ECB bond plan won't fix Europe's economy

It's a start, but it's not a cure for Europe's deepening economic stagnation.

Borrowing from the playbook of their U.S. and Japanese counterparts, European central bankers Thursday embarked on a highly anticipated plan to buy hundreds of billions of dollars' worth of government bonds to try to revive growth by pumping cash into the financial system.

European Central Bank President Mario Draghi announced an open-ended pledge to buy 60 billion euros ($70 billion) worth of private and public bonds every month in a program that could amount to as much as a trillion euros.

The long-awaited—and, many say, long-overdue—program will start in March and last through September 2016, Draghi told reporters.

The hope is that the bond-buying spree—known as quantitative easing—will help reverse a worrisome drop in prices that has recently spread throughout the euro zone.

To begin with, Europe's bond-buying comes much too late to help blunt the financial damage inflicted by the credit crisis of 2008. While U.S. bankers moved aggressively—some critics say too aggressively—to seize foreclosed homes and write off bad mortgage debt, many Europeans bankers are still working to heal their balance sheets.

Despite widespread calls for a bond-buying plan since the 2008 credit crunch first hit, European central bankers faced a thicket of political backlash and bureaucratic squabbling that thwarted those proposals.

Now, with interest rates in Europe already near zero, the impact of further money easing will be muted. Lower rates in Europe will also likely be less effective than in the U.S. because of differences in the way companies access credit.

Even if the ECB plan eases the flow of money, looser credit won't address a wider range of reforms needed to get Europe's slowing economy growing again. It may even postpone progress on making those changes.

That warning came Monday from German Chancellor Angela Merkel, who cautioned that printing more money—a policy strongly opposed by most German voters—shouldn't been viewed as a quick fix.

Merkel, along with German bankers, businesses and many voters, fears that the ECB's move to ease credit will take some of the pressure off heavily indebted "peripheral" euro zone members struggling to meet tightfisted austerity programs imposed by the European Union.

Those government spending cuts have become even more painful as Europe's economy continues to weaken. In Greece and Spain, roughly half of all younger workers (aged 15 to 24) can't find a job. The economic pain has fueled a political backlash that is further complicating reforms needed to get Europe's economy moving again.

The ECB's new quantitative easing policy may give those struggling countries more breathing room. But, as Merkel has warned, that may only delay reforms needed to get Europe's economy back on track.