The roller coaster that is Europe'sfinancial crisis obscures much of interest and importance. Buried behind the headline-grabbing urgency of the summits, rescues, and sometimes violent street protests are welcome, pro-growth structural reforms. Much remains tentative, of course. Nor should efforts at labor- and product- market reform, as well as regulatory relief, supersede questions of fiscal discipline and needed emergency infusions of financial capital. But the fundamental reform efforts in Europe's periphery nonetheless deserve investor attention, especially because they are less widely reported.

Much of the high-level debate surrounding Europe's financial crisis concerns fiscal austerity, how much to impose and whether the periphery should adopt it. German Chancellor Angela Merkel stands as the major proponent and seems at times to promote a single-minded focus on budget restraint and deficit reduction. The German position is clear. Without austerity, rescue monies are a waste and will only facilitate a return to the fiscal profligacy that brought Europe to its current crisis.

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