Tyler Cowen contributed this excerpt to The New York Times' Economic View column on the economic challenges ahead we will face in 2012.

The short answer is this: not anytime soon, and not without more pain. The longer that Europe’s troubles last, the worse and more insidious they become. Insolvent governments, troubled banks, divisive politics, painful austerity — the list of problems is formidable already.

The best-case outlook is that the euro zone will, in effect, grow its way out of this crisis. The European Central Bank is now extending unlimited loans to banks in the 17 nations of the European Union that use the euro, provided that those banks put up collateral. The loans don’t have to be paid back for three years, by which time it is hoped that steady growth will have returned.