Kicking the euro down the road …

Markets are up today on the news of yet another partial agreement on rescuing the euro, but I’m far from convinced that this latest deal will do the trick. Neither is Paul Krugman. But here’s a passage from a CNBC story that pretty nicely sums up my view (emphasis added):

There are also several fundamental problems in the euro zone that are not directly addressed by the most recent agreement.

Slowing growth rates and problems in heavily indebted peripheral economies such as Greece and Portugal are still causing concerns.

"What we have got is a continuation of kicking the can down the road for another few months," Bill Blain, Senior Director, Special Situations Group, Newedge, told CNBC.

"We have got all the ingredients in place to keep us wondering: ‘What happens next?’ The real issue is growth and this agreement does nothing to address the problem of growth in the euro zone," Blain pointed out.

Simple story: if Europe’s troubled economies (Greece, Italy, Portugal, etc.) don’t start growing, then the governments and other institutions who owe creditors lots and lots of money won’t be able to pay their debts, and eventually the markets will recognize this and start raising interest rates on new loans, thereby triggering another crisis.  In other words, this one ain’t over by a long shot.