AEI's John Makin examines the consequences of German deflationary policies and Greece's probable exit from the eurozone in the latest Economic Outlook.

Economist John Makin explores, in his latest Economic Outlook, why the Eurozone crisis has worsened so quickly in recent weeks and what options this leaves for Europe.

The world saw such extraordinary uncertainty in 2011 that a simple failure to repeat that debilitating climate of uncertainty in 2012 may engender a moderate recovery, especially in the US economy.

Europe is now battling an acute systemic debt crisis that threatens the global financial system and the global economy. This worsening crisis constitutes the largest single threat to the US economy and its financial system

As fears of another recession have mounted, so too have criticisms of the US Federal Reserve, including some irresponsible assertions that could endanger world markets if followed.

As we enter the fall of 2011, three years after the Lehman Brothers crisis, Europe and the United States are teetering on the brink of another, potentially more serious, systemic crisis.

We need good economics over politics, now more than ever. That means sensible tax reform, a Fed focus on maintaining liquidity, and rationalization of the European monetary system.

Two rounds of fiscal stimulus have produced neither a sustained rise in growth nor a sustained drop in the unemployment rate. Another round would merely increase deficits and debt levels.