The European currency euro logo stands in front of the European Central Bank in Frankfurt, Germany.
The European currency euro logo stands in front of the European Central Bank in Frankfurt, Germany. - 
Listen To The Story

Hopes that maybe, just maybe, Europe could rally and take action to solve its sovereign debt crisis helped the markets up a bit today. But hope for Europe lives on a very slim thread. The political complications that have prevented concerted action still exist -- for instance over the weekend, there reportedly was an agreement among EU nations to increase the size of the fund to rescue Greece and other countries with debt issues. But then the German finance minister seemed to scotch the idea. It seems there's no single voice when it comes to Europe.

Today we spoke with University of Chicago Professor, and former Obama administration chief economist, Austan Goolsbee. He says there are ways for Europe to solve its debt crisis with limited collateral damage to the global economy. But he also sees ways the crisis could cause serious damage, too.

Listen to the full interview with Austan Goolsbee

Goolsbee compares the situation among EU nations to a Monty Python skit in which one character shouts, "We've got to start acting and stop talking!" A second character agrees, shouting, "Let's draft a new resolution that we will stop just drafting resolutions!" Goolsbee says in Europe, so far, it's been all talk, and little action. And that gets back to the political problems caused by a monetary union (the eurozone) in which every member gets to determine its own fiscal policy. Without that incentive to work together, Goolsbee says, political will disappears.

Goolsbee says one big problem is that Europe's banks are in bigger financial trouble than U.S. banks at the height of the financial crisis. He says that the only real solution is for Europe's banks to undertake real stress tests, own up to the amount of sovereign debt they're holding on their books and then make plans for recapitalization. Goolsbee also suggested a European version of TARP; the bank bailout program that helped U.S. banks get out of trouble during the financial crisis. Those steps, he says, will stop the fear of bank runs in the short term.

But Goolsbee points out that the bigger -- and more intractable -- issue, is how to get Greece, Ireland, Portugal, et al., back into fiscal shape. He says so far there is no plan to give Greece and other debt-ridden countries the ability to export and grow.

Finally, Goolsbee says he agrees with Treasury Secretary Tim Geithner, who's spent the better part of the last several months publicly urging Europe to take bold action. But he also says that there's little the U.S. can actually do to help Europe through this crisis. Imagine the political outcry if the U.S. government stepped in and started buying Greek debt, he says. No, the U.S. can only fiddle while Rome, Athens, Lisbon, Paris and Frankfurt all threaten to burn.

Also on the show, commodities priced jumped today, after prices fell to a 10-month low last week. Sugar spun up to its highest price in more than a month. Aluminum rose, and coffee perked up, too. That news is making our hearts race a little -- you could call it a sugar high. For more, check out the Marketplace Pulse.

Follow David Brancaccio at @DavidBrancaccio