The threat of contagion in Europe has subsided. More important in securing this relief than the recent Greek rescue deal is the change in European Central Bank (ECB) policy.

The bank's decision to take a more accommodating monetary posture has at last given Eurozone markets and financial institutions the liquidity they previously lacked and desperately need to stop default, or even the fear of default, from spreading. But if the ECB has bought a measure relief, the continued narrow focus of the Eurozone's governments leaves little hope that they will use the breathing space to deal with the array of fundamental problems confronting the union. On the contrary, these underlying problems seem set to linger for years to come.

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