European Union Unveils Debt Crisis Plan

Early this morning, European Union leaders announced a new economic plan to help reduce the debt crisis that they are facing, reported The New York Times. The announcement came from a conference in Brussels after EU leaders won an agreement with banks to take a fifty percent loss on the value their Greek debt.

The plan aims to deal with three main problems facing Europe: Greece's debt crisis, instability in the European banking sector, and an insufficient bailout fund, according to CNN.

The plan comes as a relief to Europeans as the value of the euro has shot up eight cents already. Just a few weeks ago, the euro was worth $1.32, and now it is up to $1.40.

According to Al-Jazeera, stocks have surged as the new debt plan gives investors hope that the euro will regain its full strength in the near future. Luckily, this new plan is not only creating a jump in European stocks: Wall Street has felt a positive response as well. The Dow Jones is up 2.5 percent and the Nasdaq is up 2.7 percent.

While many Europeans are basking in the afterglow of the new plan, many say this plan won't solve all problems.

"It would be clearly premature to declare the euro crisis as fully resolved. Much more needs to be done, especially regarding fiscal consolidation," Credit Suisse Private Banking told Al-Jazeera.

Reuters released an analysis report early this morning stating that the new plan won't get to the root of the problem, but just fix some of the surface issues in the European economy. Reuters points out that even with the fifty percent loss that banks take on their Greek debt, the overall debt will still be 120 percent of gross domestic production--the same percentage that the debt was at in 2009.

"This is another step in the right direction, but it is not enough to get us to the end game," said Stephane Deo, chief European economist at UBS, told Reuters. "It buys time but it does not address the fundamental problem of the sovereign debt crisis."

Despite criticisms, the leaders of Europe are still optimistic that their plan will solve the crisis.

“I believe we were able to live up to expectations, that we did the right thing for the euro zone,” Chancellor Angela Merkel of Germany told the New York Times. “This brings us one step farther along the road to a good and sensible solution.”