
The latter solution--a break-up of the Euro-zone--might not be as devastating as some observers suggest, but it would also be difficult. The countries' banking and payment systems are deeply intertwined at this point.
Regardless of how the solution eventually gets resolved, Tett concludes, the "kick-the-can" strategy will only work for so long. At some point, there will be a crisis, and Europe's leaders will be forced to act.
- Gillian Tett