Europe Nears Accord on Bailout That May Be Inadequate

Source: The New York Times

PARIS — Angela Merkel, Germany’s chancellor, finds herself once again in the politically perilous position of balancing the future of Europe and the common currency against a German public that is unhappy at the price their country will have to pay. And as before, as the euro crisis has unfolded, she finds herself fighting for measures that most experts have already dismissed as inadequate.

She needs parliamentary support to implement decisions made more than two months ago in Brussels, and to bolster her case she met Tuesday evening with the Greek prime minister, George A. Papandreou. It was a kind of morality play, designed to show to skeptical German voters how his government intends to keep to its promises to continue chopping away at public spending and services to meet stiff deficit requirements, despite increasing political opposition.

Mr. Papandreou spoke again of the “great will for change” in Greece, while Mrs. Merkel talked once more of her “confidence” that her wavering parliamentary coalition would vote on Thursday for an expansion of the European bailout fund, which was agreed to more than two months ago in Brussels.

By the time the entire process is finished, about mid-October, if all goes well, Europe’s leaders will have a newly expanded European Financial Stability Facility that most analysts say will be, at $600 billion, grossly inadequate to extinguish the crisis, since it lacks the muscle to cope with the larger economies of Italy and Spain.

Read more: http://www.nytimes.com/2011/09/28/world/europe/europe-nears-agreement-on-bailout-fund-that-may-be-inadequate.html?pagewanted=all