What's needed is the strong arm of the European Central Bank to remove catastrophic risk from the marketplace without risking the bank's core mission of fighting inflation.

The European Union's Brussels summit on December 8-9 is its latest, most urgent attempt to calm the bond markets, save the euro, and create firmer mechanisms that promise to ensure long-term fiscal discipline among eurozone nations.

The Euro-Union's scramble to contain a self-inflicted debt crisis provides a cautionary tale of what happens to monetary union when promises are broken, markets are misled, and geopolitical dreams override economic good sense.

Many US municipalities and states are currently facing severe financial pressure. They have huge unfunded pension commitments, and recent forecasts of widespread defaults have resulted in a large sell-off of their bonds. This is not new. Financial history is full of instructive defaults by governments on their debt. Can these past crises teach us about what to do now?

The Transatlantic Law Forum, a joint initiative of the American Enterprise Institute and the Council on Public Policy, will explore the institutional and legal dimensions of the financial crisis at its 2010 annual conference.