Including the debt valuation adjustment, earnings were 25 cents per share, still up from a year ago.

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And it is why no policy adjustment, short of debt cancellation or hyperinflation, will make any damned difference.

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In Britain, given the size of its finance industry, housing boom and consumer debt, the balance-sheet adjustment will, if anything, be greater.

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However, German Finance Minister Wolfgang Schaeuble accepted that, later down the road, there could be debt relief if Greece completed its adjustment programme and no longer needed new loans.

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Holger Schmieding, chief economist of Berenberg Bank, thinks governments should guarantee the debt of any country that submits to an adjustment programme approved by the EU and IMF.

ECONOMIST: Germany and the euro

On this plan, the EFSF could then be a proper European Monetary Fund, with one side managing adjustment programmes and (where necessary) orderly debt restructuring, and the other side using ECB liquidity to support confidence in solvent but troubled governments, by buying their bonds on the secondary market.

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U.S. national debt, they leave in place an American liability that prevents trade adjustment.

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Despite the toughest fiscal adjustment by any rich country since 1945, Greece's debt burden will, on plausible assumptions, peak at 165% of GDP by 2014.

ECONOMIST: The euro area

But because consumer debt and the current-account deficit have swelled further, it means that the eventual adjustment, when it comes, will be more painful.

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In truth, the Italian experience is consistent with the findings of a growing body of academic literature on the issue: fiscal adjustment dominated by tax increases typically is a recipe for failure: It fails to stabilize the debt and it is more likely to cause economic contractions.

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The Goldilocks policy, as the IMF calls it, urges countries to embark on a gradual fiscal adjustment in the short term, if the markets allow it, coupled with a credible medium-term debt-reduction plan.

ECONOMIST: Charlemagne