Depending on how the beginning of the European debt crisis is dated (2010? 2008? 1999?), it has been several years since the governments of several nations have sought to relieve investors’ fears regarding their debt. The governments of four countries (Cyprus, Greece, Ireland, Portugal) turned to the IMF and other Eurozone nations for assistance, while Italy and Spain have undertaken policies designed to avoid the need for external assistance. To paraphrase a former mayor of New York, how are those governments doing?

To answer that question, we can draw upon Jay Shambaugh’s insight that there are actually three interlocking crises: a macroeconomic crisis, a debt crisis and a banking crisis.

First, we examine current data for the prevailing (2013) macro conditions in the (in)famous PIIGS, as well as the entire Euro area and, for the sake of comparison, the U.S. and Japan. We exclude Cyprus as its crisis occurred more recently:

In the Eurozone countries, only Ireland (barely) has avoided a negative growth rate, while both the U.S. and Japan are doing better. The unemployment rates reflect the depths of the continuing downturns. The budget balances continue to record deficits that largely reflect cyclical conditions; Greece and Italy have primary budget surpluses. The current accounts all register surpluses, unlike the U.S. Nikolas Schöll at Bruegel examined the data to uncover the sources of the reversals of the trade deficits, and pointed out that Ireland, Portugal and Spain recorded large increases in exports, while Greece had a dramatic drop in imports.

Will 2014 be any better? The IMF’s October 2013 World Economic Outlook forecasts a swing to positive growth rates in all of Europe except Slovenia. But, it warned, “Additional near-term support will be needed to reverse weak growth…” and called for further monetary easing. The ECB has obliged by lowering its refinancing rate to 0.25% in response to falling inflation, not a hopeful sign of recovery.

How do these countries do on their sovereign debt? We can compare the debt/GDP data for 2010 with this year’s and next year’s expected levels:

Several years of recession have pushed the ratios up despite fiscal constraint, and the IMF’s October 2013 Fiscal Monitor does not see any short-term improvement outside of Ireland. The increase in the U.S. ratio is not quite as large thanks to its economic recovery, while Japan continues to serve as an outlier. Charles Wyplosz thinks that Greece will require another debt rescheduling, and there are concerns regarding the need for another bailout in Portugal. Falling real estate prices in Spain continue to threaten its banks, while Italy’s largest burden is its politics. Ireland no longer needs external assistance, but it will take years to pay back the loans it received from the IMF and other European governments.

And interest rates? With the 10-year rate on German government bonds at 1.72%, the spreads for the other European countries last week were (in ascending order): Ireland 1.81%; Spain, 2.36%; Italy, 2.38%; Portugal, 4.29%; and Greece, 7.09%. The rates are not onerous despite mediocre economic conditions and steady debt burdens, and have fallen over the last year. What accounts for this remarkable sangfroid by investors?

The answer may be the status of the third crisis: banking. Last year the European Central Bank (ECB) under Mario Draghi instituted a new three-year Long-term Refinancing Operation (LTRO). Banks in southern Europe took the relatively cheap funds and bought the bonds of their own governments, which still carry zero-risk weights in the Basel capital regulations. As a result, according to Silvia Merler (also at Bruegel), banks in those European countries have “renationalized,” with domestic debt accounting for large proportions of their portfolios, and much of this debt consisting of government debt. Moreover, the ECB also announced that it would purchase a government’s sovereign bonds under its Outright Monetary Transactions program if necessary to maintain its target interest rate. Combine bank purchases of government debt with a guarantee of central bank intervention if markets deteriorate and the fall in yields is the obvious result.

All this has the appearance of a Rube Goldberg machine, with a feedback loop uniting the ECB, European banks and sovereign debtors. But is it sustainable? Must the ECB continue renewing the LTRO to keep the banks solvent? Will the European Banking Authority, currently undertaking stress tests of the banks, accept the arrangement? What if the fragile recovery turns out to be really fragile? And what will happen if/when the Federal Reserve does taper off its asset purchases? However many years this crisis has been going on, the exit is not visible yet.