First, European leaders appear to have reached agreement on a three-phase initiative that will 1) reduce the debt burden on Greece by about half, reducing its debt-to-GDP level to a potentially affordable level of 120%; 2) push European banks to increase their capital by about $150 billion so they can better withstand writedowns on their portfolio of Greek, Portuguese, Irish, and potentially other government debt; and 3) increase the funding for the European Financial Stability Facility to about €1 trillion (US$1.4 trillion) in order to extend credit if needed to Italy and Spain in addition to Greece, Italy, and Portugal. Taken together, these initiatives if followed through will go a long way to defusing the debt problem that has hung over European economies. It is premature to say the European debt crisis is over -- European leaders have consistently been several months late and several hundred million euros short of the aggressive rescue efforts that the US took to deal with the Lehman Brothers financial crisis. Still, this is the first time that European leaders have come up with a plan that matches the scope of the problem they face. While weak economic growth and continued downturns in most heavily indebted European countries will still persist, we think the risk of a serious recession in Europe may have been averted.