Europeans must address the banking problem forthrightly, and simultaneously with the euro, sovereign-debt, and fiscal-adjustment issues. Pretending that banks that passed modest stress tests can be kept open indefinitely with little collateral damage is wishful – and dangerous – thinking.
The debt dilemmas in Europe and the US prove yet again that elected officials will ignore long-run costs to achieve short-run benefits, and will act only when forced, in a doomed effort to circumvent the laws of economics and revoke the laws of arithmetic.
Only time will tell if the recent elections in the UK, the US, and Canada signal a retreat from the growth of the welfare state or just a temporary respite. But comparing the US, Canada, the UK, and France reveals that the stakes are immense.
California has long been a harbinger of national and global trends (both wonderful and overindulgent), a birthplace of innovation in everything from technology and entertainment to lifestyles.
Only Europe's currency union faces uncertainty about its future; America faces no existential crisis for its currency.
November's mid-term elections were a sharp rebuke to the vast expansion of government spending, deficits, and debt in the United States.
Barack Obama's administration suffered a string of fiscal setbacks this summer. But has it learned anything in recent months?
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