The doctors are strangely confident, that after a long illness, the euro may be finally recovering. Last week’s all night surgery by finance ministers to erase a festering lump of Greek debt went better than expected. Ironically, it is the optimism of despair; the patient has not died so the general consensus is it must be improving. Many are skeptical though. But consider the evidence. Greece may now stabilize. It must meet conditions to get its money and will endure pain for years. But the risk of a chaotic default and exit from the euro has receded. Elsewhere, the signs are good. Italy is reforming, as is Spain. Most EU countries have agreed to a new fiscal compact that will strengthen budget discipline. The ECB has averted a credit crunch by injecting liquidity into banks. On March 1^st EU leaders will debate calls to enlarge their rescue fund by half. This could prompt others to pay more into the IMF, which would also help.

So is the crisis over? Not so fast, say critics.

Start again, with Greece. Far from curing the patient, the medicine is coming close to killing it. Its slump i.e. a cumulative contraction of 16% of GDP and shrinking may enter the record books. Any number of problems-deeper recessions, slower privatization, and few structural reforms-could bust the forecast that Greek debt should drop to 120% of GDP by 2020. This threshold was chosen for political reasons: it is roughly Italy’s debt ratio. Yet Italy is hardly healthy; it too struggles to convince investors that its debt is sustainable.

An end to fake remedies is welcome, though it may have come too late for Greece. Had today’s policies been adopted from the outset, the Greek crisis might have been controlled sooner rather than later. That said, mistakes were to be expected, given the euro zone was both badly designed and ill-prepared for a crisis. The fear of catastrophe had forced EU leaders to think more clearly. Debtors know they must reform and creditors know they must help.

A hopeful prognosis makes sense only if the leaders use a moment of relief to push through structural reforms, remove barriers to the single market, enhance the firewall and move towards greater fiscal union. One lesson of this week is that, faced with market meltdown, politicians from both debtors and creditors will compromise. But another is that the euro crisis is still far from being resolved. Hopefully, time will heal everything.

Have a great weekend everyone!