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Reuters/Yves Herman
Play nice.
REBOUND AFOOT

Dear Europe, don’t screw this up

By Matt Phillips

The Europeans are getting close to a deal, after Greek officials seem to have softened their position by proposing a series of reforms—including raising taxes on consumers and corporations—to their European creditors.

This is good news, and the markets are taking it that way, with European stock and bond markets rallying. Investors are relieved that political wrangling over a small European economy like Greece won’t threaten to derail a recovery that is nascent, but real.

Seriously. Signs of rebound abound.

Italian industrial orders surged 5.4% in April, the best month-on-month rise since December 2010.

In Spain, they’re making babies again.

The euro zone unemployment rate, while still high, is trending lower.

And the European Central Bank is helping to enable it all, by boosting its money printing operations and aggressively expanding its balance sheet. It rose to €2.45 trillion during the week of June 19, as the central bank’s bond buying program gathers force.

In Germany, where complaints about—and costs of—the ongoing support for Greece are significant, the economy is looking especially good, thanks in part to a weak euro that’s supercharging exports as unemployment holds at historically low levels.

Of course there are problems. Greece is an ongoing one. But the potential costs of derailing Europe’s long-sought economic recovery are too great to gamble with. It seems that policy makers have discovered that, which is a relief.