Europe the Morning After Election

For much of the past year, ever-optimistic European policymakers entertained the hope that there would be a radical easing in German policy towards the European sovereign debt crisis following that country’s federal elections. Now that those elections have come and gone, a rude reality is about to dawn on them. The election results indicate that little will change in Germany’s European policy. As a result, European policymakers should brace themselves for the same pattern that we have experienced over the past three years, with the European economy lurching from one crisis to the next without any permanent strategy to resolve Europe’s long-lingering sovereign debt crisis.