Trying to save Europe “step by step”

The prevailing sentiment in Europe also leans toward Sisyphus, but in a more obvious interpretation: futility and frustration. Yet the German political class feels as guardedly un-pessimistic as at any time since Greece’s finances blew up. A few months ago, the nightmare scenarios of a hot European autumn ranged from a Greek, and possibly Spanish, default to the death of the single currency.

In the anticlimax, the latest Greek rescue last week sailed through the Bundestag, and that seemed to satisfy markets. Athens almost certainly won’t go bust this or next year—in other words, not before Germans pass judgment on Chancellor Angela Merkel’s government in elections due by next fall.

The terms of the Greek compromise might haunt Europe later, however. Greece’s creditors agreed to relieve debt and release a long-delayed €44 billion aid payment. Berlin blocked an effort to have governments write off some of their Greek debt, knowing the German public wouldn’t stand for it. So Greece still has a debt load that the International Monetary Fund calls “unsustainable.” Greece will probably need another rescue. Spain last week won the EU’s approval for a massive bank bailout. The Mediterranean countries haven’t even begun serious steps to get their economies out of debt.