Others may rush headlong into their financial crises, but on the Continent they like to give them time to mature. There are those who've been betting on a eurozone chapter to this financial crisis ever since Lehmans. Others started betting on a euro showdown the day the single currency began.

Now the nay-sayers think they've hit the jackpot. Read the headlines, and you'd think that the problems of Greece were about to bring the eurozone to its knees. But it doesn't have to be that way.

To crack this, European officials and governments just need to do something they find very difficult. They need to get ahead of the curve.

More specifically: they need to show they have a solution not only to the short-term problem of Greece but also to the long-term structural problem for the eurozone that the PIIGS have come to represent.

We should remember one thing: Greece is a special case. The chart below (from Goldman Sachs) tells the story. Other countries have a double-digit public deficit as a share of GDP, or a stock of public debt over 100% of GDP, or debt-financing costs that are also over 10% of GDP. But Greece is the only one to have all three red marks.

Greece is also the only country that's been forced to admit that its tax revenue and spending figures in recent years had been more or less fictional. And its public servants seem uniquely adept at the politics of denial. According to the New York Times, the Greek parliament more than doubled its administrative staff last year, from 700 to 1,500. And the finance ministry says that in 2009 alone, 29,000 public-sector workers were hired to replace 14,000 who retired. This, even as the country was slipping deeper and deeper into the red.

So, it's a special case. And it's small - responsible for perhaps 3% of eurozone GDP. That's why many have said Greece was a good first test case for the eurozone. The stakes seem smaller; the amounts more manageable. But that's only true if ministers and officials get it right. If they get it wrong - a crisis that did involve 3% of the eurozone suddenly involves more than 30%.

The challenge is to fix it - and contain it. But how?

I'm not in the business of prescribing solutions. But I would say that any solution to the Greece problem has to send two powerful messages to the financial markets.

The first is that - all appearances to the contrary - Europe can do crisis management.

The second message is that they "get" the broader structural problem afflicting the euro area and they're committed to fixing it.

This last challenge merits a post in its own right. I'll say more about it later in the week.

But here's what I would say about message number one.

One reason why so many predicted a European "round" of the financial crisis a year ago was that people looked at the mish-mash of European institutions - the ECB, the commission, the council of ministers, all the national financial regulators (not to mention the web of treaty clauses that did or did not bind them together) and wondered: "how is this lot going to respond if a Lehmans explodes on their patch?"

Henry Kissinger famously asked: "when I want to call Europe, who do I call?" Investors' version of this question is: "who's going to pay?"

And when it comes to Greece, the answer has been far from clear.

Every time the markets think they have an idea how Greece could be bailed out - for example, through a loan from the European Investment Bank - the institution in question releases a statement ruling it out. This morning the EIB said it could "only finance economically viable projects" and that its rules would not allow it help an EU nation cover a budget deficit.

A similar thing happened two weeks ago, when President Barroso appeared to tell journalists that EU support could be there for Greece. Hours later the UK Chancellor, Alistair Darling, made clear that he and other non-euro members of the EU would expect the eurozone to solve its problems first.

As it happens, I don't think EIB involvement is ruled out. The EIB did participate in a broader IMF loan package for Latvia last year (though, crucially, Latvia is not in the euro). What the EIB doesn't want to do is take the lead.

The problem is that nobody does. It's that lack of clarity - more than their details of their particular financial situations - which is driving investors to punish other PIIGS as well as Greece.

It doesn't help that personal rivalries - and institutional pride - seem to be getting in the way of a deal.

Almost everyone - including, I'm told, the Greek government - thinks an IMF programme would provide the cleanest, most credible, solution. That could be the IMF acting alone, or alongside the EU. However, key European officials are dead against the idea. This is mainly because they can't bear the symbolism of the IMF coming in to bail out the euro. But there are also suggestions that President Sarkozy is fighting an IMF deal for domestic political reasons.

If it were held today, French polls suggest that the IMF Managing Director, Dominique Strauss-Kahn would handsomely beat Sarkozy in a presidential election. Strauss-Kahn has made no secret of wanting to come back to French politics (he hinted as much in a radio interview earlier this week). The word is that Sarkozy can't bear the idea of his rival coming in on a white charger to save the euro.

This may or may not be a fair depiction of President Sarkozy's motivation. Only he can say authoritatively one way or another. But we do know that such speculation does no good for the euro, or for Greece.

At their summit on Thursday, investors - and the rest of the Pigs - need Europe's leaders to show they can rise above all this. And that they can indeed do 21st-Century financial crisis management after all.

Update 16:10: Dempster (Comment 5) takes exception to my use of the term Pigs - the rather unfriendly acronym for the eurozone's problematic periphery (Portugal, Italy, Ireland, Greece and Spain). True, it is disrespectful. But you have to let economists have some fun.

Maybe you would feel better if I told you the new term that some are using for the economies in trouble if Greece should fall is Stupid (that's Spain, Turkey, UK, Portugal Italy and Dubai). Then again, maybe not.

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It may not be the end of QE, but they have to hope it will be the beginning of the end. And they have to hope the Bank will will have more to show for its £200bn as the months go by.

Two observations about today's statement (see here), and a few broader implications of today's decision.

Observation One: At best, this is a very weak vote of confidence in the recovery. The paragraphs about the economy are dotted with words like "sluggish", "impaired" and "gradual". Our supply capacity is "probably impaired"; credit conditions "remain restrictive". The prospect is only for a "gradual recovery in the level of activity".

The best that the MPC can come up with on the subject of business investment is that the rate at which it is falling "appears to have eased". Likewise: "spending by households appears to have picked up a little, though that may partly reflect temporary factors".

Observation Two: They are, as expected, keeping the door open to further purchases. And the statement tries very hard to remind us that the MPC believes it is the stock of assets held by the bank that matters for monetary conditions, not the continued flow of purchases.

We'll have a good test of that this afternoon. The decision was widely expected. The stock of purchases - that is, the amount of gilts that the bank has taken out of the market - is unchanged.

That should mean that the bond market is unperturbed, and that the Debt Management Office will have no trouble shifting tens of billions of gilts over the next few months. I will be interested to see. But it would certainly be odd if the market took this as a shock.

What does this mean for the future?

One clear implication is that monetary policy has probably now been set for the duration of this Parliament. The MPC has made a habit of taking QE decisions every three months, so it can draw on the latest forecasts in the quarterly Inflation Report. If the general consensus about the timing of the election is correct, the next time the MPC thinks hard about changing monetary policy will be on polling day: 6 May.

The Bank will take issue with this assumption: in theory, monetary policy is reviewed every month. But with all the subdued language, there is surely little chance of the committee wishing to tighten policy in the next few months. And re-starting asset purchases, though perfectly possible, would be a consequential act - and send a pretty powerful signal about the state of the economy. It's hard to believe they would do that without a new set of forecasts.

Another observation would be that if this is the end of QE - and we do not know that it will be - but if it is the end, it's a pretty whimpering one. The Bank is not retiring, triumphant, from the field, the enemy slain, its job well and truly done.

The MPC is hoping the policy has worked. It sees some signs that it has. But - as the chart above shows - the conditions for lending in this country, especially to small and medium-sized businesses, are still much weaker than they would have wanted.

Quantitative easing may well have saved the economy from a credit-led depression. We will never know. It is interesting to note that monetary conditions in the Eurozone and the US are even worse than ours. That difference may be partly down to QE.

But - as the statement makes clear - the MPC needs to believe there is more to come. Its members must hope and trust that the £200bn of additional cash - roughly 14% of the economy - that they have pumped in is going to do more to help the economy over the next year.

That "long and variable" lag between action and result is one good reason to pause. Interest rate changes take a long time to show their true effects. If anything, the impact of QE could take even longer to show through. At least, that's what they tell us at the Bank.

But another reason to pause today is that, if £200bn hasn't worked, you have to wonder whether there's much point pumping in a lot more.

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The more closely you examine the gap between the Tories and Labour on the deficit, the smaller it seems to get. But the big message from today's Green Budget from the IFS is that the future performance of the economy is going to have a far greater impact on the public finances than the political affiliation of the party in power.

Consider the following key conclusions from the report: if the Treasury's forecasts for economic growth are right, then the IFS believes that borrowing will be slightly lower than forecast in the PBR over the next few years. But, say the IFS, the deficit would probably still remain too high, for too long, to command confidence in the financial markets.

That is why they recommend an additional £13bn in tax rises or spending cuts between 2011 and 2015 (they don't recommend any further tightening this year). That's on top of the £57bn already announced by the chancellor.

The Conservatives will be pleased to note that is very similar to the extra amount of tightening the IFS believes that a Tory government would need to implement over the period, to meet what the IFS deduces to be its target of eliminating the structural current deficit over the same period.

In other words, the IFS is saying that the Conservatives' plans, on the basis of current forecasts, would preserve market confidence in the UK.

However, the report notes that you can be a lot more gloomy about our economic future than the Treasury is. Specifically, the Barclays economists involved in the report think the permanent hit to GDP from the crisis is likely to be at least 7.5% of national income, not 5% as estimated by the Treasury. And they think our long-term potential growth rate after this will be 1.75% a year, not 2.75% as forecast in the PBR.

So much for the detail. What's the punchline?

The punchline is that, if the Barclays folk are right, the next government would need to find - not an extra £13bn, but an extra £66bn to fix the structural hole in the public accounts. The IFS doesn't think this would be feasible in one Parliament unless the markets had a gun to the chancellor's head so you would be talking more pain before and after 2015.

And remember, that's their "central" scenario. You don't even want to know about the pessimistic one.

More to say on this - but the IFS press conference is still going on and I don't want to miss any more gems.

I'm left with the following thought. Once you strip away the debate about timing and possible cuts in 2010-11 - which, as I have said many times, has always been about rhetoric more than a big difference of policy between the parties - once you strip away that debate, this election could end up being fought over a difference of around 1% of GDP in medium-term spending plans. That's more or less what the 2005 election was fought over as well.

As then, the winning party could find the economy has bigger things in store.

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