The European Central Bank met this week. You probably didn't notice.

It was a fairly boring meeting. Policy rate remains unchanged. Forward guidance remains for low rates for a long time. Boring is exactly what ECB President Mario Draghi wants.

The summer of 2013 was characterized partly by the absence of what had been a staple of every summer for the last three years – a crisis in the European financial system, and the threat that it would take down the nascent global recovery with it. The truth is that Europe has been quietly putting up relatively good numbers after many analysts had virtually written off the continent to languish in recession all year.

All summer long, much of the data out of Europe has been positive, but what made the world sit up and take notice were the GDP reports that came out in mid-August. The Euro zone region posted growth of 0.3% for Q2 from the previous year, ending an 18-month decline, and led by German growth of 0.7% and French expansion of 0.5%. Those two countries account for nearly 50% of Euro zone GDP. The peripheral countries are mostly still in recession, but not as deep as many had anticipated. The numbers do carry some caveats, with some of the growth coming from public spending (of all things) and inventory buildup, but the result was still impressive to the markets.

Much of the credit goes to ECB President Draghi, whose promises to support the Euro zone and keep interest rates low, has given the currency union time to heal.

My View: I am very pleased to see growth in the Euro zone, but I still have a long-term concern. The Euro zone as constructed – i.e., a currency union but without fiscal coordination among countries – will inevitably fall into crisis again someday. I wish I could assure you that all is well and there will be no sovereign debt or solvency bombs going off, but I have no doubts that we have not seen the last of European problems. When we experienced those dramatic financial episodes, at least there was discussion of long-term structural fixes. Hopefully, with better times at hand, wisdom and courage to make the necessary changes will prevail.

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