Attempts at austerity and deleveraging in Europe have converted an economic problem into a political dilemma, with leftist governments rising against Germany's austerity-laced rescue packages. Germany now faces a tough economic decision that will involve choosing between a breakup of the current euro system and a movement toward a common fiscal policy in Europe.

These days, billions of dollars is spoken of as pocket change. A by-product of massive government debt burdens and decades of cheap cash from central banks is the notion that, while solvency might be important, liquidity should be easy to find. Particularly for financial institutions, the official state position appears...

Bargain hunting is the only thing that can save us.

Enormous losses could have been avoidedif the SEC and the FASB had recognized that mark-to-market accounting should not be used when there is no active market.

How can positions be marked to market when there is no active market?

There currentcredit crisis is growing, but it is possible that buying bonds may ease the situation.

When foreign policy cognoscenti run down threats on the global horizon, there is a temptation to cite China, Israel and Palestine, Afghanistan, Iran, Venezuela, and perhaps pending trade agreements with partners in Latin America and across the Pacific. Europe was omitted entirely, but its serious economic implications alone should earn the story a front-page spot above the fold.

The search for optimal bank regulatory capital requirements has received additional momentum recently with the proposal by the Basel Committee on Banking Supervision for reforming its standards. The U.S. Shadow Financial Regulatory Committee has developed a comprehensive program for capital standards for large banks. The committee’s plan would increase...