Krugman Not Optimistic About Europe

Markets have been relatively hopeful this week, basically because they now believe that the ECB will step in with massive bond purchases...

But as Martin [Wolf] says...

The German faith is that fiscal malfeasance is the origin of the crisis. It has good reason to believe this. If it accepted the truth, it would have to admit that it played a large part in the unhappy outcome.

The result of this fiscal fixation is that the macro policies now on tap consist of even harsher fiscal austerity in southern Europe..

And expected inflation for the eurozone is still far too low, indicating an impossible adjustment process for overvalued nations.

This is not over.